For decades, real estate decisions in India have been driven by a single number: cost per square foot. While simple, this metric hides the true financial picture. Today, with hybrid work, sustainability goals, and employee well-being shaping business priorities, organizations are shifting to a more comprehensive approach: Total Cost of Occupancy (TCO).
Why Cost Per Square Foot No Longer Works
Traditional measures only capture rent and construction costs, overlooking critical factors such as:
- Unused space: Offices designed for 1,000 employees often see only 600 seats filled daily, resulting in wasted investment.
- Employee productivity: Poor lighting, overcrowding, or bad ventilation can reduce performance by up to 18%.
- Sustainability impact: LEED-certified buildings save 20–30% in energy bills, but older metrics failed to capture these long-term benefits.
The reality? A Bengaluru IT company paying ₹120 per sq. ft. for rent actually spends closer to ₹214 per sq. ft. once hidden costs like electricity, maintenance, and vacancy are included.
Global Forces Driving Change in India
India’s workplace market is experiencing major shifts:
- Hybrid work: Delhi offices see just 45% occupancy on Mondays, compared to 70% mid-week.
- Net-zero commitments: With a 2070 carbon neutrality goal, firms are beginning to calculate energy savings from solar adoption and other green initiatives.
- Technology: IoT sensors and AI dashboards are helping companies track real-time utilization and optimize layouts.
The Building Blocks of Modern TCO
TCO is no longer one-dimensional. It’s a blend of visible and hidden costs:
- Visible costs: Rent, utilities, cleaning, and repairs.
- Hidden costs: Underutilized space, higher turnover, health-related absenteeism, and energy inefficiencies.
Leading firms are applying step-by-step methods to measure these costs:
- Track usage with desk sensors and peak-hour analysis.
- Quantify employee experience, including productivity loss and healthcare impacts.
- Plan for long-term expenses, such as renovations and compliance with safety standards.
A Case Study in Optimization
At a Pune manufacturing plant, leaders took a holistic approach to TCO:
- Motion sensors revealed underused areas.
- Solar panels covering 20% of space reduced energy bills by ₹2.2 lakh per month.
- Redesigning layouts saved employees 45 minutes a day in movement time, translating into over ₹1 crore annually in productivity gains.
The result? A 34% drop in TCO in just two years.
Indian Companies Leading the Way
- Tata Consultancy Services: Encourages intergenerational mentoring via its iConnect platform.
- Kotak Mahindra Bank: Pioneers reverse-mentoring, with Gen Z teaching digital tools to senior leaders.
- Infosys: Offers inclusive spaces like quiet zones and wellness centers.
- Unilever India: Introduced a “cafeteria” approach to employee benefits.
Tata Consultancy Services
Challenges for Indian Businesses
While progress is accelerating, barriers remain:
- Data gaps: 70% of SMEs lack tools to measure occupancy.
- Short-term focus: Cheap rent is still prioritized over long-term value.
- Rising urban costs: Rental spikes of 22% in 2024 are forcing companies to recalculate strategies.
The Future of TCO in India
The next decade will see stronger integration of TCO into workplace strategy:
- Government policy: Smart Cities Mission will soon require TCO disclosures for public buildings.
- AI integration: Dashboards will consolidate rent, utilities, and maintenance into a single monthly metric.
- Employee-centric design: Linking TCO directly with satisfaction and retention rates.
Actionable Steps for Companies
To stay ahead, organizations can:
- Audit hidden costs with energy calculators and space sensors.
- Renegotiate rent or move to flexible workspaces if utilization drops below 65%.
- Track employee output to connect workplace improvements with measurable gains.
Final Thought
TCO is redefining how Indian businesses think about workplaces. It’s no longer just about space—it’s about people, performance, and sustainability. Organizations that adapt will unlock long-term savings and resilience, while those that don’t risk overspending by up to 40% in the next decade.
“For Indian businesses, TCO is not just a financial metric—it’s a blueprint for smarter, healthier, and more sustainable workplaces.”
— Sid Majumdar, Unispace
About Swatasiddha Majumdar, Principal, Strategy, India
Swatasiddha Majumdar is the Principal, Strategy at Unispace India, a global design and build firm that specializes in workplace strategy, design, project management, and construction. With over two decades of professional experience, Swatasiddha leads the strategic initiatives at Unispace, where he focuses on architecture, workplace strategy, and project integration management.
He holds a Bachelor of Architecture & Planning from the Indian Institute of Technology, Roorkee (1996-2001) & Postgraduate in Advanced Programme in Product Marketing from Indian Institute of Management, Calcutta.
Follow Swatasiddha Majumdar on LinkedIn.
