Coworking spaces face 60% loss

Internet disruptions, instability push tech firms to relocate, investors shy away


GOHAR ALI KHAN August 25, 2024
“No government has been able to understand that the IT sector can help the country earn dollars without incurring any huge import expenditures. This just shows the lack of understanding,” says Parvez Iftikhar, ICT Expert. photo: file

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KARACHI:

Coworking space providers, professionals, and analysts are calling for urgent political and economic stability, as well as the elimination of internet disruptions, as the entire coworking space industry faces a 60% business loss and teeters on the brink of collapse. Tech companies are relocating their operations, and not a single new investor is eager to enter the market given the bleak situation, particularly in Karachi, the economic engine of the country.

Industry insiders report that coworking spaces have been grappling with multiple challenges over the past year, with the situation worsening in recent weeks. These coworking spaces cater to a significant number of freelancers, remote workers, and micro-agencies in e-commerce, social media marketing, and business process outsourcing. The rising demand for coworking spaces in major cities attracted investors to develop this infrastructure, which also supports entrepreneurs in boosting their business productivity.

These spaces offer affordable office solutions, helping businesses manage challenges like prolonged electricity outages and slow internet, along with other essential amenities. However, those responsible for installing firewall systems must expedite their work, or alternative IT experts should be deployed to resolve this pressing issue immediately, they urged.

Recognising the increasing productivity of freelancers and entrepreneurs, the previous caretaker government had planned to establish coworking spaces in various cities across Pakistan. Unfortunately, recent internet disruptions have undermined the role of coworking spaces in supporting micro and small businesses, leading to significant losses on investments.

IT and Telecom Sector Analyst Muhammad Yasir highlighted the critical role of coworking spaces, stating, "These co-workspaces can be the best workstations to provide fast internet under vigilant supervision while installing firewalls in the country. In the digital age, the internet is as essential to life as Roti and Kapra (bread and cloth). From communication to information, education to entertainment, and banking to business, every sector depends on stable internet."

Yasir also highlighted two broad categories of businesses: those that operate well with internet support and those entirely dependent on it. The ongoing internet issues have harmed the former and severely crippled the latter.

WorkMore CEO Abid Beli pointed out that local IT companies have been struggling with uncertainty, political and economic instability, and lacklustre business performance for over a year. International companies have also been affected by internet disruptions due to firewall installations and other issues. The once rapidly growing coworking space industry is now in decline, with 62 out of over 200 coworking spaces in Karachi losing 60% of their business.

"We offer various coworking solutions, from small rooms to large halls, including dedicated desks, hot/flexible desks, and private rooms for teams of two to 40 or more people. We provide furniture, internet, electricity backup, refreshments, and more," said Beli.

BuildIT CEO Ehsan Elahi added that frequent internet disruptions are causing significant distress for coworking space providers and their clients. This industry, over a decade old, is now witnessing approximately 30% of international companies planning to relocate their operations due to ongoing losses.

Lahore-based entrepreneur Hasan Shahid, who runs a coworking space, mentioned that many small companies and startups from abroad have been using coworking spaces in Pakistan. However, new foreign software companies are now reluctant to invest in Pakistan, and local IT companies are also considering relocating their businesses out of the country.

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