As a growing number of outsourcing companies are looking at tier II and III cities for expansion, Ahmedabad, Jaipur, Kochi and Kolkata figure among the most favoured destinations by IT-BPM players.
According to a report on the emerging delivery locations in India by IT-ITeS industry body Nasscom and global property consultant Cushman & Wakefield (C&W), these cities are offering better opportunities in terms of business environment, talent, infrastructure and cost differential.
“Ahmedabad, Jaipur, Kochi and Kolkata have significantly improved their value proposition for IT-BPM services delivery over last five years and emerged as front runners next only to Tier I cities or ‘Leader’ locations which continue to be the preferred choices for IT-BPM industry,” Nasscom said in a statement quoting the report. The ‘leader’ locations however have also seen, a shift towards expansion into peripheral locations as emerging alternate delivery locations, it added.
Front runner cities are followed by Bhubaneswar, Coimbatore, Trivandrum and Visakhapatnam as the second choices while Chandigarh and Indore are promising locations, the report said. The report said Ahmedabad showcases strong infrastructure with good air connectivity, significant growth in IT Grade A office stock, upcoming metro rail project and location advantage of being on the Delhi-Mumbai corridor. On the other hand, Jaipur offers a wide talent pool with headcount and number of IT-BPM units doubling in last five years along with good air connectivity and under-construction metro rail.
Kochi presents a distinct cost differential with operational cost savings up to 25 per cent along with enabling IT infrastructure like presence of submarine communication cables ensuring high speed internet connectivity with export revenues tripling in last five years. Kolkata excels in business performance with employee headcount and number of engineering students doubling in the last five years.
Explaining the rationale behind the changing preference for locations, the report added over the last couple of years, the transformations in delivery models have altered location strategy of IT-BPM organisations. There is an increased focus on non-linear growth, serving new customer segments, verticals and geographic markets, attracting domain knowledge and emergence of digital technologies has led to shifts in global delivery models, it said.
“With changing client needs and the growth in broadband penetration, the latest trend that we are witnessing is that more and more companies are entering tier II & III towns,” Nasscom president R Chandrasekaran said. NASSCOM and the industry will work with the government to improve infrastructure in these cities and support ministries to achieve the dream of an inclusive Digital India, he added.
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