Outsourced office a multi-decade trend: Kunal Walia, CEO & Founder, Simpliwork Offices

“A shift becomes a trend when it is not limited to one category of customers, but is applicable across sectors,” says Kunal Walia, CEO & Founder of Simpliwork Offices, one of India’s largest outsourced office partners. From top IT companies and BSFI firms to MNCs and leading Indian businesses across sectors, the demand for flexible workspaces is at an all-time high.

“It’s pent-up demand,” explains Walia. After over two years of pandemic uncertainty and limited decision-making in the corporate real estate space, organisations are now investing in cost-effective, efficient, agile, and sustainable office spaces. 

Currently, the outsourced office segment accounts for nearly 22-26% of corporate leasing in India, up from 7-8% in 2018. “The numbers are predicted to go up to 48% in the next 7 to 8 years. This is a multi-decade trend,” notes the Bengaluru-based entrepreneur.

“Today, two of the largest accounting firms in the world are our clients; one of the largest credit card networks is our customer. As are some of the biggest hedge funds in the world. So, we are not only dealing with IT back offices, but with core operations, and even companies with financially sensitive data,” he says.

Businesses are making the shift to outsourced offices, with flexibility and cash conservation becoming top priority. The need to support hybrid and distributed working, as employees get back to office, has been one of the major demand drivers for workspace outsourcing. “There was a paucity of available workspace,” notes Walia, even as the hiring numbers went up. 

Furthermore, there was a slowdown in the pace of construction of new office spaces, especially Grade A office spaces, during the pandemic. “Key micro markets across the country today have single-digit availability in terms of vacancy versus the 16% to 18% vacancy that was seen at the end of the pandemic,” he avers.

Post-Covid and with the ongoing economic slowdown in the US, organisations are increasingly questioning the merit of locking in substantial capital in long-term leases, as well as human resources in building and managing office spaces. They are investing in Grade A flex office spaces with advanced technology that enables them to up their productivity and scale, without taking on significant risks.  

Simpliwork delivered India’s largest flex office (6oo,ooo sq. ft.) in Hyderabad and the second-largest flex office (450,000 sq. ft.) in Gurugram during the pandemic in 2020. “While there are companies opting for their own offices, the transition has begun. In the next 10-15 years, it will be odd for a company to build their own office,” predicts Walia, who believes that coworking, enterprise-managed workspaces, and custom-built offices will be the norm in the future.  

The biggest advantage for businesses, apart from the flexibility factor, is the assured delivery of the office space in the quickest time frame with optimum utilisation of resources. Typically, it takes anywhere between 9-15 months for a large firm to set up a fully functional office. With an outsourced office provider, the process usually doesn’t take more than three-four months, depending on the size of the space and desired design elements. 

“Also, it frees up the company’s balance sheet,” asserts Walia. Suppose it takes INR 15 crores to build a 50,000 sq. ft. office space. That capital is essentially locked in for the next decade or so. “But if a corporate outsources the requirement, the service operator essentially provides that capital and absorbs the lock in period, leaving the company’s balance sheet empty,” he explains. Given the current economic scenario, outsourcing office space to convert capex to opex, while earmarking capital for core operations, becomes a particularly attractive choice.