More turning to virtual and serviced offices amid economic slowdown

As companies around the world retrench staff and downsize during the current downturn, many are turning to alternatives like virtual and serviced offices. Within Asia, companies in Singapore are leading the way in this trend.

Their take-up rate for such services has grown by up to 20 per cent in the last quarter compared to the same period in 2007.

For example, one chiropractor has opted for a temporary serviced office.

Dr Inge Austin, chiropractor, Paramount Chiropractic Group, said: “At this time and day, it’s not the time to rent an office on a long-term lease. I just signed a new lease for six months because it gives me ultimate flexibility.

In six months, I see where the rentals are, I can still open up my own clinic if I choose to, within a private setting. But I find it quite flexible to be in a serviced office.”

Many serviced offices are taken up by companies in industries such as finance or insurance.

Traditionally, it would cost a company about S$28,000 every month if it were to rent an office space. But renting a serviced office would set them back at about S$9,000 monthly.

Meeting rooms and receptionists to attend to clients are some of the facilities included if one rents an office space.

Deborah Sweetman, senior manager, Servcorp, said: “We have seen some multi-national companies looking to downsize their operations. They did actually lay off some staff so they didn’t actually need all the office space they’ve been renting previously.”

And those savings can be put to better use.

Peter Tan, CEO, Virtual Office Singapore, said: “They can use the amount of money that they save to actually invest in marketing, invest in other things that actually make money for the company, especially for a start-up.

“They actually have limited financial resources. So having an address in Singapore actually helps to convey an image that they’re stable, forward-looking and aggressive.”

Virtual office providers believe that their business will improve as long as the economy continues on its downward trend.

Source : Channel NewsAsia – 2 Feb 2009

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