TikTok ban puts brake on parent ByteDance’s India office space expansion plan

TikTok parent ByteDance’s move to lay off employees, following its permanent ban in India, has effectively shuttered the Chinese company’s office expansion plans here.

The company is unlikely to go ahead with its plan to occupy big space in Mumbai’s Goregaon suburb as committed in July, right in the middle of the pandemic and uncertainty over its future in the country, said people with direct knowledge of the development.

The Beijing-headquartered company had entered into a flexible office space deal for 1,250 seats at WeWork India’s Nesco property in Mumbai’s Goregaon suburb last year.

The company was expected to occupy this office this month.

However, it has not taken charge of the space and not even intimated WeWork India about any plan to do so.

“While WeWork India has already completed the interior and fitouts for the Internet technology company’s contracted space, there is no certainty that the latter would go ahead with the deal,” said one of the people.

The deal for the Mumbai office was struck last year with a plan to use the same for expansion and consolidating some of its operations here.

The agreement factors a lock-in period until the end of 2022.

ByteDance and WeWork did not offer any comment for the story.

Apart from this proposed office set-up in a co-working hub in Mumbai, ByteDance also has two operational offices in Bengaluru and Gurgaon through a similar arrangement with WeWork India and these would also be up for review.

The company supports some of its overseas operations from these offices.

According to industry experts, any move to cancel the plan to occupy the space will have legal ramifications too if the service provider decides to exercise his rights in the backdrop of financial losses.

“If a contracted entity does not go ahead with occupancy of the leased space, the company will have to make payment of rentals for the lock-in period. Forfeiting the deposit amount is an option, but that is usually equivalent to 4-6 months’ rent. This may then get resolved through an arbitration mechanism,” said a senior official of a co-working company.

According to realty industry experts, ByteDance was looking to expand its presence in Mumbai, Bengaluru and Gurgaon following the exponential growth of its TikTok app.

However, the India-China standoff has slowed decision-making on the real estate front.

ByteDance’s TikTok, Vigo Video and Helo were among 59 Chinese apps that the government banned on June 29 citing national security concerns.

The temporary block has now been converted into a permanent ban.

ET has already reported that the Chinese Internet company has started the process of laying off employees in India following this permanent ban on its most popular apps TikTok and Helo last week. As many as 800 people out of the 2,000-plus workforce may lose their jobs, while around 100-200 employees supporting global teams or in critical roles may stay. Its plan about the rest of the employees is not known.