Coworking spaces, which are entirely dependent on companies occupying their space for work, are staring at a crisis with most of the country’s workforce working from home. And with no revenues in sight at the moment, companies are finding it tough to manage their fixed costs, such as rental payments, operational costs, salaries, electricity bills, among others.
As per reports, the Coworking Association in India, which includes 40 coworking space providers such as Awfis, WeWork, 91Springnoard, among others, is looking to approach the government seeking support to help mitigate the crisis.
Amid this situation, TNM spoke to Amit Ramani, Founder & CEO, Awfis on the impact coronavirus is having on the company and the industry and how Awfis is looking to navigate the situation. Here are some edited excerpts of the interview:
Are you seeing cancellations of contracts due to the pandemic? Have there been instances of companies not renewing their contract?
COVID-19 has impacted all the business organisations in the country irrespective of industry and size including the coworking sector. Our clients are working from home due to the statutory lockdown by the central and state government. We are working with our clients in a positive, amicable manner while keeping our customer-first approach at the core of all our solutions.
Our business consists of three major cost heads – fixed rental payment, fixed operations cost and variable operations costs. As a responsible company, we are striving to form a mutually beneficial arrangement between the landlords and members by passing through any waivers on fixed rental payments that we receive from landlords and our savings on variable operating costs to members, thus creating a winning solution for all stakeholders involved. It is heartening to see how our partners and clients are collaborating with us to structure a win-win solution on concessions, to manage through the current economic challenges.
What kind of a drop in growth are you anticipating this fiscal?
We are cognizant that the current state of affairs will have an adverse impact on our business metrics until the situation improves overall for the economy. Since this is an evolving situation, we are continuously assessing it to decide its overall impact on our business.
However, we have evaluated the changing business trends post the lockdown and are expecting a V-shaped recovery. Overall, we have an optimistic outlook for our company and the coworking industry in general.
A V-shaped recovery is when a sharp decline in the economy (or a business) is followed by a quick and strong recovery
Are companies seeking waivers on payment of rentals? And are you considering asking your landlords for a moratorium on rent payment or invoking force majeure?
We will continue to work closely with all our landlord partners ensuring that we come out with the most effective solution in an amicable manner. We have requested rental waivers from our landlords for the period of statutory lockdown and the same benefit will be passed on to our members.
As stated before, as a customer centric brand, we are striving to maintain a fine balance between our landlords and members by passing through the waivers which we get on fixed rental payment and our savings on variable operating costs, to our customers in the form of concessions on monthly rentals.
We believe this kind of symbiotic arrangement will help all stakeholders in minimising the negative impact on their respective businesses. Apart from this, we are renegotiating contracts with our partners, while assuring them that we will go back to original contractual terms once the current situation stabilises.
Are you finding it difficult to pay fixed costs?
So far, with the immense support from our community members we haven’t faced any issue in meeting our commitments towards fixed operations cost.
Do you anticipate pay cuts or job losses due to the pandemic? How are you handling the situation?
We have adopted a growth-oriented mindset towards the current challenge and are treating this as a unique opportunity to come to the forefront with effective solutions for both our employees and our clients, thus providing our unwavering support in this hour of need.
To ensure continuity of business we have empowered our employees and ensured that they are fully equipped to work from home in the most productive manner. We are also extending IT support to member companies to enable their employees to work seamlessly from home including audio/video conferencing and other collaboration tools. We are using technology in the best possible manner to stay connected with all stakeholders and work at an optimal capacity even under the current situation.
How many months do you think it will take before companies start coming back to office?
While the situation is very fluid and it’s hard to predict how things might evolve, we at Awfis have already formulated post lockdown centre re-opening procedures to ensure full preparedness and complete safety for our clients upon return to our coworking centres. We have developed a twenty-five-point operational checklist to ensure physical safety, hygiene and well-being of the occupants.
We are using physical checks with our technology app to develop processes that ensure that all occupants are always physically and virtually tracked. We are working closely with member companies to develop customised options that ensure social distancing in our spaces including running multiple shifts, alternate day employee mapping, and rearrangement of workspace.
With the above solutions in place, we are ready to host our member companies at our premises as soon as the mandatory lockdown ends.
Do you see an impact of this on the industry overall with startups opting for work from home to save costs even after the lockdown is lifted?
The current situation has bought about a shift in the way organisations work. It has created a work environment to which not many were exposed before i.e. working remotely/working from home. We are excited that this will present a unique opportunity for coworking spaces as there will be more professionals who will be familiar and comfortable with the concept of remote working. These people will find flexible workspaces as a great option for distraction-free, ‘work near home’ arrangement. This will in turn will make companies, including startups more open to the idea of partnering with coworking space providers for their office needs.
Over the years, coworking spaces have witnessed tremendous growth globally and in India. We expect that post this period of lockdown, the demand for coworking will continue to grow as companies will lay more emphasis on cost optimization, conversion from CapEx to OpEx and having more flexibility in rental contracts. We believe given this scenario, even the most conventional occupiers will start shifting to coworking once things get back to normal.
Are you seeking government support? If yes in what form?
We are a part of The Coworking Association in India which includes 40 other coworking space providers. The association will closely work with policymakers to create strong policies that will address all aspects of coworking. We will seek government support through this industry body.