IT firms’ share in office space absorption falls by 24%

The share of IT-ITeS (IT-enabled services) firms in total office space across the top seven cities declined by nearly 24% in the first quarter (Q1) of 2023.

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IT services firms are aggressively undertaking a cut in their real estate costs. The real estate accounts for about 15-20% of the total costs to IT firms. 

According to the data released by property research firm Anarock, the share of IT-ITeS (IT-enabled services) firms in total office space across the top seven cities declined by nearly 24% in the first quarter (Q1) of 2023. Their share in total office space in 2019 stood at 42%.

The major factors that are pulling down the real estate absorption of IT firms include- ebbing business, increasing adoption of hybrid work model, and distribution of talent to the tier-2 satellite offices. The report, however, noted a rise in the global capability centres (GCCs) of MNCs and product firms, which seek more in-person collaboration. GCCs are offshore units that provide support services like IT, finance and analytics to their parent organisations.

Anuj Puri, Chairman Anarock said, “Over 200 million sqft of commercial stock in India is currently occupied by GCCs and 500 new MNCs are expected to enter India and set up capability centres.” He further added that the ‘China plus’ sentiment has created opportunities for manufacturing and industrial segments. The share of real estate absorption by these two sectors as such has more than doubled.