Metro IT-BPO centres challenged by smaller cities

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New Delhi, May 5 (UNI) Metro cities, which have been serving as operational hubs for software companies are facing tough competition from the Tier-II and Tier-III cities.

''Metros like Bangalore, Chennai, Hyderabad, Kolkata, Mumbai, Pune and NCR are challenged by around 15 Tier-II cities,'' a Nasscom-AT Kearney report said.

The report titled 'Location Roadmap For IT-BPO Growth: Assessment Of 50 Leading Cities' on the assessment of 50 locations in India suitable for the IT-BPO industry, was conducted by collecting and analysing data from 50 locations on over 100 metrics broken down in to key parameters such as Knowledge pool and skill-set availability, infrastructure, social and living environment, enabling business environment, government support and operating cost.

The study provides a detailed gap analysis along with advantages and shortcomings of these 50 locations, the available opportunity for attracting investment from this sector with a deeper objective of showcasing a roadmap to achieve uniform economic development in India. It sets the stage for the next wave of the industry's growth beyond the top seven cities.

From a talent perspective, while the number of people required to capture a five-fold growth are available, there maybe a requirement of employable talent, of which approximately 50 per cent of the additional talent requirements will have to be met from Tier II and III cities in the country, necessitating the creation of physical and social infrastructure in these cities.

Speaking at the launch, Chairman Nasscom Ganesh Natarajan said, ''the Indian IT-BPO sector has been a front runner of economic development in select cities, providing employment to a large number of people and improving the overall quality of life and amenities like education and healthcare in these cities. We now see the time as being right to spread this development to a new set of locations, provided the requirements of the Industry can be met.'' We see this report serving as a planning input for State Governments, educational institutes, policy makers and local industry bodies when they look at means to attract investment into their regions, he added.

Nasscom President Som Mittal added that the development of only a few select set of cities has put severe pressure on the infrastructure, costs and also increased migration of resources.

''We see immense potential in the next set of locations if the right steps are taken now. The growth projections of the industry indicate that even existing seven existing centres will see significant growth, however would need proactive planning and meticulous execution to support this growth,'' he said.

The report will provide useful information on relative attractiveness to companies who are looking to enter or expand.

Apart from partly balancing the pressure on the top tier locations, this would also add significantly to the stability of employees and reduce migration to large urban areas, he added.

Mr Mittal further said that the success of each of the centres would depend upon the speed and commitment with which the local city and state governments will work to fill up the gaps identified.

''We also hope that the government would support and encourage development of these areas by extension of the STPI/SEZ like tax benefits as there are few SEZ's in these locations,'' he added.

Commenting on the methodology and findings of the study, Saurine Doshi, Partner, AT Kearney said the objective of doing this study was to assess the potential and attractiveness of key 50 locations in India as hubs for IT and BPO operations.

''In addition to the defined information on the locations, we have also provided insights based on discussions with key stakeholders on factors that determine 'location choices' for both companies seeking to outsource as well as companies offering IT-BPO services,'' he said.

The insights from this report will serve as key reference point for everyone who plays a role in planning, development and leverage of a location, he added.

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