Looking for Office Space in India
For any start-up wishing to setup their own company, being visible online is a no-brainer.
And the first step to do after having your million dollar idea and having generated the funds , the employees team to execute it, is a physical office space.
The first and foremost thing to do is to narrow down on your preferred location of setting up your first office.
Does your business require you to be near your customers, or can you service them online?
Even when you opt for an online only business selling through Amazon, Flipkart, Shopify other aggregators. But still you need a physical office presence, be it in the gateway cities (Mumbai, Manila), Metros or other cities where one can get abundant choice of software/engineering talent.
In India, that choice of city has now narrowed down to Bengaluru and Hyderabad.
The rising cost of living, talent attrition, cost of the talent and the crumbling infrastructure in the Metros and Bengaluru has given an opportunity to the southern city of Hyderabad as the preferred choice of starting business in India.
Hyderabad, the city of Nizams, has achieved this position as the majority of the top 10 companies in the world have their presence here, be it Amazon, Apple, Google, Facebook, Microsoft etc.
Types of Office spaces:
Offices are generally are categorized in the following types:-
· Bare shell – the owner/ landlord only provides the bare office spaces without any flooring and hence the fit-outs have to be undertaken by the client. Normally, the Landlord can also furnish out common area spaces, outside toilets, lifts, staircase etc.
· Warm shell – herein the landlord provides with air-conditioning and electricity backup facilities with flooring is done.
. Plug n Play space – also called a furnished or plug n play office, wherein the office is fitted-out as per the specifications of the client, and they just have to occupy the space the tenant just has to come with their server and Laptops/desktop system to start their operations.
. Managed Offices - a relatively new concept is slowly gaining ground among the users due to its relatively ease of use and minimal commitment of resources to start an office space.
The budget allotted for setting up the office along with the location filters out the options for the company.
Subject to their timelines business development team goes on location scouting on its own or through the help of consultants.
If the company is willing to spend their budget on the capital expense side of their balance sheet and are looking for a longer term of lease, they normally go for a bare shell or warm shell type of office space.
And if the company does not want to overload their balance sheets and prefer to spend their budget on the operating expense side, then they opt for a plug n play office or even a managed office.
Number of employees:
Most of the companies have specific requirement as to the number of employees they need to execute their project. But, they fail to understand the area required to house these many seats for their employees.
The IT market is dominated by the IT/ITeS services, application software development, maintenance of IT software, call center, BPO setups etc.
Not long ago these companies would consider an area of 100 sq ft per employee but the rising cost of real estate this space has now been reduced to around 50-70 sq ft/employee.
SEZ vs STPI
There are two taxation regimes under which the companies operate, namely the SEZ and the STPI.
Under the SEZ scheme the occupant (unit) gets tax benefits for operating from a SEZ.
Some of the salient points are
The SEZ regime entails export obligations from the unit for the next 5 years, hence they should prudently consult a tax /management consultant before choosing to locate their operations in an SEZ.
Generally the office spaces which are in the IT SEZ are more expensive than non-SEZ office spaces.
Parking – The norm these days is to allot a car parking slot per 1000 sq ft of area
The general rule is to provide for a 1kva of power/100 sq ft of space leased.
Electricity Back-up: As the electricity utility companies power supply is not reliable, the clients should check for the sufficient back-up power as per their requirements.
Most of the IT corporate prefers to be located in the core or the western periphery of the Hyderabad, the south western part of Bengaluru, Gurgaon region of NCR, as most of the IT development is concentrated here. In other cities, the suburbs are preferred due to their cost effective option.