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The Top Ten Cities for Outsourcing in India

India has 35 major cities. Not all of them are good offshore outsourcing hubs.

In the recent past, several studies have been carried out to identify the best or most attractive cities in India. Gartner Inc, National Association of Software and Service Companies (NASSCOM) and KPMG, neoIT, Mercer, A T Kearney, Merrill Lynch and several others have carried out city studies for a wide range of objectives.

Important parameters that were considered when developing the rankings in these studies include:

  • Availability of Infrastructure (Power, Transport, Telecommunication, Housing)
  • Cost of Living
  • Real Estate Costs
  • Availability of Skilled Manpower
  • Attrition Rates
  • Quality of Living
  • Political Climate
  • Educational Institutions

Urban infrastructure in India is not the best in the world. Indian cities are facing overpopulation, indiscriminate growth and shortage of urban services like public transportation, water supply and sanitation. It is important to point out that the 2006 World-wide Quality of Living Survey by Mercer for 350 global cities has the top Indian cities Mumbai and Delhi ranked at 150th place. Not impressive at all. On the networking front, India ranks 40th out of 115 countries with the network readiness index of 0.23.

Despite the constrains imposed by the infrastructure or lack thereof, availability of skilled manpower and the low cost advantage continues to drive investment into urban India.

An analysis of city rankings by different surveys and study of recent outsourcing trends reveals that the top 10 outsourcing destinations in India are:

1. Chennai was the poor cousin of Bangalore and Hyderabad during the initial years of the IT boom in India. Today it is the lead outsourcing destination due to the low cost advantage, improving infrastructure, international connectivity, availability of land, skilled manpower and lower attrition rates compared to Bangalore and Hyderabad.

2. Hyderabad continues to woo investors by focusing on improving its urban infrastructure. The Governments, both past and present, have been very clear in their focus and support to the IT industry. The city has been among the most favored destinations due to the infrastructural improvements and the planned growth phased in by the governments in the twin cities.

3. Bangalore is the technology hub of India. It is increasingly becoming a global melting pot of cultures. The original garden and pub city of India has a comfortable climate compared to the other Indian cities that are happening in terms of outsourcing. However, the city’s infrastructure is inadequate to meet the demands of the exploding population. There is a growing feeling that other cities will overtake Bangalore if it continues to suffer due to political bickering, skyrocketing real estate prices and poor urban planning. According to a recent survey, it still ranks as the top city for living, earning and investing.

4. National Capital Region (NCR) includes Delhi and its surrounding suburbs. Delhi is expensive and not as popular for outsourcing. It is the suburbs, Gurgaon and Noida that have become important outsourcing destinations due to their proximity to the capital. They continue to be a major draw due to improving transport connectivity with Delhi, good international linkage and availability of skilled manpower.

5. Pune is Maharastra’s response to Bangalore. Its proximity to India’s financial capital, Mumbai and availability of trained manpower has led to the development of a thriving hi-tech outsourcing industry in this erstwhile retirement and education haven. Apart from other infrastructure components, the city is focusing on township projects to improve housing facilities.

6. Chandigarh and Mohali are twin cities. Chandigarh is one of the few planned and good cities of India. Mohali is its twin. Together, they have the space as well as the intellectual and financial capability to become India’s best outsourcing destinations. It does not yet have an international airport, but is well connected to New Delhi by road and rail.

7. Kolkata, the capital city of the state of West Bengal is high in intellect and has an advantage in terms of low costs. However, the city is famous for its traffic snarls and trade union shut downs. The current state government under chief minister Buddhadeb Bhattacharjee is making the right noises to encourage investors. Early indications are that it may actually emerge as a good outsourcing destination.

8. Mysore is one of India’s smaller cities, which have joined the outsourcing bandwagon. Its proximity to Bangalore and presence of companies like Infosys and Wipro has helped the cause. It is emerging as a preferred choice over Bangalore as India’s silicon city is now congested, expensive and has higher than average attrition rates.

9. Thiruvananthapuram in Kerala is well known for some of the leading science & technology research organizations in India. The city has the infrastructure and skilled workforce to attract IT investments. It is early days yet and remains to be seen whether Thiruvananthapuram can woo investors away from Bangalore, Hyderabad and Chennai.

10. Coimbatore is the emerging engineering outsourcing hub located in the state of Tamil Nadu. The government of Tamil Nadu is keen on developing Coimbatore as a major IT destination in the state. Coimbatore’s strength is its rich engineering tradition and young graduating engineers to meet the manpower demands of the growing industry.

January 7, 2009 Posted by | Business, General, India Related, IT, World News | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | 1 Comment