Nasscom-Kearney study on IT-BPO industry identifies small cities with big potential

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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.

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