Nasscom or National Association of Software and Services Companies, the consortium that serves as the apex body of the Indian IT software and BPO industry, together with global management consulting firm AT Kearney has released a comprehensive assessment report of 50 locations in India suitable for the IT - BPO industry titled 'Location Roadmap For IT- BPO Growth: Assessment Of 50 Leading Cities.'
The report analyzes the strengths and weaknesses of these 50 locations and sets a stage for the growth of the IT-BPO industry beyond the top seven leader cities viz. Bangalore, Pune, Hyderabad, Chennai, Kolkata, Mumbai, Delhi and NCR (National Capital Region).
According to the joint report, at least 15 Tier II cities can comfortably challenge the leaders while both Tier II and Tier III cities can function as operational hubs for the software companies.
Some of the upcoming cities are Ahmedabad, Kochi, Bhubaneswar, Chandigarh, Coimbatore, Indore, Jaipur, Kochi, Lucknow, Madurai, Mangalore, Nagpur, Thiruvananthapuram, Vadodara, Tiruchirapalli and Visakhapatnam, it said.
The third category or the followers comprise of 12 cities including Bhopal, Goa, Kanpur, Aurangabad, Gwalior, Hubli-Dharwad, Nasik, Mysore and Surat. The fourth or the final category is the aspirant locations. These are cities where individual companies have already set up offices and more companies are expected to follow, for example Allahabad, Dehradun, Durgapur, Gangtok, Guwahati, Ludhiana, Patna and Raipur. However, to attract investments they need to develop further, the report said.
Overall, the success of all these cities will depend upon the speed and commitment with which the local city and state governments will work to fill up the gaps identified. For instance, the local governments can support the development of these areas by extension of similar tax benefits that are given to the Software Technology Parks of India (STPIs) and the Special Economic Zones (SEZs).
Decongestion of growth at a macro level and enhancing the level of attractiveness at a location level will require each IT and BPO industry stakeholder to play a proactive role in creating the ecosystem for the sector, the report said.
These include developing the right vision for the IT and BPO sector development at a location, aggressive focus on enhancing the quantity of talent pool available at a location and addressing issues related to talent suitability, enhancing awareness of international and domestic BPO careers amongst stakeholders, and improvement and development of physical infrastructure and urban environment, it added.
The Indian IT- BPO sector has been a frontrunner of economic development in select 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, Nasscom chairman Ganesh Natarajan said.
The development of only a few select set of cities has put severe pressure on the infrastructure, costs and also increased migration of resources, said Som Mittal, president, Nasscom.
With the IT-BPO industry maturing, it has become imperative to expand the geographical spread of IT-BPO growth to enable more balanced economic development of the country, lower migration across cities and reduce the burden on the stretched infrastructure in the current hubs, he added.
While big cities will continue to be the preferred destinations for setting up IT-BPO companies, the Tier II cities will have the potential to account for at least 40 percent of the total projected IT-BPO jobs by 2018 provided there is a balanced growth, the report said.
Presently, the top seven cities account for over 85 percent of IT sector employment and over 90 percent of the BPO employment in the country, it said.
The report is expected to benefit regional governments, as they will be able to plan and develop the regions and attract investment in the future.
All the locations were analyzed on the following parameters: talent pool available, infrastructure, social environment, business enablers, government support and cost of operations.
India's $64 billion IT-BPO industry employing 2 million people, accounts for 5.4 percent of India's gross domestic product (GDP). The industry, which grew in the mid-1990s and helped the nation's economy surge to an annual growth rate of nine percent, is expected to increase its workforce to 8 million by 2018.