By Raghavendra Kamnath
Co-working company WeWork India recently made an investment in conferencing and collaboration platform Zoapi. As it celebrates its fifth year of operations in the country this year, it intend to add 1.5 million square feet of space by the end of 2022 to its existing portfolio of 5 million sq ft, says Karan Virwani, CEO, WeWork India, in an interview with Raghavendra Kamath. Edited excerpts:
WeWork recently made its investment in conferencing platform Zoapi. What is the idea behind it? Will WeWork look to acquire similar companies in the future?
Businesses today have organically transitioned to a hybrid work model which has led to an increased demand from employees for a blend of physical and virtual work experience along with a sense of community at workplaces. With innovative technologies such as Zoapi becoming central to this need, our main intent to invest in this platform was to offer an affordable service to our members that is compatible with numerous video conferencing platforms and devices. By combining our technologies, we wish to take Zoapi to a larger audience and facilitate seamless communication for businesses of all sizes. In fact, this homegrown product has been implemented across all industries and also has the potential to grow into a global player with its unique capabilities.
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According to an analysis by Savills India, the average transaction size of co-working spaces was almost 53% higher than the average of other sectors from 2020 to H1 2022. What has been your experience and how do such large deals help WeWork become profitable faster?
We have witnessed a definite rise in the adoption of flexible workspace models as well as solutions by large corporations and enterprises. The pandemic brought out the need for hybrid and flexible ways of work. At a time when it was presumed that flexible spaces will phase out due to a shift in the overall workplace scenario, not only did the industry survive and thrive but over time it has also evolved into an indispensable part of real estate planning for most companies. In fact, our leasing in H1 2022 has been almost double of that observed in H1 2021, that is, 0.15 million sq ft in H1 2021 vs 0.29 million sq ft in H1 2022. The long-term agreements have not only led us to profitability but also are a testament to the potential of the flexible workspace industry as India’s workforce gradually returns to work. As enterprises relook their real estate requirements in this ever-evolving workplace scenario, we believe it will steadily surge in the coming years.
With the slowdown in tech firms, how do you think it will impact your business?
If there’s one valuable learning that we’ve derived through our experience during the pandemic, it is to be agile in any situation by focusing on listening to our members and customising products and offerings as per their requirement. WeWork India has always had agility and dynamism at its core. We have always challenged the conventional norms and been ahead of times providing business-focused solutions and a vibrant member experience. By focusing on our strategy for asset-light expansion and growth, we will continue to cater to the rapidly changing business needs, coupled with the uncertainties and irregularities that were thrust upon workplaces due to the pandemic. The fact that flexible workspaces can adapt to the diverse demands of growing businesses in record time, rendering agility and efficiency in operations, is proof of its growing preference over the past few years.
How does the company look at recession predictions next year and how are you geared up?
We have performed exceptionally well over the past two years to get the business on the right foot with the right foundation, so we do believe we have overcome many of the obstacles for profitability. Besides this, WeWork India has a robust and agile work model which enables us to scale up and down based on the market condition and our member requirements. Having said that, over the past couple of years, we have continued to earn the trust of our members as well as businesses of all sizes by providing them with swift, innovative and customised workspace solutions as per their needs. Whether you are an employee looking to reduce commute time, an enterprise looking for custom-built office spaces, or a creator looking for space to shoot, we have offered a range of innovative solutions to help businesses ease into their new routines and have a better day at work. The bullishness displayed by these members entrusting us to look after all their workspace needs has definitely helped strengthen our brand’s value proposition.
What are your expansion plans for 2023?
We are very bullish on expansion and FY23 has been very robust. As we celebrate the fifth year of WeWork in India this year, we intend to add 1.5 million sq ft by the end of 2022, with over 70% of the planned development pre-committed by enterprises. We are targeting an increase in profit by 15-20% (Ebitda) at the company level by the end of FY23.
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Some consultants say that take-up of coworking spaces this year is expected to cross that of 2018 and 2019 together. Your views.
We are absolutely confident about flexible workspaces’ ability to steer its growth in India by offering a diverse range of products and services. Companies are always scaling and shrinking depending on their business cycles as well as the stages of their growth while real estate has always been like this fixed cost within most organisations. During the pandemic, we observed a growing trend among enterprises adopting flexible workspaces, due to its lower fixed costs, greater customisation options, flexibility to scale or simply access to a culture of community and networking. Flexible workspaces such as WeWork India moved the needle for businesses by helping them make this a much more variable cost and enabled them to ensure a smooth transition back to work.