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Karnataka’s other cities market themselves as viable
alternatives even as escalating costs send firms out of the
city.
Bangalore: When Quality Engineering and Software
technologies Inc. (QuEST), an engineering software services
company that supports customers including Airbus (for the
A380 project), and Boeing (for the 787 Dreamliner project)
in the design of airframe and engines, decided to set up a
software special economic zone (software SEZ), it decided to
go back to its roots, to Belgaum.
QuEST had been founded in 1997 in Hubli, some 420km
northwest of India’s software and offshoring hub Bangalore.
Belgaum is about 94km away from Hubli. Yet, it wasn’t
history that influenced QuEST’s move.
The company now works largely out of offices in Bangalore
and, according to Vijay Menon, vice-president, marketing,
costs are one reason why its SEZ is coming up in Belgaum.
The zone, he added, would be spread across 250 acres and the
first phase would be completed by 2008.
Even as costs soar and Bangalore becomes expensive and grid
locked—some companies are moving to cities such as
Hyderabad, Chennai, even Kolkata.
But Karnataka’s tier II cities are also sensing an
opportunity and marketing themselves as cost-effective
alternatives to their larger cousin. In 2006-07, Karnataka
accounted for one-third of the country’s software and
back-office services exports of Rs51,700 crore, according to
Software Technologies Park, Bangalore, and Karnataka state
information technology department.
Of this, Bangalore alone accounted for
Rs50,050 crore.
Karnataka’s tier II cities exported software and services
worth Rs1,650 crore in the same period according to the
state IT department, a growth of 50% over the previous year
compared with a 28% growth for Bangalore.
That number, while low, isn’t insignificant. Software and
back-office services exports from all of Gujarat in 2006-07
totalled Rs550 crore; Orissa Rs732 crore; and Kerala Rs800
crore, according to the IT departments of the respective
states.
Indeed, leaders such as Infosys Technologies Ltd and Wipro
Ltd have started ramping up their presence in cities such as
Hubli, Dharwad, Mangalore, Manipal, and Mysore.
Smith Dornan Dehn, a Manhattan-based international media and
intellectual property firm, which has clients mainly in New
York, Los Angeles and London, recently opened a knowledge
processing outsourcing centre in Mysore. “It is good to set
up our operations in Mysore. Cost of living is much lower
here and rentals (too) are lower. Commuting takes much
lesser time (in Mysore compared with larger cities),” said
Sanjay Bhatia, head of the firm’s operations in India.
Other reasons why companies seem to prefer Karnataka’s tier
II cities in addition to operating costs, include quality of
life issues for employees and lower attrition levels.
“If we look at attrition, it is as high as 40% to 45% in
Bangalore-based business process outsourcing units.
In smaller cities, it is about 5% as most of the employees
live with their families and expenses are lower, compared
with Bangalore,” said M.N. Vidyashankar, IT secretary of
Karnataka.
“Several of the tier II cities have excellent manpower and
companies can tap them. Our aim is to spread growth across
the state and we will help companies with whatever
infrastructure is required to do the same.”
The government-owned Software Technology Parks of India (STPI)
is also planning incubation centres in Mysore and Gulbarga.
The STPI already has such centres in Bangalore, Mangalore
and Hubli.
Source:
http://www.livemint.com/2007/11/12232508/As-Bangalore-chokes-tier-II-c.html |
