Beruflich Dokumente
Kultur Dokumente
Locations in India:
The Rising Tide
Emerging
Delivery
Locations in
India
Foreword
With revenues of USD 118 billion in FY2013-14 and a large multicultural and highly
aspirational workforce of over 3.1 million employees, the Indian IT-BPM industry
is cementing its leadership position in the global sourcing arena and highlighting
its increasing importance in the domestic market. The industry today is the largest
private sector employer in India and about 85 per cent of the current revenues are
generated by the six Leader Indian cities of Bengaluru, Chennai, Delhi-NCR, Hyderabad,
Mumbai and Pune. However, around 50 per cent of the employee workforce in these
cities originates in other Indian cities. In order to control rising costs in the established
destinations, hire and retain more talent (if possible, at cheaper costs) and mitigate risks
to ensure business continuity; various domestic and international firms are exploring
other locations within India and abroad.
In continuation to the previous report by NASSCOM and AT Kearney India: Location
Roadmap for IT-BPO Growth, Assessment of 50 Leading Cities published in 2008,
six years later, NASSCOM and Cushman & Wakefield have come together to present
an updated and in-depth analysis of 10 emerging IT-BPM destinations (previously
identified as Challengers in the earlier report) in India. This report Emerging Delivery
Locations in India: The Rising Tide details the factors, opportunities and risks
associated with transformation of the 10 cities, into potential IT-BPM destinations.
Factors taken into consideration include:
Demographics
Availability of talent pool
Skill set assessment
Educational infrastructure
Physical infrastructure
Social and living environment
Economic assessment
Key trends witnessed in the growth of real estate sector and their
implications for the industry
Government initiatives and subsidies
Whilst the six leading destinations have held prominent positions even during
the last six years, through this report we are highlighting the overall growth of the
IT-BPM industry in select 10 Challenger cities and how their development has opened
the doors for further growth of the industry in India. The significant merits that these
cities enjoy over other emerging cities in India have transformed them into alternate
IT-BPM locations that will help achieve a more balanced growth in this sector.
We hope that this report would prove useful to you. We welcome your suggestions and
comments at research@nasscom.in
Sanjay Dutt
R Chandrashekhar
Executive Managing Director, South Asia
President
Cushman & Wakefield
NASSCOM
Executive Summary
The Indian IT-BPM industry has grown manifold in the last 15-20 years. With revenues
of USD 118 billion in 2013-14 and employment opportunities to over three million
professionals directly, the industry has emerged as Indias premier growth engine. The
Indian IT-BPM industry has been the front-runner of economic development, providing
direct and indirect employment to a large number of people across the country,
a major chunk of which lies within six leading locations that include Bengaluru,
Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune. These cities are typically the first
choice destinations for IT-BPM organisations to start and/or expand their operations
and are ranked highest in both quality and quantity (availability) on account of
several parameters like better talent availability, physical and social infrastructure,
connectivity, conducive ecosystem and excellent business environment. Consequently,
they were identified as Leader cities in the 2008 report titled India: Location
Roadmap for IT-BPO Growth Assessment of 50 Leading Cities, prepared and
published jointly by NASSCOM and AT Kearney.
During the last five years, the industry has undergone numerous changes due to
external and domestic conditions involving economic, political and social factors
that has led to the emergence of many new delivery locations to serve the needs of
this growing industry. Increased focus on non-linear growth, the need to serve new
customer segments, verticals and geographic markets, attracting domain knowledge,
and emergence of digital technologies has led to tectonic shifts in global delivery
models. This has enabled expansion of existing Leader locations and development
of the hub and spoke delivery model, where smaller locations co-exist in tandem,
working with and complementing Leader locations. The emergence of smaller
cities offers promising growth and sustenance for the IT-BPM industry through
availability of quality infrastructure, talent pool and conducive business environment
at lower costs.
The industry is expected to generate around USD 225 billion by 2020, while employee
base is set to more than double during this period. This will require massive expansion
of infrastructure which cannot be met by the leading six IT-BPM destinations alone;
hence, alternate delivery centres in emerging locations will augment the growing
Executive Summary
Acknowledgement
Section I:
Overview of the
IT-BPM Industry
Pg. 12
Indian IT-BPM
industry
Current scenario
India advantage
Strategic Country
with over 50
Delivery Locations
Pg. 15-20
Pg. 21-24
Section II:
Location Selection
A Complex Case
Table of
Contents
Pg. 6
Emerging Business
Trends - Altering
Location
Expansion
Strategy
Pg. 25-28
Challenger
Locations
Offering Unique
Benefits
Location
Attractiveness
Parameters
Pg. 33
Pg. 35-36
Section III:
Challenger Locations Increasingly Viable Destinations
Analysis and
Comparison
with Leader
Locations
Pg. 45-57
Section IV:
Challenger Locations Driving the
Next Phase of Growth for India
Transformation
of Leaders
Challengers
Following the
Leaders
Pg. 29
Pg. 30-31
Performance
of Challenger
Locations
Pg. 37-43
City Profiles
Pg. 58-77
Conclusion
Best Practices
Pg. 79-80
Pg. 81
Appendix
Pg. 84
Bibliography
Pg. 86
Acknowledgement
The preparation of this report has been facilitated by a number of organisations and
people who have extended great help to the NASSCOM and Cushman & Wakefield
teams. We wish to sincerely thank all of them for their valuable contributions
without which this report would not have been possible.
Firstly, we would like to thank all the participating industry members, who went out
of their way to provide detailed inputs and perspectives of their firms as well as
clients/markets. They offered great support to this project by providing the requisite
data and assisting the study team with individual meetings to discuss the analysis as
well as future strategies.
We would also like to thank the central and state government departments especially
Software Technology Parks of India (STPI), education department and local municipal
corporations, educational institutions, infrastructure providers and recruitment
agencies who participated in this study, provided data as well as assisted the study
team with individual meetings to develop the studys outcome.
We also wish to thank the executives working at these firms who gave us valuable
inputs, shared their experiences, as well as offered suggestions and necessary
direction to this project.
We would like to specially acknowledge the support offered by NASSCOM research and
Cushman & Wakefield teams for their efforts and contribution towards the execution
and completion of this report.
12
13
Summary
With revenues of USD 118 billion and employment
in excess of 3.1 million, the Indian IT-BPM industry
has achieved leadership position in the global
sourcing landscape
Presence of 50 delivery locations within the country is one
of the key reasons why India is the Leader in the global
sourcing landscape
14
118
108
32
CAGR*
22%
32
69
28
2
Domestic
Exports
3
FY1998
10
22
76
86
FY2013
FY2014
47
18
FY2005
FY2009
*includes hardware
15
Geographical Trends
The USA still continues to have the largest market share at 62 per cent
The last two years have seen a rapid upturn in revenues from Europe which now
constitutes 29 per cent of the total revenues in FY2014
Industry exposure to Rest of World (RoW) and APAC is low but these segments
are growing fast
Geography Break-down (USD billion)*
86
2
USA
UK
Europe (Excl. UK)
Asia Pacific
RoW
47
1
3
6
9
7
10
15
CAGR 16%
CAGR 15%
CAGR 11%
CAGR 11%
53
CAGR 14%
28
*In the last five years
Source: NASSCOM
FY2009
FY2014E
Vertical Trends
The BFSI industry accounts for the largest revenue share of ~41 per cent
Emerging verticals like retail, healthcare, utilities, travel & transportation and
media are the new growth drivers for the industry
16
Emerging segments account for about ~25 per cent share in total IT-BPM exports
86
BFSI
CAGR 12%
22
Hi-Tech/Telecom
47
Manufacturing
Emerging
CAGR 11%
14
11
15
CAGR 14%
CAGR 13%
9
35
19
*In the last five years
Source: NASSCOM
FY2009
FY2014E
0.4
9
11
14
CAGR 10%
20
CAGR 11%
CAGR 14%
52
27
*In the last five years
Source: NASSCOM
FY2009
FY2014E
17
Key Highlights
1. IT Services
4. Software Products
18
e. Engineering analytics an
upcoming opportunity; ~3X growth
expected by the end of 2017
f. Convergence, fuel efficiencies,
localisation along with digitisation
8.1%
3.1
38%
share
25+
million
years
60-70%
>1
million
55%
share
Source: NASSCOM
19
Cost Leadership
3-4X cheaper
than the US
Maturity
16,000+ firms, 25+ years
of experience
Ecosystem Leadership
~43 Tier II/III cities
Scalability,
Security, Leadership
~78 countries, ~600 ODCs*
20
21
Aspirants
Followers
Challengers
Leaders
Benga
lu
Chenn ru
ai
DelhiNC
Hyder R
abad
Kolkat
a
Mumb
ai
Pune
Ahme
da
Bhuba bad
neswa
r
Chand
ig
Coimb arh
at
Indore ore
Jaipur
Kochi
Luckn
ow
Madur
ai
Manga
lo
Nagpu re
r
Tiruch
ira
Thiruv ppalli
ananth
apuram
Vadod
ar
Visakh a
apatna
m
Auran
ga
Bhopa bad
l
Goa
Gwalio
r
Hubli
Kanpu
r
Mysor
e
Nashik
Puduc
he
Salem rry
Surat
Vijaya
wada
Allaha
ba
Dehra d
dun
Durga
pu
Gangt r
ok
Guwah
a
Ludhia ti
na
Patna
Raipur
Ranch
i
Shimla
Siligur
i
Srinag
ar
Varana
si
Location Attractiveness
High
Challengers
Leaders
Aspirants
Followers
23
Low
Cost Attractiveness
High
The success of the largely unregulated and self-growing IT-BPM industry in the top
six Indian cities could potentially be replicated in many other Indian cities too. Whilst
these smaller cities were categorised as Challengers, Followers and Aspirants five
years ago, it has become important to see if there has been a substantial change in
their value proposition as IT-BPM destinations. Almost all state governments have
followed policies that are conducive to the growth of the industry within the emerging
cities and we have seen that some of them may be on the threshold of making
the quantum leap into a higher segment and hence, need to be recognised so that
interested organisations can act accordingly.
The current report titled Emerging Delivery Locations in India: The Rising Tide
examines the changes that have taken place in select 10 emerging cities to help
decision-makers in their medium to long-term growth strategies. Additionally, the
study enumerates the advantages and challenges these cities are facing and seeks
to find solutions which can make these locations even more conducive to the IT-BPM
industry. With increased participation from all the key industry stakeholders state
governments, industry bodies, academic institutions and public authorities, there
is a strong likelihood that India can continue to grow its share within the global
IT-BPM industry.
24
Emerging Business Trends within the Industry that have Impacted the Location
Expansion Strategy in the Last Couple of Years.
As industry is focusing more on transformational impact innovation, differentiation
and hyper-specialisation are the key catalysts
Revenues
per employee
2013
2009
100
1.2x
Employee addition
per USD billion of
revenues added
2013
62
2009
100
116
1.6x
Revenues from
SMAC (% share)
5-10%
Source: NASSCOM
25
Number of countries in
which industry has Global
Delivery Centres (GDCs)
78
':
':
26
4PVSDF/"44$0.
Talent mobility
':
':
People (millions)
Leadership in
talent
Employable pool
t )JHIFTUFNQMPZBCMFUBMFOUQPPMJOUIF
world - India produced
7,50,000-8,00,000 technical graduates
and 4-4.5 million non-technical
graduates in FY2014, out of which
6,00,000-7,00,000 are employable
Diversity of
workforce
Ph Indi
ilip a
pi
ne
Ch s
in
a
Br
az
il
4%
3%
13%
Source: NASSCOM
Educational qualifications of
IT-BPM workforce
5%
Uniformly
high talent
output
Leader
32%
45%
Engg Grads
Grads (excl. Engg.)
Post-Grads
Financial Specialists
Other Specialists
Other Grads
Talent Background
(in %)
50-52%
48-50%
Tier I cities Tier II/III cities
27
Value proposition
- beyond cost to
delivering business
outcomes
Convergence
of services/
solutions SMAC
28
Next phase of
growth projects
to platforms
9
NTG
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29
Business
ecosystem
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Talent
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Further, from the initial list of 15 cities that were identified in the Challenger
category in the 2008 NASSCOM-AT Kearney report, 10 cities (including Kolkata)
have shown measurable and noteworthy growth in their value proposition for the
IT-BPM industry and have been considered for evaluation in this report.
All the 10 cities assessed have shown improvement across multiple parameters such
as IT-BPM ecosystem, availability of talent pool and infrastructure over the period of
the last five years which has led them to undertake the journey of higher growth in
the future.
Along with Kolkata, cities like Ahmedabad, Kochi and Jaipur have emerged as viable
alternatives to Leader cities in India. The rest have shown growth in the last five years
but they still need to develop at a faster pace to build up the necessary momentum
and be considered worthy options to Leader locations.
31
Summary
Cushman & Wakefield Research and NASSCOM conducted
a survey of prominent IT-BPM players of varying sizes
(revenues and/or employee strength) to understand their
location selection criteria
Benefits/advantages offered by Challenger location are:
a) Lower operating costs, up to 25 per cent as compared
to the leading cities; these cost savings actually make
servicing new customer segments viable
b) Happier, more satisfied employees (since 50 per cent
of employees originally are from the Challenger
locations)
c) The flexibility of having business continuity/disaster
recovery centres in the same country
Areas where the Challenger locations need to improve
include a) Talent availability at mid to senior levels
b) Infrastructure c) Business support from local
authorities
While talent pool is the most important criteria for
location selection by offshore focused IT-BPM companies,
domestic market focused firms give equal importance to
both cost and talent
32
Location Selection
A Complex Case
The Challenger locations have shown gradual improvement over the years to offer a
set of distinct advantages to the IT-BPM organisations. Cushman & Wakefield Research
and NASSCOM conducted a survey of prominent IT-BPM players of varying sizes
(revenues and/or employee strength) to capture their location selection rationale.
The results of the survey, which includes key advantages, challenges and location
attractiveness parameters, are covered in this section.
Increased
breadth and
depth in
offerings
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expansion
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expansion
&OUSFQSFOFVSJBM
spirit
33
Manpower issues
Eco-system
Poor infrastructure
34
Perceptions about
quality of life
35
Rank
Location
parameters
Talent pool
Cost
competitiveness
Infrastructure
Business
environment
Government
policies
Real estate
36
Motivating
factors
Domestic
firms
Multinational
firms
Hygiene factors
Comments
Availability of requisite
talent at different levels
across various functions
and skill-sets was the most
important criteria
Supportive physical
infrastructure through
good road, rail and air
connectivity, IT bandwidth
and constant electricity
supply is perceived to be a
pre-condition
A conducive business
environment with
concentration of
interrelated businesses,
suppliers and associated
institutions gives added
competitive advantage
I. Talent Pool
The industry has significantly increased the employee headcount in Challenger
locations in the last couple of years. For the 10 Challenger IT-BPM locations
covered in our study, the employee headcount has almost doubled since 2008.
IT-BPM occupiers, both domestic and international, consider presence of ample talent
pool a crucial decisive factor in zeroing on to ideal locations. Whilst respondents in all
the 10 cities feel that the talent pool available in their cities is adequate; Bhubaneswar,
Coimbatore and Kolkata have rated the available talent pool as relatively higher. While
talent available in all cities is technically proficient, they lack soft skills that could
make them suitable for higher positions and client interaction.
Importance of talent pool for location strategy as per IT-BPM organisations
surveyed in these cities
5
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38
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sw
ar
Details
Connectivity to the leading cities through domestic
flights and trains is imperative
Connectivity
Transportation
Electricity
Internet
Connectivity
Standout Cities
Ahmedabad, Kochi,
Thiruvananthapuram and
Kolkata
Relatively lower
commuting time in
cities like Jaipur,
Indore and Ahmedabad
Healthcare
Education
Kochi, Ahmedabad,
Jaipur, Kolkata and
Chandigarh
39
Components
Details
Standout Cities
Kochi offers modern
social infrastructure
Retail and
hospitality
Kolkata, Kochi,
Chandigarh,
Jaipur, Indore,
Thiruvananthapuram
and Ahmedabad
Others
va
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40
Entrepreneurial talent and presence of SMEs along with the established players act
as catalysts for a conducive business environment, which consists of all the external
aspects with which any business connects such as clients, suppliers and competition.
The presence of several incubation centres backed by the support from government,
educational institutes and angel funds has led to a spurt in start-ups activity in
several cities and has increased the success rate too. Also, the competition stimulates
innovation and leads to the growth of newer verticals and business processes.
am
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V. Government Policies
Government support for the easy set-up of IT-BPM facilities is an important
consideration for the industry to take a root in any new location. Provisions
41
for tax-breaks, incentives and subsidies for the IT-BPM industry have been provided
by the central government, so that firms can continue to operate mainly out of the
already established Leader locations. In order to promote select Challenger locations
as IT-BPM hubs, special focus from the state government is required. Provision of
quality government office space for firms at subsidised rentals has proved to be quite
advantageous to firms in Indore, Kochi, Thiruvananthapuram and Visakhapatnam
by lowering their operating expenses. While provision of land at cheaper rates was
provided in most cities, Kochi and Thiruvananthapuram have benefited from favourable
construction norms1.
Apart from investment subsidies and concessional power tariffs, price preference
in government contracts is also granted to firms in Kochi and Thiruvananthapuram
based on certain parameters. Thus, firms find government policies quite important
as these policies can substantially increase their operational savings. The competitive
advantage of locations needs to be such, that IT-BPM firms can derive higher synergy.
The implementation of single window clearance system in select Challenger cities
and the short duration (1-2 months) to start operations with minimal paperwork
are some of the positive factors that led to these cities being considered attractive
by potential and existing occupiers. The Governments in Ahmedabad, Kochi and
Thiruvananthapuram have also provided venture capital funding in the initial stages to
homegrown firms, contributing well, in making these locations as preferred choices.
Importance of government policies and incentives for location strategy as per
IT-BPM organisations surveyed in these cities
5
4
3
2
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kh
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42
rh
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43
Summary
The performance of select Challenger cities over last
five years was evaluated across various parameters such
as business performance, talent, infrastructure, living
environment and cost differential and benchmarked
against the Leader locations
Business environment: While Leader locations continue
to grow, certain Challenger locations such as Coimbatore
and Visakhapatnam have matched them and in certain
parameters exceeded the performance of Leader locations
44
Challenger Locations:
Now Even More Viable Destinations
IT BPM locations
Chandigarh
Delhi-NCR
Jaipur
Ahmedabad
Indore
Kolkata
Bhubaneswar
Mumbai
Pune
Visakhapatnam
Hyderabad
Bengaluru
Chennai
Leader
Challenger
Coimbatore
Kochi
Thiruvananthapuram
45
Growth in
employee headcount
Visakhapatnam
4.0X
Chandigarh
2.5X
Kochi
2.7X
Tier I
Benchmark
1.8X
Coimbatore,
Visakhapatnam
and Ahmedabad
have witnessed
more than
2.5X growth in
employee
headcount
While the overall industry has witnessed growth in revenues by 1.8X in the last 5
years, Chandigarh, Kochi and Visakhapatnam have surpassed the industry average
growth with support from growing businesses in varied verticals.
46
While more firms set-up their operations in the Leader locations, some of the
Challenger locations did well on that front too. The largest increase in number of
IT-BPM registered units in the last five years was noticed in Coimbatore followed
by Visakhapatnam and Kolkata. This increase was corroborated by an increase in
employee headcount as well as revenues for these locations. The rise in employee
headcount indicates the growing scale of operations of IT-BPM organisations present
in all cities, further aided by the presence of a strong base of other industries
2.5X
1.8X
1.8X
1.8X
1.7X
1.1X
1.6X
1.6X
1.0X
30.0X
3.3X
2.4X
1.4X
1.4X
2.1X
1.8X
2.0X
2.0X
2.1X
1.3X
3.3X
2.8X
1.2X
1.4X
1.2X
1.0X
1.4X
1.4X
1.6X
2.1X
1.5X
Ahmedabad
Indore
Thiruvananthapuram
Bhubaneswar
Jaipur
Visakhapatnam
Chandigarh
Kochi
47
Attrition rate
Kolkata
1.8X
Jaipur
1.7X
Visakhapatnam
1.6X
Tier I
Benchmark
1.2X
48
Attrition rate in
Attrition rate in
Visakhapatnam and
Visakhapatnam and
Coimbatore remains
Coimbatore remains
within the range of
within the range of
4-5 per cent as
4-5% as against Tier 1
against Tier I
Benchmark of
benchmark of
22-25%
22-25 per cent
Besides hiring new talent, it has become imperative for firms to manage and retain
their existing talent in the present competitive scenario. Although the local talent
pool may suffice the requirement for entry/beginner level jobs, lateral hiring plays an
important role in hiring for mid and senior levels. Most of the Challenger cities have
recorded attrition levels below 10 per cent, which is very healthy compared to the
Leader locations witnessing attrition as high as 22-25 per cent. Hiring local talent is
one of the reasons attributed to the low attrition rate in the Challenger cities.
Number of enrollments
(growth since 2008)
1.2X
1.5X
1.4X
22-25%
In percentage
1.3X
1.1X
1.8X
1.7X
1.5X
1.3X
1.6X
1.3X
Attrition Rate
13%
8%
Tier I Benchmark
Coimbatore
Kolkata
9%
9%
5%
9%
11%
5%
Ahmedabad
Indore
Thiruvananthapuram
9%
5%
Bhubaneswar
Jaipur
Visakhapatnam
Chandigarh
Kochi
49
1. Real Estate
Real estate is one of the most important support infrastructure required for the
development of any industry including, the IT-BPM industry and is a key indicator of the
competitive advantage for any city.
Availability of quality office space for setting up and expanding operations, and the
availability of housing options for employees at competitive rentals and capital values
affect the decision-making process while choosing any location.
The Challenger cities have pulled out all stops in providing quality office space for
attracting the IT-BPM industry. Many of the respective state governments have also
notified Special Economic Zones (SEZs) and Software Technology Parks of India (STPI)
providing tax exemptions among other benefits for setting up of IT-BPM companies.
Private developers too, have joined the fray with integrated office space developments
with plug and play facilities. Whilst Leading cities have just over doubled their stock
of Grade A IT space in the last five years, few of the Challenger cities have increased
their Grade A stock of IT space by more than 10 times.
One of the added advantages of operating from the Challenger cities is the reduced
real estate cost compared to the Leader locations. Private developers are very
pro-active in provisioning of quality housing options in close proximity to all IT hubs
in each of the Challenger cities. Cashing-in on the demand generated for housing
by the IT-BPM industry and the ripple effect, the developers have initiated projects
to cater to demand from across the levels of employees. With the rise in number of
residential developments, the number of under-construction residential units have
more than doubled in most of the Challenger cities over the last five years.
50
IT Stock: Grade A
(growth since 2008)
12.5X
11.4X
11.1X
4.5X
2.2X
1.9X
2.2X
1.6X
1.6X
1.0X
1.5X
13.3X
2.4X
3.6X
2.4X
2.1X
2.4X
2.4X
1.8X
0.9X
100
2.1X
1.4X
82.7
`/sf/month
80
52.5
60
40
34.0
45.0
28.0
28.0
32.0
35.0
45.0
35.0
35.0
20
0
Tier I Benchmark
Coimbatore
Kolkata
Ahmedabad
Indore
Thiruvananthapuram
Bhubaneswar
Jaipur
Visakhapatnam
Chandigarh
Kochi
51
'Challenger' cities
have average rental
values for Grade A space
in the range of `
28-35/sf/month i.e.,
55-65 per cent lower than
Tier I cities which cost `
80-85/sf/month
Growth in stock of
Grade A IT space
Ahmedabad
11.1X
Trivandrum
2.4X
Tier I
Benchmark
2.4X
Indore
3.6X
Visakhapatnam
11.4X
Source: Cushman & Wakefield Research
Tier I
Benchmark
2.2X
Growth in no. of
under-construction
residential units
Coimbatore
12.5X
Bhubaneswar
13.3X
2. Living Environment
Tier I
Benchmark:
2.3X
Kochi
90X
Jaipur
3.7X
Kolkata
3.4X
52
Support infrastructure
(growth since 2008)
90X
3.7X
2.3X
1.7X
3.4X
2.2X
1.4X
1.0X
1.0X
1.0X
2.4X
2.3X
2.0X
1.9X
1.7X
1.5X
1.3X
1.2X
1.3X
1.2X
1.4X
1.4X
1.2X
1.7X
1.5X
1.0X
1.1X
1.1X
1.1X
1.3X
1.1X
1.2X
Ahmedabad
Indore
Trivandrum
Bhubaneswar
Jaipur
Visakhapatnam
Chandigarh
Kochi
53
The global nature of the IT-BPM industry necessitates the presence of first-class
hospitality services in the city. All the Challenger cities have recorded a significant
growth in the number of hotel keys in the last five years. While the Leader locations
benchmark is set at 1.5 times, five of the Challenger cities have witnessed higher
growth in the last five years. Prominent hotel chains have either already established
their presence in the Challenger cities or are in the process of doing so.
Many private sector hospital chains have expanded across various cities, improving
the quality and diversity of healthcare services being provided within these cities.
Some of the Challenger cities have recorded an increase in the number of hospital
beds, in the range of 10-50 per cent in the last five years.
Growth in hotel keys
Ahmedabad
2.0X
Kochi
2.3X
Source: Cushman & Wakefield Research
54
Tier I Benchmark
1.5X
Tier I Benchmark
1.4X
Chandigarh
2.4X
Bhubaneswar
1.5X
Kolkata
1.3X
Jaipur
1.7X
3 Connectivity
Good connectivity within the city and to nearby locations via road, railways and air
along with large investments to upgrade existing physical infrastructure provides
support as well as aids the emergence of new business locations. This is further
fuelled by real estate development along these transportation nodes that provide
requisite infrastructure.
To keep the competitive advantage at home, Challenger cities are constantly
upgrading their existing infrastructure and taking initiatives for developing new
infrastructure. Besides undertaking planning/construction of ring roads, many of
the Challenger cities have also progressed towards Bus Rapid Transit System (BRTS)
or Mass Rapid Transit System (MRTS), which would significantly improve intra-city
connectivity. Expanding the current capacity of domestic/international terminals, also
featured in most of the cities.
Air connectivity
3.8X
2.0X
1.3X
1.3X
1.3X
1.2X
1.1X
1.4X
1.4X
1.3X
1.9X
No. of passengers
2.6X
1.9X
1.2X
1.3X
1.1X
0.8X
1.0X
1.0X
1.1X
1.0X
No. of flights
Tier I Benchmark
Coimbatore
Kolkata
Source: Cushman & Wakefield Research
Ahmedabad
Indore
Thiruvananthapuram
Bhubaneswar
Jaipur
Visakhapatnam
Chandigarh
Kochi
0.7X
55
Kolkata
1.2X
Tier I Benchmark
1.2X
Indore
1.4X
Source: Cushman & Wakefield Research
56
Chandigarh
2.6X
Indore
2.0X
Tier I Benchmark
1.3X
Bhubaneswar
2.0X
Chandigarh
3.8X
Coimbatore
20-22%
15-20%
In percentage
15-20%
20-25%
Approx.
20%
5-10%
Ahmedabad
Indore
Thiruvananthapuram
Bhubaneswar
Jaipur
Visakhapatnam
Chandigarh
Kochi
Coimbatore
Kolkata
To further understand how each city has evolved since 2008, more detailed findings
on each parameter as well as other interesting findings are provided in the city
profiles.
57
AHMEDABAD
Active state
involvement
Quality
infrastructure
Industry Profile
Building Blocks
Lower
costs
Strong
manufacturing
industry
Employment**
t )FBEDPVOUHSPXUIJOUIFMBTUWFZFBST_9
Industry
t IPNFHSPXO*5#1.SNTMJNJUFE*OEJBOGPSFJHONVMUJOBUJPOBMTXJUIMBSHFDBQUJWF
operations
t 3FOPXOFESNTQSFTFOU5BUB$PNNVOJDBUJPOT
5$4
,FOEMF
*HBUF
$ZCBHF
.PUJG*OEJB
FUD
Talent
t "UUSJUJPOSBUFTIJHIMJUFSBDZSBUFPG XFMMBCPWFOBUJPOBMBWFSBHFPG
t *5BOETPGUXBSFEFWFMPQNFOUBSFDPOTJEFSFEBTQSFGFSSFEDBSFFSDIPJDFTCZFOHJOFFSJOHTUVEFOUT
Export
revenues**
t 451*FYQPSUTHSFXCZ9JOUIFMBTUWFZFBST
Nature of
operations
Cost Differential*
15-20%
Ahmedabad
Business Environment
Tier I cities
People Cost
t (4%1HSPXUISBUF
IJHIMFWFMTPGUSBEJOHBDUJWJUZXJUINBKPSQPSUTBU.VOESB
Economy
,BOEMBBOE)B[JSB
t 1SPNJOFOUJOEVTUSJFTBQBSUGSPNBHSJDVMUVSFJODMVEFUFYUJMFT
NBOVGBDUVSJOH
DIFNJDBMT
QIBSNBDFVUJDBMT
Other Cost
58
t &YFNQUJPOGSPNQPXFSDVUTBOEFMFDUSJDJUZEVUZGPSZFBST(*%$UPGBDJMJUBUFMBOEBDRVJTJUJPO
single window mechanism for various approvals
t 4UBNQEVUZFYFNQUJPO
OBODJBMBTTJTUBODF
TJNQMJFEMBCPVSMBXT
DBTFUPDBTFFYFNQUJPOGSPN
[POJOHSFHVMBUJPOTBWBJMBCMFGPSSNTTFUUJOHVQ*5PQFSBUJPOT
t "QQSPYJNBUFMZ
FOHJOFFSJOHTFBUTJODSFBTFEUPOFBSMZ9JOUIFMBTUWFZFBST
t 1SFTFODFPGQSPNJOFOUFEVDBUJPOJOTUJUVUJPOTMJLF**."
**5(BOEIJOBHBS
/*'5
/*%
$&15
FUD
(PWFSONFOU
incentives
Educational
ecosystem
t *OGPDJUZBU(BOEIJOBHBSEFWFMPQFEVOEFSUIF111NPEFMQSPWJEFTTQBDFGPS*5SNTBU
Real estate
affordable rentals
t (SBEF"PDFTUPDLJODSFBTFECZUJNFTJOUIFMBTUWFZFBST
t )FBMUIZVOEFSDPOTUSVDUJPOQJQFMJOFPGNTGQSPKFDUTMJLF(*'5DJUZFYQFDUFEUPQSPWJEFJNQFUVTGPSHSPXUI
t .JOJNVNUSBWFMDPTU_MPXFSDPNQBSFEUP5JFS*DJUJFT
t &YQBOTJPOPGDJUZMJNJUTUP(BOEIJOBHBSEVFUPRVBMJUZJOGSBTUSVDUVSFFYDFMMFOUBJSDPOOFDUJWJUZUP
other locations within and outside the country
t $POUSBDUTGPSSTUQIBTFPGUIF%FMIJ.VNCBJSBJMXBZGSFJHIUDPSSJEPSOFBS"INFEBCBEBXBSEFE
t $POTUSVDUJPOPGUIFNFUSPSBJMQSPKFDUFYQFDUFEUPCFHJOTPPO
Infrastructure
Engineering Colleges*
2008
18
2013
t QFSDFOUJODSFBTFJO
FOHJOFFSJOHDPMMFHFT
t *NQSPWFNFOUJO&OHMJTI
QSPDJFODZEFTJSFE
28
"*$5&BQQSPWFE
Student Enrolments
2008
o
FOHJOFFSJOH
TUVEFOUT
t /VN
C
JODSF FSPGJHI
t /VN BTFECZ UT
9
C
JODSF FSPGQBTT
BTFE
CZ FOHFST
9
2013
o
FOHJOFFSJOH
TUVEFOUT
*Residential units
under-construction
_
JODSFBTF
32
0.53
2008
34
2013
t "NQMFBWBJMBCJMJUZPG
RVBMJUZPDFTQBDFGPS*5
SNTUPTFUVQFYQBOE
PQFSBUJPOT
2008
9
SJTF
5.90
9
JODSFBTF
t #35
4
t 'JST PQFSBUJPO
UQIB
BM
FYQFD TFPGNF
U
UFEC
Z SP
t 3PC
VT
XJUIO UQPXFST
VQ
QPXF PQMBOOFE QMZ
S
UIFZ DVUTUISP
VHIP
t "N FBS
VU
POHU
IFG
QPXF
STVSQ FX
JOUIF
MV
DPVO TTUBUFT
USZ
t "WFSBHFIPVTJOHSFOUBMTQFSDFOUMPXFS
UIBO5JFS*DJUJFT
* Includes high-rise apartments in standalone buildings and
complexes by prominent developers
t /VNCFSPGIPUFMLFZTIBWFHSPXOCZ9PWFS
UIFMBTUWFZFBST_
FYJTUJOHLFZTXJUI
BQQSPY
JOQSPHSFTT
2013
t $PNQFUJUJWFPDFSFOUBMT
QFSDFOUMPXFSUIBO
5JFS*DJUJFT
t /VNCFSPGIPTQJUBMCFETJODSFBTFECZ9
PWFSUIFMBTUWFZFBST
t .BMMTQBDFIBTJODSFBTFEUPOFBSMZ9JOUIF
MBTUWFZFBST
/PUF
4UPDLEPFTOUJODMVEF#VJME5P4VJU #54
BOEDBNQVTEFWFMPQNFOUT
"WFSBHFSFOUTPG5JFS*DJUFTDPNQSJTFLFZ*5MPDBUJPOTPG#FOHBMVSV
.VNCBJBOE/$3
TVDIBT0VUFS3JOH3PBE
8IJUFFME
.BMBE
(PSFHBPO
(VSHBPOBOE/0*%"
59
INDORE
Active
industrial
base
Skilled talent
pool
Good
support
infrastructure
Industry Profile
Government
Support
Employment**
Cost Differential*
Industry
Talent
t )FBEDPVOUHSPXUIJOUIFMBTUWFZFBST_9
t *OEVTUSZJTFYQBOEJOHUIFTDBMFPGPQFSBUJPOTFWJEFOUCZNPSFUIBOUXPUJNFTHSPXUIJO
total employees
t *5#1.SNTSFNBJOTTJNJMBSJOUIFMBTUWFZFBSTNJYPG*5NBKPST
NJETJ[FESNTBOE
entrepreneurial start-ups
t .BKPSSNTQSFTFOUJODMVEF*#.
$4$
9FSPY
'JSTUTPVSDF
.QIBTJT
5FMFQFSGPSNBODF
FUD
t "UUSJUJPOSBUF-JUFSBDZSBUF XFMMBCPWFOBUJPOBMBWFSBHFPG
Export
revenues**
Nature of
operations
Tier I cities
People Cost
Indore
Other Cost
Business Environment
Approx.
20%
60
t (4%1HSPXUISBUF
QSPNJOFOUJOEVTUSJFTJODMVEFFMFDUSJDBMFMFDUSPOJDQSPEVDUT
auto and auto components, iT-BPM, food processing, manufacturing, textiles, etc.
t "DUJWFJOEVTUSJBMCBTFGVSUIFSBEETUPUIFBUUSBDUJWFOFTTXJUIDPNQBOJFTMJLF)JOEVTUBO.PUPST
Bridgestone, Larsen & Toubro, etc.
Economy
Government
t Single window clearance and facilitation mechanism; one-time reimbursement of up to
incentives
50 per cent of the cost incurred on skill gap training
t Availability of land at 25 per cent of the collector guideline rate subject to project cost .This land should
FNQMPZNJOJNVNQSPGFTTJPOBMTQFSBDSFQFSDFOUFNQMPZFETIPVMECFSFTJEFOUTPG.BEIZB1SBEFTI
t /FBSMZ
FOSPMMNFOUTJOFOHJOFFSJOHDPVSTFTJO; sufficient availability of both technical
and non-technical talent
t Significant presence of academic and technical education institutes to provide skilled and educated
talent pool for white collared jobs; only city to have both IIT and IIM
Educational
ecosystem
t 'JSTU*54&;JOUIFDJUZHPWFSONFOUPXOFE$SZTUBM*51BSLCFDBNFPQFSBUJPOBMJO
PFSJOH
quality IT spaces at affordable rentals
t 458 hectares of planned real estate development along super corridor, likely to provide a significant
boost to both IT industry and real estate growth
Real estate
t .JOJNVNUSBWFMDPTU_MPXFSDPNQBSFEUP5JFS*DJUJFT
t 8FMMDPOOFDUFECZBJS
SPBEBOESBJMUPBMMUIFNBKPSDJUJFTJO*OEJB#354PQFSBUJPOBMPOLNQJMPU
stretch of AB Road between Rajiv Gandhi Square and Niranjanpur
t 1SPQPTBMUPEFWFMPQUIFDPVOUSZTSTUMJHIU.FUSP3BJM
t .FUFS(BVHFDPOWFSTJPOPG*OEPSF6KKBJOTFDUJPOVOEFSQSPHSFTTU
Infrastructure
Engineering Colleges*
2008
35
2013
44
"*$5&BQQSPWFE
t QFSDFOUJODSFBTFJOFOHJOFFSJOH
DPMMFHFTJOMBTUWFZFBST
t 5FDIOJDBMMZTPVOEFOUSZMFWFM
UBMFOUTPGUTLJMMUSBJOJOHSFRVJSFEUP
MFBEDMJFOUJOUFSBDUJPOSPMFT
Student Enrolments
2008
o
FOHJOFFSJOH
TUVEFOUT
t /VN
C
JODSF FSPGJHI
B
U
/VN TFECZ T
C
9
BMNP FSPGQBTT
t *OE TUEPVCMF FOHFST
VTU
E
OFFE SZFOWJTB
H
G
DPOO PSJOUFSOB FUIF
FDUJW
UJPOB
JUZ
M
2013
o
FOHJOFFSJOH
TUVEFOUT
9HSPXUIPWFSUIFMBTUWFZFBST
*Residential units
under-construction
_
JODSFBTF
9
SJTF
9
SJTF
t #35
4P
t /PQ
QJMPUD QFSBUJPOB
MP
MBOOF
P
LNTP SSJEPSPG O
E
UISPV
O"#3
HIPV QPXFSDV
t
UT 1SPQP
UUIFZ
PBE
T
FBS
NFUSP FEMJHIU
SBJM
t .BKPSJUZPGSFTJEFOUJBMVOEFSDPOTUSVDUJPO
BDUJWJUZQSFWBMFOUJOFBTUFSOQBSUTPGUIFDJUZ
* Includes high-rise apartments in standalone buildings and
complexes
t )PUFMLFZTJODSFBTFECZ9PWFSUIFMBTU
WFZFBST
t -JNJUFE(SBEF"TUPDL
XJUIIJHIQSFGFSFODFGPS
CVJMUUPTVJUPDFTBOE
DBNQVTFTEVFUP
BPSEBCMFMBOEBOE
DBQJUBMWBMVFT
t .BKPSJUZPG(SBEF"TUPDL
CFDBNFPQFSBUJPOBMQPTU
BQQSPYMPXFS
SFOUBMTBTDPNQBSFEUP
5JFS*DJUJFT
/PUF
4UPDLEPFTOUJODMVEF#VJME5P4VJU #54
BOEDBNQVTEFWFMPQNFOUT
"WFSBHFSFOUTPG5JFS*DJUFTDPNQSJTFLFZ*5MPDBUJPOTPG#FOHBMVSV
.VNCBJBOE/$3
TVDIBT0VUFS3JOH3PBE
8IJUFFME
.BMBE
(PSFHBPO
(VSHBPOBOE/0*%"
t /VNCFSPGIPTQJUBMCFETJODSFBTFECZ
9PWFSUIFMBTUWFZFBST
t .BMMTQBDFTNPSFUIBOEPVCMFEJOUIFMBTUWF
ZFBSTGSPNNTG
UPNTG
XJUI
UISFFOFXNBMMTCFDPNJOHPQFSBUJPOBM
61
COIMBATORE
Availability of
technically
sound talent
Proximity to
prominent
IT hubs
Lower attrition
levels
Industry Profile
Building Blocks
Enterprising
Community
Employment
Industry
Talent
t Attrition rates: sub 5%; high literacy rate of 89%, above national average of 74%
t Stable workforce; 80-90% (local and 35-40% female)
Export
revenues**
Nature of
operations
t IT and software: 55-60% (software development, cloud computing, website development, SEO,
IT infrastructure, etc.)
t BPM: 35-40% (IT staffing, analytics, sales lead generation, customer support services, data
mining, etc.)
Cost Differential*
t (4%1HSPXUISBUF
t 1SPNJOFOUJOEVTUSJFTJODMVEF5FYUJMF
"VUPNPCJMF
+FXFMSZ
FUD
Tier I cities
People Cost
Coimbatore
Business Environment
Approx.
20-22%
Other Cost
62
t *OGPSNBUJPO$PNNVOJDBUJPO5FDIOPMPHZ *$5
1PMJDZXJUIQSPWJTJPOGPSSFMBYBUJPOJO'4*
exemption in stamp duty and registration fee, provision of single window clearance, etc.
t 5BNJM/BEV4&;QPMJDZBJNFEBUQSPWJEJOHTJOHMFXJOEPXDMFBSBODFUPBMM4&;VOJUT
FOTVSJOH
adequate power and water supply, providing legislative support, etc.
t 5FDIOJDBMUBMFOUQPPMJODSFBTFEUPOFBSMZ9NBKPSJUZPGUIFFOHJOFFSJOHDPMMFHFTBSFBMJBUFEUP
Anna university
t 5BMFOUBWBJMBCJMJUZGPSOPOUFDIOJDBMSPMFTBTXFMM_DPVSUFTZPWFSBSUTBOETDJFODFDPMMFHFT
t $PNNFSDJBMTQBDF
QSPWJEFECZ5JEFM1BSL HPWFSONFOUPXOFE
BOE$)*-4&;
accommodating over 15,000 employees
t 0DFTUPDLIBTHPOFVQCZ9UJNFT NTGDVSSFOUMZ
NBKPS*5SFBMFTUBUF
establishments came into existence in the last 3-4 years
t .JOJNVNUSBWFMDPTU_MPXFSDPNQBSFEUP5JFS*DJUJFT
t 5ISFFNBJOOBUJPOBMIJHIXBZTQBTTJOHUISPVHIUIFDJUZBOEDPOOFDUJOHJUUPDJUJFTMJLF#FOHBMVSV
Kochi, Thiruvananthapuram, etc.
t 1SPQPTFENPOPSBJMXJUIUXPDJSDVMBSSPVUFTDPOOFDUJOH/PSUIFSOBOE4PVUIFSOQBSUBOEEVBM
linear line connecting Eastern and Western part of the city
t 1SPQPTFE#VT3BQJE5SBOTJU4ZTUFNTUBSUJOHGSPN"WJOBTIJ3PBEBOEFOEJOHBU.FUUVQBMBZBN
Road streching over 18.6 kms
Economy
Government
incentives
Educational
ecosystem
Real estate
Infrastructure
Engineering Colleges*
2008
42
2013
62
t JODSFBTFJOFOHJOFFSJOH
DPMMFHFT
t 5FDIOJDBMMZHPPEUBMFOU
JNQSPWFNFOUJOTPGUTLJMMT
EFTJSFE
2007-08 2012-13
"*$5&BQQSPWFE
Student Enrollments
2008
o
FOHJOFFSJOH
TUVEFOUT
t "JSQ
B
USB TTFOHFS
DI
JODSF BT
B
9 TFECZ
2013
o
FOHJOFFSJOH
TUVEFOUT
t $SJU
JDB
XJUIB MQPXFSTJU
V
W
CFUX FSBHFQP BUJPO
F
X
QFSE FOIP FSDVU
VST
BZ
t 1SPQ
PT
#354 FELN
T
t 1SPQ
PT
DPOO FENPOPS
FDUJO
BJM
H
JNQP
SUBOUB
SFBT
*Residential units
under-construction
9
SJTF
2.0
2008 2013
9
SJTF
~8%
JODSFBTF
26
0.2
2008
28
2013
t 4UPDLIBTJODSFBTFE
NVMUJGPMEJOWFZFBST
BWBJMBCJMJUZPGSFBEZUP
NPWFJOTQBDFT
2008
t "WFSBHFIPVTJOHSFOUBMTBSFQFSDFOUMPXFS
UIBO5JFS*MPDBUJPOT
* Includes high-rise apartments in standalone buildings and
complexes
t /VNCFSPGIPUFMLFZTIBWFJODSFBTFECZ9
PWFSUIFMBTUWFZFBSTVQDPNJOHLFZT
2013
t $PNQFUJUJWFPDFSFOUBMT
OFBSMZQFSDFOU
MPXFSUIBO5JFS*MPDBUJPOT
t /VNCFSPGIPTQJUBMCFETIBWFJODSFBTFEUP
9PWFSUIFMBTUWFZFBST
t 8JUIOPNBMMJO
UIFDJUZIBTTFFOBO
JOVYPGBSPVOENTGPG(SBEF"NBMM
TQBDFJOUIFMBTUWFZFBST
/PUF
4UPDLEPFTOUJODMVEF#VJME5P4VJU #54
BOEDBNQVTEFWFMPQNFOUT
"WFSBHFSFOUTPG5JFS*DJUFTDPNQSJTFLFZ*5MPDBUJPOTPG#FOHBMVSV
.VNCBJBOE/$3
TVDIBT0VUFS3JOH3PBE
8IJUFFME
.BMBE
(PSFHBPO
(VSHBPOBOE/0*%"
63
VISAKHAPATNAM
Proximity of
distances
Growth of
industry in the
last five years
Industry Profile
Employment**
Dominance
of domestic
firms
Industry
Talent
Export
revenues**
Nature of
operations
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64
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BHUBANESWAR
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People Cost
Bhubaneswwar
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66
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KOLKATA
Skilled talent
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infrastructure
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Industry Profile
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Kolkata
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CHANDIGARH
High quality
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business
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Scalability
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Tier I cities
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Chandigarh
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70
Tier I cites represent Bengaluru, Mumbai and Delhi-NCR
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JAIPUR
Tourist
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processes
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operations
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Tier I cities
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Jaipur
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72
Tier I cites represent Bengaluru, Mumbai and Delhi-NCR
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73
t .BMMTQBDFJODSFBTFECZOFBSMZ9JOUIFMBTU
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KOCHI
Quality
manpower
Enabling IT
infrastructure
Favourable
business
environment
Industry Profile
State
government
focus & support
Employment**
Industry
t )FBEDPVOUJODSFBTFJOUIFMBTUWFZFBST9
Talent
t Attrition rates in ~10% range; high literacy rate of 96%, above national average of 74%
t Stable workforce ; 25-30% of work force is female
Export
Revenues**
t *OUIFMBTUWFZFBST HSPXUIJOUPUBMFYQPSUSFWFOVFT_9
Nature of
operations
Cost Differential*
Business Environment
Approx.
25%
Tier I cities
People Cost
Kochi
Other Cost
74
Tier I cites represent Bengaluru, Mumbai and Delhi-NCR
*Based on surveys
**Based on STPI registered units
Conversion Rate: 1 USD = ` 40.2 (2007-08); 1 USD = ` 54.2 (2012-13)
^Other cost includes real estate, electricity charges, travel, maintenance
and other utilities
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products like spices, bananas, coconut, etc.
t Equity and margin money assistance to MSMEs
t Concessional power tariffs, 30% standard investment subsidy, Stamp Duty and Registration Fee
exemption
t Over 30,000 fresh enrolments in 2013 across courses in higher education
t Talent availability for both technical and non-technical talent
t Commercial space, primarily provided by Infopark (government owned) at affordable rentals
t 0DFTUPDLIBTNPSFUIBOEPVCMFEJOMBTUWFZFBSTBDDPNNPEBUJOHPWFS
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upcoming IT township Smart City: 8.8 msf
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t 1SFTFODFPGMBOEJOHTUBUJPOGPSTVCNBSJOFDPNNVOJDBUJPODBCMFTFOTVSFTIJHITQFFEJOUFSOFU
connectivity
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(PWFSONFOU
incentives
Educational
ecosystem
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Infrastructure
Excellent domestic & international connectivity and good quality infrastructure adds to its attractiveness
Engineering Colleges*
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13
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Number of flights#
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desired
2007-08 2012-13
Student Enrolments
2008
5,300 5,400
engineering
students
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75
THIRUVANANTHAPURAM
One of the premier IT park in the country, Technopark
offers affordable office and incubation space and aids in
strong brand association for the IT-BPM firms
Building Blocks
Strong research
ecosystem and
high literacy
rate
Industry Profile
Talent
availability for
both specialized
and generic
roles
Employment**
Government
focus
Continuity in
operations even in
times of strikes
Industry
Talent
t )FBEDPVOUHSPXUIJOUIFMBTUWFZFBST9
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5$4
64
Technologies, IBS Software, Nest Technologies
t Attrition: 8-10% range; high literacy rate: 93%, above the national average of 74%
t Stable workforce: nearly 30% women employees
Export
revenues**
t *OUIFMBTUWFZFBST HSPXUIJOUPUBMFYQPSUSFWFOVFT_9
Nature of
operations
Cost Differential*
t (4%1HSPXUISBUF
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Business Environment
20-25%
Tier I cities
People Cost
Trivandrum
Other Cost
76
Tier I cites represent Bengaluru, Mumbai and Delhi-NCR
*Based on surveys
**Based on STPI registered units
Conversion Rate: 1 USD = ` 40.2 (2007-08); 1 USD = ` 54.2 (2012-13)
^Other cost includes real estate, electricity charges, travel, maintenance
and other utilities
Economy
Government
incentives
t Presence of prominent institutions like Vikram Sarabhai Space Centre, Indian Institute of Space
Science and Technology and Indian Institute of Science, Education and Research, CDAC
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in the city
Engineering Colleges*
2008
15
2013
15
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2008
6,800 7,200
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students
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8,800 9,200
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2008 2013
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77
Conclusion
Whilst the established hubs continue to witness growth
across all parameters, the select 10 Challenger cities have
also experienced growth of IT-BPM business
Improvements made in the infrastructure (physical
and social), talent pool (quantity and quality), and the
creation of a supportive business environment are the key
considerations
Based on overall performance across the parameters
Ahmedabad, Jaipur, Kochi and Kolkata emerge as first
choice alternatives to Leader locations
Several best practices can be replicated to accelerate the
pace of development and visibility to these alternate
destinations
78
Challenger Locations
Can Drive the Next Phase of Growth for India
The last decade has witnessed the Indian IT-BPM industry prove its prowess to garner
the majority of the global IT outsourcing business. This has helped to put Indian cities
such as Bengaluru, Chennai, Delhi-NCR, Hyderabad, Mumbai and Pune on the global
map as the top IT-BPM hubs, where it is imperative for global IT-BPM companies to
have a presence.
However, with the emergence of competition from other regional destinations in
China, Malaysia, Indonesia, Thailand, Vietnam and the Philippines, the challenge
now lies in keeping the advantage at home. Whilst the established hubs continue to
witness growth across all parameters, we have seen that the 10 Challenger cities
have also experienced growth of IT-BPM business. This has happened largely because
of improvements made in the infrastructure (physical and social) and talent pool
(quantity and quality), and the creation of a supportive business environment that
help these cities to emerge as alternate delivery locations.
All the Challenger cities studied have shown improvement in their overall
attractiveness. However, they are still behind the Leader locations, as they have still
not attained the critical mass to be considered destinations of first choice by the
established companies. Based on overall performance during the last five years across
all the parameters analyzed, Ahmedabad, Jaipur, Kochi and Kolkata seem the best
suited currently to be considered as great alternatives to Leader locations in India.
IT BPM Location Classification
Ahmedabad
Chennai
Bhubaneswar
Bengaluru
Jaipur
Hyderabad
Kochi
Leaders
Fro
nt
-ru
nn
er
Delhi NCR
Coimbatore
Se
co
n
dc
ho
ice
Trivandrum
Challengers
Kolkata
Visakhapatnam
Mumbai
Pune
Promising
Chandigarh
Indore
79
Coimbatore and Visakhapatnam have shown the highest growth and improvement on
various parameters since 2008, yet their base was very small in 2008 and hence, they
still have some distance to make up in their endeavor to become established IT-BPM
hubs. Bhubaneswar is emerging as a strong destination in eastern India, which has
sorely lacked the development of an established IT hub. Indore has been building up
the scale of IT-BPM operations focusing specifically on the domestic IT-BPM market.
Overall, for all of these cities to move to the next level in the next five years, their
respective State Governments need to ensure that maximum attention is given for
their growth through further development of infrastructure, educational facilities and
curriculum that help develop the IT-BPM industry on an accelerated path. To position
themselves as specific services hubs, based on talent background and existing support
business, these cities will also need to pick up service/vertical areas in which they can
promote themselves as specialists. Each city needs to ensure that they encourage local
start-ups by providing fertile environment whilst also rolling out the red carpet to
invite large, established domestic and MNC businesses. Unfortunately, most have been
more caught up in trying to woo only large IT companies without realizing that startups today offer huge growth potential, thriving in an environment that is supported by
local businesses, competition and cross breeding of ideas, talent and technology.
80
To Attract Investments
Consistency in approach;
introduction of Dividend Distribution Tax and Minimum Alternative
Tax on SEZs mid-way has deterred
fresh investments
81
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team of over 2,000 employees, operating across New Delhi, Gurgaon, Mumbai,
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For more information about Cushman & Wakefield, contact:
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sanjay.dutt@ap.cushwake.com
82
Sitara Achreja
Director, Marketing & Communication
+91 (124) 469 5555
sitara.achreja@ap.cushwake.com
Divya Grover
Deputy Manager, Research
divya.grover@ap.cushwake.com
Reuben Jacob
Senior Associate, Research
reuben.jacob@ap.cushwake.com
Divya Bajaj
Associate, Research
divya.bajaj@ap.cushwake.com
Kamal Kumar Agarwal
Associate, Research
kamal.agarwal@ap.cushwake.com
Vineet Sharma
Associate, Research
Vineet.S@ap.cushwake.com
Sarbani Chatterjee
Manager, Research
sarbani.chatterjee@ap.cushwake.com
83
84
Growth comparisons: The Leader locations have already trodden the steep growth
trajectory and established a substantial base with respect to various parameters
analysed in the report. Therefore, the rate of growth in Leader locations is
not as high as Challenger cities that have outperformed the Leader locations
primarily due to the Low Base Effect
GSDP: Gross State Domestic Product is a measure of economic output of any particular
state
IT services: IT services involve a full range of engagement types that includes
consulting, systems integration, IT outsourcing/managed services/hosting services,
training, and support/maintenance
IT stock: It doesnt include Build To Suit (BTS) and campus developments
Malls: Shopping centre/mall is a large retail complex comprising commercial rental
units/stores that are inter-connected with walkways. These developments have
common areas and typically provide onsite parking
MNC: Multinational Corporation is a firm which has registered subsidiaries operating
in more than one country
Micro Small and Medium Enterprises (MSME): For service sector micro enterprises
are the one which have investment in equipments of up to ` 10 lakhs, small having
investment of more than ` 10 lakhs and up to ` 2 crore and medium having
investment of more than ` 2 crore and up to ` 5 crore
Passenger traffic: Number of air travellers from a particular city annually
SMAC: Social Media, Mobility, Analytics and Cloud
Total number of hotel keys: Includes total number of hotel keys in budget, mid-scale,
up-scale and luxury segment
85
86
87
Copyright 2014
Published by
NASSCOM, New Delhi
88
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