For long, Bengaluru was the technology capital and Chennai the technology services capital of India. With large companies such as Texas Instruments, Motorola, Intel, Cisco and SAP establishing in-house technology centres in Bengaluru, the city grew into a heterogenous technology hub for products, services, embedded systems, e-commerce, BPO and tech-focused start-ups.
Chennai, on the other hand, had a homogenous technology ecosystem of mostly IT services and BPO companies leveraging the city’s domain and technology talent. A long and thriving financial services, manufacturing, healthcare and retail heritage helped Chennai steal a march on the other IT hubs in attracting the top 10 IT services companies. The IT services and BPO sectors were at the forefront of adding talent, thanks to some of the best engineering and science colleges in the State. Chennai thus scaled quickly to emerge among India’s top three IT services destinations.
Yet, while Bengaluru could boast of many home-grown companies such as Infosys, Wipro, MPhasis and Mindtree with annual revenues of $1 billion to $14 billion, Chennai only has a handful of names such as Intellect Design Arena, Zoho and Freshworks with annual revenues of under $800 million.
Even so, Chennai has had a roaring success with companies founded outside Tamil Nadu and India. Although headquartered elsewhere, TCS and HCL Technologies have their largest software development base in Chennai. Multinationals such as Cognizant and Sutherland, too, have had a great growth run in Chennai.
However, this early mover advantage for Chennai did not quite extend through subsequent waves of growth driven by in-house technology centres of global enterprises, digital natives such as Facebook, Amazon, Google and Salesforce, and new-age tech start-ups.
Two decades ago, Chennai was the first port of call for names such as Citigroup, Bank of America, American Express and Standard Chartered Bank looking to set up in-house centres. While Chennai did attract other marquee names from across sectors such as financial services (The World Bank, BNY Mellon, PayPal, Barclays, BNP Paribas), manufacturing (Ford and Caterpillar), telecom (Verizon) and energy (Shell), it is far from realising its full potential.
What is the ‘tech’tonic shift needed for Tamil Nadu to reclaim that momentum? Here’s what the State can do to accelerate high-value growth along with social inclusion.
First, the State should attract companies investing big in digital technologies such as cloud, data and analytics, artificial intelligence and IoT, as well as deep technologies such as quantum computing, photonics and advanced material science. These technologies are enabling FinTech, ManuTech, HealthTech and SaaS companies to make a significant impact on businesses, government, society and environment.
Second, the State should draw global capability centres (GCCs) of multinational companies. Today, India has over 1,400 GCCs employing more than a million people. Despite being home to the GCCs of large players such as Wal-Mart, Astra Zeneca, Fidelity, TransUnion, Wells Fargo, Shell and BNP Paribas, Tamil Nadu enjoys only a single-digit share of the overall opportunity.
Third, the State, among India’s most urbanised, should incentivise expansion across its large number of tier-2 cities. The COVID-19 pandemic has mainstreamed work-from-anywhere models, turning the spotlight on tier-2 and tier-3 cities. Some of the largest IT services players such as Accenture, Tech Mahindra, Mindtree and L&T Infotech have entered Coimbatore in the last few months alone, joining companies such as HCL, Omega Healthcare and Zoho, who have a presence in Madurai, Tiruchi and Tenkasi as well.
Fourth, the State should galvanise the start-up and innovation ecosystem. With private equity, venture capital and angel investors looking to invest in tech-focused new-age companies, Tamil Nadu has a golden opportunity to extend its head start in SaaS (Zoho, Freshworks and Chargebee) and FinTech (CredAvenue, Credit Mantri, and KaleidoFin) to ManuTech, HealthTech and deep tech.
Finally, the State should market itself better both within India and globally. Humility may well be a virtue, but marketing is not a vice!
(The author is former CMD of Cognizant, India, and partner at tech advisory firm Catalincs)
