The Evolution of SOHO (Small Office - Home Office) Concept in India

Wednesday, August 22, 2012 · 0 comments



The concept of the ‘home-office’ is no longer new and is fast evolving in India. The way we at RealEstateDealStreet.com see it, it has evolved as needs have changed. When we say ‘not new’ - we mean it has been around for decades now, the difference being, these used to be in the form of small businesses or professions run by one or two people from their homes. These professions include Doctors, Teachers, Chartered Accounts, Lawyers, tuition or hobby classes, and real estate agents/brokers. And this phenomenon not only thrived in India, but across the world including UK, Europe and America.

In US, it was termed SOHO (Small Office Home Office). Americans also have the concept of Garage Start-up, which is nothing but an extension of this, where entrepreneurs who couldn’t afford proper offices in business districts worked form either rented garages or their own homes. Quite a few world class companies were once called “start-up” and literally started from a garage. The greatest example is of the IT giant Microsoft. This concept is now catching up in India tremendously. Few Indian start-ups which worth millions now, started from home even though those were from other cities like Banglore, Delhi( NCR) etc. 
Mumbai is ‘space-constrained’ and so, entrepreneurs driven SOHO concept should catch up and will have considerable impact on real estate market. 
There are few reasons due to which, SOHO concept will flourish in Mumbai. We have tried to pen down few of them and the impact they will have on the real estate market.

1)      Commuting: - Traffic, not only in Mumbai but across the country, is pathetic. Vehicles move on an average speed of around 20 miles per hour during peak traffic hours at certain business locations. Mumbai’s public transport has its own set of problems. Our decade old infrastructure is not able to cope up with the increasing demand of the increasing commuters. On an average, citizens of Mumbai spend about 3 to 4 hours daily on just commuting from home to work and back, let alone the assorted work related commuting. All this stress and impatience has started taking a toll on people’s health. They have started realizing this and our hence considering to start work from home as an option.
2)      Property Prices: - Property prices in Mumbai’s CBD (Central Business Districts) have become both unfeasible and unaffordable. This is also one of the reasons why people have started working from home. 
3)      Technology:- With the advent of path-breaking technologies, such as Skype, G-talk, BBM, video conferencing, Whatsapp, etc  communication has become much easier and cost-effective and also that much more convenient with anyone being able to reach out to anyone at anytime, thereby loosening up the constraint of working at the same place. Also, in today’s world one doesn’t need much face to face interaction and even little one needs can be made through facilities like G-talk, Skype or videoconferencing. One can always avail facilities of cafes, hotel lobbies or business center if need arises at no cost or friction of cost required to run proper office set up.
4)      Man Power: - They say machines have replaced the man, and this holds true to our advanced times where everything is going to the cloud. Due to online banking, online shopping, online filing of returns and other regulatory requirements one doesn’t need much man power. Hence, the entrepreneur or professional can do without formal business set-ups and man power like peons, receptionist etc.
5)      To protect new business / Innovative Ideas: - India is an emerging star of new innovative business ideas by young generation which need to be protected from clones. In SOHO concept one’s idea remains in stealth mode, for a bit longer than in the typical dog eats dog business environment because he/ she can take help from family, friends and trusted ones at the initial stage of venture.
6)      Scarcity of Bank Funding: - It was always difficult and a detailed process for small businesses to get funded by banks or financial institutions and acquire a work place on loan. In today’s time because of sky scraping real estate prices it becomes next to impossible.
7)      Flexible Working Hours: - In today’s time people do lots of cross border interactions, transactions and communication. Conference calling, Video conferencing became very routine affair in SOHO concept it is easy to do that with out waste of time in waiting till odd hours.
8)      Rise of Women Entrepreneurs: India is seeing a paradigm shift in the attitude of the people towards women entrepreneurship. Given the high risk factor in starting your own venture and the high-cost of living in metro cities, more women are stepping up to take the plunge. Some men prefer having a secure job while letting their wives test entrepreneurial waters. Besides seeing their personal growth, women also find it one of the better ways to stay busy. With the fast adopted concept of nuclear families and sometimes even single-parenting, SOHO is seen as a convenient option to keep oneself occupied and generate income without increasing overhead costs or compromising with domestic responsibilities.

All these points indicate that after some time not only all the business districts but the retail space will also lose its luster and head towards a secular bear market. Start-ups are growing in numbers and these entrepreneurs know how to use technology in their advantage. Location will not have that much of importance that it had earlier. The gap between non premium locations and premium locations will be narrowed. For retailers and hoteliers whose business model only shouts “location, location, location!” will be at loss. As per RealEstateDealStreet.com study, it is time that organizations, whether small or big, should be lean and have lesser commitments on their shoulders because there is a higher chance that this bubble might burst in current cloud of drought and signal the slowing down of economy!