IWG looking at a franchisee model to expand business: Harsh Lambah

Co-working, which started about 30 years back, is the latest trend in the world of work and was pioneered by IWG Plc. Harsh Lambah, country manager – India, IWG Plc, in an interview with Ateeq Shaikh says going forward, this trend will continue for a decade and then change in terms of design, palette or format. He also shared the company's plans.

What's the current occupancy ratio for start-ups and large enterprises?

There is a bigger focus from large enterprises on co-working right now. If you look at any of our workspaces, about 40% would be large enterprises, another 40-45% would be small and medium enterprises while start-ups and professional entrepreneurs may be just 8-10%.

Will the format see a change in the near future as the industry continues to evolve?

We think from our visibility right now, for the next eight to ten years, this trend of co-working is going to be very strong, and then it might adapt, change a little bit more. There might be a move towards home offices, offices at airports, at railway stations, not only commercial buildings per se. It's no longer that Tier-2 cities are behind metro cities. The commercial real estate development there and the planning there is as good, if not better than the major metros. So that's again a trend that is going to happen.

Any new cities you are planning to enter?

We are always looking at Tier-2 cities but I will give you a background on that. Today, we have about 120 workspaces across 16 cities in India. Nobody else has gone there. In each of the Tier-2 cities, we have tasted tremendous success. In Indore, we have opened our third workspace. In Ahmedabad, we are going from two to four. In Chandigarh, we have opened two. In Vizag and Jaipur, we have expanded. There is a lot of commerce happening there, and hence a lot of potential in Tier-2 cities.

What's the future of this industry?

In 2017 and 2018, co-working was the fastest-growing industry in the world. Everybody and anybody came into this business. There are about 200-plus players in India today. They were all expanding, setting up their operations; now what is happening is consolidation. A lot of them either don't have the funds or don't have the cash to expand. So, there is going to be fragmentation and consolidation in the industry. There will be acquisitions and there will be a lot of players who will just have to shut shop because building scale in this industry is tough. So, right now there's consolidation happening.

Are you too looking at inorganic growth or acquisitions?

We are looking at growing in three ways. One is organic, putting our own centres in place. Second is through acquisitions. We are being approached by a lot of parties out there who would like to either get investment or get funding. Third is through what we call our franchise plan; that is something we are very focused on. We want to look at a franchise strategy for India. So either that would be led by one single plan in terms of giving the country to one party or franchising different states or different regions to different parties.

As you have hired a franchise director, would that model be under a new brand?

No, this would be under Regus or Spaces brand. Our requirement, our need for putting up a particular brand is decided on the market, in the business environment there, on the stock of commercial real estate and the ability of our brand be successful there.

What kind of players would get wiped out or get acquired?

The ones who have got into the industry but not been able to build or sustain their model. It will be difficult for them to hold on for long. We have been approached by many players and we are taking a look at their value. These would be in the markets where we don't have a location. We are looking at micro-markets and also new cities. We need to be in Cochin, Trivandrum, in Punjab, Rajasthan, Andhra Pradesh and Telangana. We will look at that once we have our franchise strategy in place.

Any plans to venture into neighbouring countries?

We are already there. We are in Sri Lanka; we have seven workspaces in Colombo. We have two workspaces in Dhaka in Bangladesh, and one workspace in Kathmandu in Nepal. And based on the opportunities there, we would be expanding our strategy also. We would be expanding our presence in other countries but India is the major hotspot for