As per the latest report by Cushman & Wakefield and NASSCOM 'Emerging delivery locations in india: the rising tide', 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. The 'leader' locations, however have also seen, a shift towards expansion into peripheral locations as emerging alternate delivery locations.
The report includes a survey and study that evaluates the top 10 challenger cities that show the potential to attract IT-BPM companies to set-up and expand their operations in the medium term. The front runner cities are followed by Bhubaneswar, Coimbatore, Trivandrum and Visakhapatnam as the second choices while Chandigarh and Indore as promising locations.
Over the last couple of years, the transformations in delivery models have altered location strategy of IT-BPM organizations. 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.
Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield said, ''India's Tier II markets are at an interesting cusp of growth. While many of these locations have been in the frame as next destinations for a very long time, it is only now that realistic signs of their emergence are visible. While the existing delivery locations will strengthen their proposition and new one's may emerge that offer specialized services and greater value addition in times to come. However, these locations have to be backed by strong state government and local government policies order to grow as IT-BPM destinations.''
All the front runner cities have exhibited notable improvements in various parameters that have helped them to be among the top performers. 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 to name a few.
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% 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.
Talking about the growing upcoming IT-BPM destinations in India, R. Chandrasekaran, president, NASSCOM said, ''The BPM industry has always been known for its versatile nature, and we have been able to stay ahead of the curve because we were not a stationary target. From providing unique domain expertise and venturing into new geographies, the industry has also acquired capabilities across domains. Now, 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 2 & 3 towns. Hence, it is the need of the hour that we build a robust ecosystem in these towns to help organizations in their functioning. 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.''
The largest increase in the number of IT-BPM registered units in the last five years was noticed in Coimbatore followed by Visakhapatnam and Jaipur.
The highest overall cost differential was recorded at Kochi at approximately 25% compared to Tier I benchmarks. Kochi has the highest differential in terms of people cost at nearly 22% while Indore clocked the highest differential under the other costs at 40%.
The employee headcount more than doubled in 7 out of the 10 cities in the last five years. The highest increase was witnessed in Coimbatore followed by Visakhapatnam and Ahmedabad. With more than 1.3 lakh employees, Ahmedabad also had one of the highest employee headcount, preceded only by Kolkata clocking nearly 1.7 lakh employees.
Most of the emerging cities have recorded attrition levels below 10%, which is less than half of the levels of 22-25% reported in tier I cities.
The number of student enrollments has increased in most (nine) emerging cities, surpassing the Tier I benchmark of 23% growth over last five years. Kolkata, Jaipur and Visakhapatnam noted the highest increase in last five years.
While Kolkata recorded the highest export revenue at nearly USD 1.8 billion, Visakhapatnam recorded the highest growth in export revenues in the last five years followed by Kochi and Chandigarh. Other cities too exhibited healthy growth in export revenues in the range of 60-80% in the last five years.
