Special Correspondent

Chennai is a leader location, and in terms of costs, Coimbatore, Tiruchi and Madurai are challenger cities, says a study

CHENNAI: Chennai, Coimbatore, Madurai, Tiruchi and Salem are among 50 cities in the country that have been described by A.T. Kearney as attractive locations for information technology and business process outsourcing firms, Nasscom president Som Mittal said on Thursday.

Releasing the study on ‘Location roadmap for IT-BPO growth: assessment of 50 leading cities’ at the fifth annual HR Summit 2008, he said Chennai was a leader location for these firms, and in terms of costs, Coimbatore, Tiruchi and Madurai were challenger locations, and Salem was a follower. Tamil Nadu was the only State to have the maximum number of cities.

A.T. Kearney has grouped cities into leaders, challengers, followers and aspirants. Chennai has been ranked with Bangalore, Hyderabad, Kolkata, Mumbai, the National Capital Region and Pune. Tirunelveli and Hosur have been left out, as the study dealt only with 50 leading cities.

According to Mr. Mittal, Coimbatore had the potential to become an IT-BPO hub with further investments in infrastructure, while Madurai’s attractiveness could be improved by enhancing the quality of the talent pool, increasing the quality of infrastructure and creating a supportive business environment. Tiruchi could be an attractive destination for sourcing talent for small and mid-sized IT/BPO firms, while significant efforts were needed to improve the attractiveness of Salem.

Though Chennai ranked among the top three investment destination, it faced challenges in the form of high attrition, the war for talent, pressure on infrastructure and high real estate costs. However, it had good infrastructure and good connectivity compared to other Tier-II cities, Mr. Mittal said.

Later talking to journalists, Mr. Mittal, along with former Nasscom president and Cognizant vice-chairman Lakshmi Narayanan, said the study was conducted by collecting and analysing data based on the availability of knowledge pool and skill sets, infrastructure, social and living environment, enabling business environment, government support and operating cost.

“Currently, the total direct employment in the IT-BPO sector is about 2 million, of which 85 per cent is bagged by seven leading cities. In the next 10 years, it will grow to 8 million. If we don’t make changes in the current metrics, the load will go on to the seven leading cities that will grow by 10 times. This will pose a significant challenge to the physical and social infrastructure,” Mr. Mittal said.

Mr. Lakshmi Narayanan attributed the growth in the sector in and beyond Chennai to the proactive steps taken by the State government. To move to the next level, these locations would have to create the required pull to attract talent, strengthen infrastructure, improve the quality of life and increase inclusiveness to accommodate the demographic diversity that growth would accompany.

More than 600 delegates and 40 speakers representing over 350 IT, BPO and other firms participated in the two-day event. The delegates discussed how the workforce in the industry could be managed during the period of maturity, consolidation and change, and how HR functions could play the role of a catalyst for change.