As employees continue to work remotely and revenues decline due to reduced operations in a nearly three-month long lockdown, offices have started to vacate leased spaces.
As employees continue to work remotely and revenues decline due to reduced operations in a nearly three-month long lockdown, offices have started to vacate leased spaces. From food aggregator Zomato to private actor lender IndusInd Bank, companies are being forced to close offices; Zomato has shut down 125 of over 150 offices worldwide and IndusInd Bank has also reportedly vacated one of its prominently-located leased office spaces in Mumbai, The Indian Express reported. The situation is bad at the end of employers as they have also continued to announce layoffs with Zomato recently letting go off its 14% staff.
To save upon costs, the companies are now cutting down on one of the major fixed cost components — real estate. To that extent, work from home is expected to become a permanent feature in the near time. Homegrown food aggregator Zomato too said something along the same lines. In a communication sent to employees, Zomato CEO Deepinder Goyal said that other than employee salaries, its biggest recurring expense was real estate. In order to cut that, Zomato has decided to make partial or full work from home a “permanent feature”. “The management has realised that work from home is an easily workable solution and thus office spaces is one area where costs could be cut. So a number of office spaces will no longer be retained,” a company executive said, the newspaper reported. Zomato’s chief rival Swiggy is also scaling down on kitchen facilities.
“Identify and significantly reduce every single indirect cost like hubs, office infrastructure, etc… it is one of the areas where we feel the cut is most prudent given it doesn’t affect customer or employee experience,” Swiggy CEO Sriharsha Majety wrote in an email to employees. Swiggy and Zomato are not isolated incidents and many other startups in India’s metro cities have also served notices to vacate office premises.
Massive jolt to startups
While the coronavirus situation has impacted big and small businesses, start-ups have borne a major brunt of the coronavirus lockdown and over one-third 250 start-ups have either temporarily shut down or are closing down permanently, according to a survey by IT sector industry body NASSCOM.