Kolkata to be a outsourcing hub
Bangalore and Pune, the popular outsourcing destinations are showing signs of getting choked. It is not just the traffic, but there are water shortages, climbing real estate prices and so much congestion and pollution that quality of life suffers. These cities are growing way too fast for the infrastructure to keep up. We in India might be used to overcrowding, vendors on pavements and traffic jams, and may even believe it will not hinder growth, but those who come from other countries find it difficult to believe that India is a good place to live in. Many foreigners leave, unable to take the hard life.
Take the example of Bill Wood, vice-president of engineering at Ping Identity, a manufacturer at an Internet Software firm:
“…Frustrated, Wood began searching for a partner outside India. He scoured 15 companies in 8 different countries, including Russia, Mexico, Argentina, and Vietnam…that path is being trod by a lot of executives, eager for new sources of low-cost, high-tech talent outside India. Many are fed up with the outsourcing hub of Bangalore, where salaries for info tech staff are growing at 12% to 14% a year, turnover is increasing, and an influx of workers is straining city resources.”
In fact a study by Tholons, (a services globalisation advisory and investment firm) warns:
India will lead in the IT/BPO space, but it faces challenges such as overheating of the offshore outsourcing market due to attrition, escalating wages, talent scarcity and rising real estate prices, which are leading entrepreneurs to explore other options including China, the Philippines, Russia and other tier II cities in India.
While Tholons admits that India has advantages over China like good English speakers, better communication skills, more maturity in service delivery, better cultural compatibility and more confidence from buyers in the US and Europe, it does not mince its words when it talks of India’s problems. As this article points out:
Existing outsourcing destinations need to watch out…many more countries and cities are expected to become centres of outsourcing in 2007…
Interestingly, Kolkata is one of these cities. Right now the top Indian outsourcing cities are Bangalore, Hyderabad, Mumbai, Chennai, Pune, and Delhi, but the talent pool in Kolkata has not been exploited fully up till now. As this article explains:
The capital of the state of West Bengal, is gradually attracting investment with its intellectual talent and low costs. Currently the revenue generated by the West Bengal IT industry is miniscule, accounting for 2.2% of India’s total, whereas Karnataka accounts for a third of the total…the communist government in the state, is playing an important role in Kolkota’s transformation. By offering generous incentives to investors like low electricity tariffs and declaring IT as an essential industry, the government is increasing Kolkata’s value. Infrastructure is improving rapidly and a state that was known for its poor power supply until the 1980s is today one of the few power surplus states in the country.”
The other cities that are expected to see growth are Nagpur, Lucknow, Allahabad, Varanasi, as well as cities in Kerala, Punjab, Tamil Nadu, Karnataka, and the North East…well just about every place in India that has English speakers!
This is not to say that Bangalore and Pune are going to decline. Not at all. Its just that the business coming into India is coming in droves and as much as Bangalore and Pune might want it all, as of now they can’t cope. Infrastructure in Karnataka has a long way to go and as for Pune, the city does not even have have an efficient mass transport system.
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