Top 50 Emerging Global Outsourcing Cities - Tholons

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Special ReportThe gateway to the global sourcing of IT and BPO servicesQ&AMukesh Aghi, Chairman and CEO, Steria (India)“Awesomecosmopolitan city”How do you perceive Bangalore as anoutsourcing destination?Even when outsourcing hadn’t taken offin India, Bangalore was known for itsexcellence in education and infrastructure.Moreover, the city has an added advantageof defense support. The presence ofinstitutions like IIS (Indian Institute ofScience) and DRDO ( Defence Research andDevelopment Organization) adds value tothe talent pool in the city.What are the other factors that signifythe city as a “talent and IT hub”?The cosmopolitan culture in Bangalore isincredible. It’s an awesome cosmopolitancity. The youth is attracted to the citybecause of its lively pub culture andamazing weather, any time of the year. Ibelieve that the people in the city are moreadaptable as compared to big cities likeDelhi. It would be unfair not to mention thesafety of women in Bangalore. The femaleworkforce is more than willing to do nightshifts in a city like Bangalore because of thelow crime rate. Thus, highly efficient laboris easily available and enthusiastic to work.However, the city needs to keep pacewith the increasing crowd by handling itsinfrastructure carefully. Otherwise, it isanticipated that there will be a trend toinvest in smaller Indian cities instead. GS— By Diksha DuttaBangalore, IndiaBangalore needs no introduction in the global outsourcing community. Thecity continues to be in the top slot of the Top 8 Global Outsourcing Citieslist for the fourth consecutive year. Despite changed economic and outsourcingdynamics, the city continues to be as charming as ever.Amidst the after effects of Satyam scam, low and stagnant pay packages ofIT professionals, and the not-so-improving infrastructure problem, Bangalorestill survives as the Silicon Valley of India. Big three service providers—Infosys,TCS and Wipro—in the city continue to attract major chunk of global buyers.The city came into focus way back in 1991 as an IT hub with the support ofSoftware Technology Parks of India and soon developed its BPO capabilitiesas well. Bangalore has grown from low-end ITO and BPO such as coding anddata-entry processes to now doing high-end ITO and BPO such as embeddedsystems and voice-based technical support respectively.Many global firms have also set up their outsourcing capabilities in the city.For example, Simbiosys Bio, the U.S.-based biotechnology firm, opened a centerin Bangalore in 2006. HP’s subsidiary Global E-business Operations in thecity provides finance accounting solutions with a focus on HR, supply chainand business analytics. Blue Vector is a radio frequency identification technologymanagement appliances provider with an engineering and design centerin Bangalore. Visionet has a mortgage-processing center in the city catering totop banks in the U.S.However, the attrition rate in the city is a concern. The ball park numberfor ITO companies in Bangalore is around 15 to 30 percent. BPO has a higherrange due to the large spectrum of services, around 40 to 80 percent.The city is the technical hub for semiconductors due to the presence ofa large number of semiconductor companies, design and engineering firms,research facilities, and such. It now has the headquarters for one of the leadingsemiconductor consortiums – Indian Semiconductor Association. Theprominent Global semiconductor companies in Bangalore are Intel, Samsung,Toshiba, Texas Instruments and ST Microelectronics.Magma,SpringSoft, Icon Design, D’gipro and CMR are the main EDA vendors.In addition, firms like Wipro, TCS, Patni, Larsen & Tubro eEngineeringSolutions, Infosys, Infotech, Quest, Mahindra Satyam, ABB, HCL, GeometricSoftware, NeilSoft, IBM, Cadence Design Systems, to name a few have competenciesin design automation / CAD and other engineering services.Bangalore could undoubtedly claim tohave the highest number of captives acrossThe city came intofocus in 1991 asan IT hub with thesupport of SoftwareTechnology Parksof India and soondeveloped its BPOcapabilities as wellthe globe. Intel, Microsoft, Oracle, SAP, Cisco,Google, Yahoo, HP, Motorola, Siemens, Samsungare among the ITO sector. BPO / KPOwould cover Citi, Reuters, HSBC, GoldmanSachs, Dell and JP Morgan.There have been noticeable changes in theattitude of service providers after the economicdownturn shaking. Their emphasis has shiftedfrom FTE-based (Full-time Employees) pricingto output-based pricing, which gives clientsmore worth for the work they outsource. Mostrecently, Mahindra decided to pay the savingsfor the entire project upfront to retain theirlargest and most critical client BT.GS24 GlobalServices www. globalservicesmedia.com October 2009
Delhi (NCR), IndiaThe gateway to the global sourcing of IT and BPO servicesTill the time outsourcers’ destination search remains at the country level,undoubtedly India is their top of mind choice. And when their searchgets deeper and reaches to the next level, which is finding best locationwithin India, Delhi (NCR) emerges as their second choice after Bangalore.These two Indian cities have different outsourcing advantages to offer.If Bangalore’s strength lies in high-tech talent pool due to abundance ofeducational institutions in the city, Delhi is far better in terms of its BPOcapabilities, especially contact centers. Delhi (NCR), the national capitalregion, which is formed of three cities Delhi, Noida and Gurgaon, offer aconducive eco-system for business analytics, finance and accounting, softwaredevelopment, product development, engineering services and contactcenter services in English.According the Nasscom (National Association of Software and ServicesCompanies) figures, software and services exports contributed $40 billionto Indian revenues in 2008. Of which Delhi NCR contribution stood from17 to 18 percent.The major advantage of Delhi is its fast growing educational setups,which attract graduates from all over the country giving access to 400,000technical graduates in India.The city’s entry-level labor cost is $320 in the IT sector and $22 to $240in the BPO sector. It is home to prominent firms like IBM, Microsoft, Intel,Oracle, Accenture, HP, Amdocs, Capgemini, SAP, Siemens, Motorola, Delland Indian players such as Infosys, TCS, Wipro.However, the city faces problems of political disturbances from time totime, although it has a stable state government. The law and order and securityfor women are its major concerns. Like any other Indian city, realestate in the capital city became very expensive. BPOs faced high attritionrates due to recession. Hiring was frozen for a long time but the situationhas improved drastically during the last couple of months. The city is stilltackling with huge traffic jams, which creates a lot of chaos.Harsh Singh Lohit, Chairman, National Association of Software and ServicesCompanies (Nasscom) Regional Council NCR and MD, Headstrongadds, “Nasscom has taken up five initiatives in Noida for which we are goingto the government of UP to ask fortheir help to develop strong infrastructureas we are the significant contributorto the economy. Noida’s positioning isso powerful that its design and embeddedservices are after Bangalore in India.Product development and BPO are itsother strong areas.”The city has a large contact-centerindustry, which is in competition withthe Philippines. Nasscom is confidentthat the city has a lot of potential to growand become the best outsourcing destinationin India due to massive amountof investment going into the developmentof infrastructure. With metro joiningNCR region by the end of next yearwould be a boon to the city. GSThe major advantageof Delhi is its fastgrowing educationalsetups, which attractgraduates from allover the countrygiving access to400,000 technicalgraduates in IndiaSpecial ReportHarsh Singh Lohit, Chairman, Nasscom RegionalCouncil NCR and MD, Headstrong“An attractivedestination”Q&AHow did Delhi NCR develop over time?There was a time when all IT was in Delhi,and there was nothing in Noida andGurgaon but over a decade, it emergedas an attractive destination. At present,it has got a lot of strength.What has been the impact of recessionon the city’s business environment?The impact of recession was largelypositive. There were excess ofexpectations, compensations, demandfor real estate due to recession,which resulted in dropping the priceof real estate dramatically. Now, thecommercial and residential propertycould be purchased easily.The entire business industry has gone fora massive rationalization of its businessmodels and its business costs. It doesnot mean cutting electricity, salaries,expenses but it means rethinking theentire business model that how doesthe IT Industry make money under theadverse circumstances where businessis less, the customers are payingless. All these factors have forced thetechnology industry to become efficient.Bubbles have gone away. We are goingto optimize our cost. GS— By Pratibha VermaOctober 2009 www. globalservicesmedia.com GlobalServices 25
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Top 50 Emerging Global Outsourcing Cities - Tholons

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