Keppel Land-backed Smartworks has spotted a better business model in the office space segment. It is somewhere in-between a co-working space serving startups and a commercial office park serving large enterprises.
In today’s world, getting a modern, high-quality office space is easy, even for young companies or freelancers. There are beautifully designed co-working locations across all big cities in India. On the other hand, for mid-sized companies, while going to co-working way was an option, it wasn’t exactly designed for larger teams. You want the design of a co-working location, but some of the features of a larger facility become important. That’s where the concept of a managed office comes in. Neetish Sarda believed this was an underserved segment. Yes, the WeWorks and the CoWrks were there, but these were still designed for smaller startups and smaller teams of larger enterprises.
This prompted Sarda to set up Smartworks with an initial investment of $25 million in Delhi-NCR in 2016. The aim was to provide completely managed and configured office spaces with world-class facilities and a collaborative community environment that was both accessible and affordable. ”We seek to transform the regular concept of a coworking office space into a managed office space, where we can build a company with a more robust business model with better unit economics and predictable cash flows,” explains Sarda.
Sarda’s journey began in his family business, which has an employee base of 50,000, and was into manufacturing, real estate, and IT. He also worked for two real estate developers – Space Group and PS Group – and then Vision Comptech Integrators (part of the Sarda Group) before embarking on his own entrepreneurial journey.
Harsh Binani, the co-founder who joined the team in 2017, had over seven years of experience in management consulting and real estate. He worked with the consulting firm, McKinsey in Chicago, handling strategy and operations across different verticals such as healthcare, infrastructure, and insurance. Following a stint at Medanta Medicity, spearheading critical strategic initiatives for the CEO, he has been responsible for envisioning the overall strategic roadmap of Smartworks, driving product development, customer experience, technology, and marketing.
The company recently raised US $25 million from Singapore-based Keppel Land in Series-A funding. This will enable Smartworks to scale up rapidly across India’s Tier 1 and Tier 2 cities and further invest in building its next generation product, improving client experiences, as well as boosting talent and technology.
In the three years since inception, Smartworks has been focussed on offering a significant value proposition on employee engagement and capital efficiency to increase productivity in the workplace. Smartworks had started by focusing on start-ups/freelancers, but the enterprise business is bigger and lends more stability in terms of cash flow, while also ensuring better unit economics. “Early learnings on the right client mix with longer tenures and stable cash flows led us to focus on enterprises looking for convenience, business, and employee engagement/productivity,” explains Sarda.
Of the 400 customers it caters to, more than 90 percent are large enterprises comprising of Indian and Global MNCs and Fortune 500 companies such as Amazon Web Services, Bacardi Limited, DHL, Ernst & Young, Hitachi, Jaguar Land Rover Automotive PLC, Microsoft Corporation, Petronash, Red Hat, Ricoh, and Samsung.. This focus has enabled Smartworks to become the only Indian home-grown managed office space provider to become profitable at the consolidated level in less than three years. “Last year, we had revenues of over Rs. 100 crore. This year too we are on track to triple it,” Sarda says with justifiable pride. “Conventional office spaces, which typically have enterprise occupants, will continue seeing disruption from players like us,” he adds.
“The current millennial workforce is exposed to a shared economy, modern consumerism, and western practices and wants a radically new office experience,” he points out. Therefore, harping on Design, Technology, and Hospitality, the company aims to build inspiring workspaces where going to office becomes fun again. It provides chic office spaced embedding concepts like data-driven workspaces, biophilic architecture, activity-based design, etc. Its technology team seamlessly integrates physical, digital, and service platforms while actively developing collaborative tech solutions to deliver a seamless experience, Video conferencing and networking equipment, cybersecurity, enterprise security tools, proprietary solutions for: visitor management, a community and customer service app, augmented reality office tours, and Amazon Alexa-powered personal assistants are part of the experience. “Right from mass concierge services to employee engagement to health & wellness – we want to wow our customers and make it affordable,” Sarda adds. The latest addition to its tech-enabled working environment is a Virtual Reality (VR) tool that lets its clients experience and see how their space is going to look once it’s ready!
Smartworks considers traditional/conventional office space providers and not coworking spaces as competition. “Our minimum lease term is three years, and on an average, a client takes about 280 seats, which is 10,000 sq. ft. area. So, we are into a large format play, unlike a regular co-working space,” he elaborates.
Our minimum lease term is three years, and on an average, a client takes about 280 seats, which is 10,000 sq. ft. area. So, we are into a large format play, unlike a regular co-working space
One of the hurdles the company faced was challenging the preconceived notions and changing the mindsets of MNCs and Indian enterprise giants, who were reluctant to leave their comfort zones and trust a managed office space provider with their operations. “We focused on not just providing office spaces but giving them a holistic experience. Right from the infrastructure, technology, employee engagement activities, configured offices, we cater to each and every demand of our customers,” explains Sarda. “Obviously, convincing that first big corporate was the most difficult as compared to the 401st now,” says the founder.
Smartworks, today, is a team of close to 300 employees with diversified profiles such as project managers, interior designers, marketing professionals, business development, community managers, facility managers, business analysts, real-estate analysts, to name a few. More than a job, the company believes in creating a career pathway for the employees. Therefore, timely feedback that enhances their productivity and helps them raise their game plan regularly is one of its approaches. It also has mentors for cross-training and encourages acquiring new skills. A Learning & Development team ensures regular training programs are focussed on skills relevant to the business and learning from day-to-day examples.
The co-working market is gaining traction at an extremely fast rate due to reduced cost and is expected to be 13.5 million users by 2020, half of which will be from enterprises that will take up 10.3 million seats. “Additionally, we see a lot of growth coming from Tier II markets as well,” Sarda says.
Having understood we understood this demand and trend at the very beginning of its business journey, gives Smartworks the confidence to cater to a large portion of the managed office space segment in India. In the next five years, it plans to expand its footprint to 20 million sq.ft. and provide office solutions for over 200,000 working professionals across the cities where it is already present. It is also aiming to enter the tier-2 cities with small-format facilities in the coming years.
- ET Most Promising Entrepreneur 2018 Award for Neetish Sarda, Founder.
- LinkedIn Top 25 companies to work for in India in 2019.
- Started in 2016
- Achieved profitability at the consolidated level in less than three years.
- Generated revenues of over Rs 100 crore last year
- Targeting tripling it this year
- 400 customers with 90% large enterprise clients
- 300 employees
- Raised US $25 million from Singapore-based Keppel Land in Series-A funding