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Up and Coming Indian Cities for Outsourcing

Outsourcing consulting firm Alsbridge has compiled a list of India’s top five up and coming cities for setting up outsourcing centers. A multitude of reasons ranging from infrastructure breakdowns to rising salaries and turnover rates are compelling IT and BPO majors to look outside of the Big Six cities – Bangalore, Mumbai, Chennai, Hyderabad, Pune and the National Capital Region of New Delhi (includes suburban towns of NOIDA and Gurgaon). Alsbridge’s list is a well-timed effort but, in my opinion, it stops short of giving the right perspective.

Outsourcing consulting firm Alsbridge has compiled a list of India’s top five up and coming cities for setting up outsourcing centers. A multitude of reasons ranging from infrastructure breakdowns to rising salaries and turnover rates are compelling IT and BPO majors to look outside of the Big Six cities – Bangalore, Mumbai, Chennai, Hyderabad, Pune and the National Capital Region of New Delhi (includes suburban towns of NOIDA and Gurgaon). Alsbridge’s list is a well-timed effort but, in my opinion, it stops short of giving the right perspective.

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Alsbridge’s list is as follows (in descending order):
1.Ahmedabad
2.Nagpur
3.Kochi
4.Vizag (Vishakhapatnam)
5.Mangalore

My disagreement with the list starts right at the top. Ahmedabad, a bustling industrial city well past its glory, is definitely not the most up and coming Indian city from an outsourcing perspective. Ahmedabad suffers from similar infrastructure problems that are plaguing most Indian cities. However, it has some unique issues of its own. One, Ahmedabad is located in the ‘dry state’ of Gujarat, which means sale, purchase and consumption of alcohol is banned in the city. This issue alone will prevent many professionals from accepting job offers in Ahmedabad. And I can’t imagine too many Americans willingly traveling to a place where they can’t kick back with a beer after a hard day’s work. Two, Gujarat’s image is tarnished since the communal riots of 2002. Popular belief of that being a state-sponsored genocide does not build confidence in corporations and professionals to set up base in Ahmedabad.

There are several glaring omissions from the list. Mysore is a very strong contender for the top spot in the list. Proximity to Bangalore (it’s 120 kms from Bangalore) and easy availability of engineering talent cannot be ignored. Infosys has already made the city famous by building their showpiece training center in Mysore. It’s a wi-fi city and boasts of good road conditions. And with the newly built expressway, driving from Mysore to Bangalore takes lesser time than driving from North Bangalore’s residential areas to the Electronic City.

Chandigarh built by Le Corbusier is the best-planned modern city in India. Attracted by its infrastructure, cleanliness, political stability and proximity to the Himalayas, several IT and BPO companies like TCS have been flocking to the city for the last five years. It’s one of the few Tier II cities that have ample engineering talent and accent neutralized English speaking youngsters ideal for call centers. The buzzing night life of Chandigarh is an added bonus.

Kochy and Calcutta can be taken in the same breath. Both are interesting cities with a history, both have sufficiently large talent pools and enjoy strong government support for outsourcing. Several large companies like IBM, Cognizant, Wipro and TCS have set up centers in these cities. However, there is another commonality between the two which pulls them down. They are located in states governed by communist parties. Due to this, both cities go through number of sudden strikes that shut the entire city down. I was involved in a 6-month long project in Calcutta last year and was shocked to see the number of forced and voluntary holidays the city goes through. In the outsourcing business, these unforeseen shut downs can be catastrophic.

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Coimbatore is another notable omission in Albridge’s list. Like most cities in Southern India, Coimbatore has a strong engineering base. It’s close to both Bangalore and Chennai and has favorable weather. I was very impressed with the city on my first visit in 1999 as part of an assignment with P&G. At the time, P&G used Coimbatore as a test-market site due to the city’s cosmopolitan outlook.

Bhubaneshwar, the capital city of the eastern state of Orissa, is highly rated. Like Chandigarh, it’s a modern city, well planned and houses Infosys. Infosys has been encouraging many of their engineers to work in the Bhubaneshwar center.

Bhopal is a scenic city in the heart of India. Already it has caught the eye of several outsourcing majors like Genpact (formerly GE Capital International Services) who have bought large pieces of land in the city. Being the capital of the state of MP, it has better air connectivity than several other cities.

I will take the liberty of making this into a list of top ten Indian Tier II cities from an outsourcer’s perspective.

1.Mysore
2.Chandigarh
3.Calcutta
4.Kochy
5.Mangalore
6.Vizag
7.Coimbatore
8.Bhubaneshwar
9.Bhopal
10.Nagpur

Anupam Mukerji • Bangalore, India • anupam.mukerji@gmail.com www.mmi-india.com

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