Tech majors, MNCs go slow on office expansion plans

According to industry insiders, a search that was ongoing for more than 10 million square feet of large office space for global tech majors has already veered into the slow lane.

“While 2022 is well-geared to close on a high note, the India office market is likely to see some rationalisation in demand in 2023. Companies are putting a hold on new hiring as they brace up to keep costs under check due to looming recessionary conditions and slower growth in major economies,” said Ramesh Nair, chief executive, India at commercial real estate services firm Colliers.

Due to global uncertainties, large companies like Meta, Amazon, Twitter, and IBM have either announced job cuts globally or put a hiring freeze in place. Local companies including startups have also laid off employees.
“A majority of the IT and ITeS workforce continues to work from home, and it is inevitable for companies to relook at space utilisation as they formulate next year’s strategy,” said the real estate head of a large multinational company.

Commercial realtors said IT and ITeS firms had failed to ramp up headcounts in the offices with fewer than 30% of the employees working from offices, except for those providing services to the banking, financial services and insurance sector.

“Work is what you do, not a place where you go to. Companies have adopted a wait-and-watch approach and are evaluating their real estate to fit employees’ comfort,” said Sarita Hunt, managing director (Bengaluru) at real estate consultancy Savills India.

Currently, the IT/ITeS sector leads the pack of commercial real estate occupiers in the country, although its share has come down in the past five years to 34% of total demand from more than 50%.

It is a direct result of other sectors, such as BFSI and flexible office providers starting to absorb more office spaces.