Emerging Delivery

Locations in India:
The Rising Tide

Emerging
Delivery
Locations in
India

The Rising Tide

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

business needs of domestic and international organisations. Many state governments

are looking to replicate the success of established locations to ensure broad-based
growth of their cities. The vision to repeat the success story of Leaders has aided
infrastructure and connectivity improvements, making these cities more livable and
viable business destinations.
The cities of Ahmedabad, Bhubaneswar, Chandigarh, Coimbatore, Indore, Jaipur,
Kochi, Kolkata, Thiruvananthapuram and Visakhapatnam were identified as
Challengers in the previous report. On both qualitative and quantitative parameters,
these cities have shown enough potential to attract IT-BPM organisations to setup and
expand their operations.
NASSCOM and Cushman & Wakefield are delighted to present this report titled
Emerging Delivery Locations In India: The Rising Tide, which specifically examines
the changes that have taken place in select 10 Challenger cities to help decision
makers in their medium to long-term growth strategies. Additionally, the study
enumerates the advantages offered by these cities along with challenges (if any)
and seeks to find solutions which can make these locations even more conducive
to the growth of IT-BPM industry. With increased participation from key industry
stakeholders state governments, industry bodies, academic institutions and public
authorities, there is a strong likelihood that these locations will become crucial cogs in
Indias endeavour to further grow its share within the global IT-BPM industry.
A detailed research exercise was carried out by researchers from Cushman &
Wakefield to collect quantitative and qualitative data through primary and secondary
sources. The process involved field visits, personal interviews and group discussions
with various government officials, stakeholders and industry experts while evaluating
various parameters for location selection rationale in each city.

Some of the key findings presented in this report are:

The Leader cities have witnessed IT-BPM organisations expanding their footprints
to suburban and peripheral locations aided by enhanced connectivity and
scalability options with respect to real estate
The leading IT-BPM locations witness more demand than supply for talent along
with higher cost of hiring and retaining talent. Other locations assure availability
of talent in abundance, along with higher retention rates, thus pointing towards a
need for organisations to reconsider their location strategy in India
Increasingly expensive and stressful quality of life in Leader cities is beginning
to pre-empt reverse migration of senior and mid-level management to some
Challenger cities
Although, Leader cities are far ahead in terms of infrastructure, there are
noticeable improvements in both physical and social infrastructure such as
connectivity, hotel keys, real estate in Challengercities over the last five years
Challenger cities offer operational cost savings of upto 25 per cent compared to
Leader cities. However, this is not the primary reason for organisations to shift
their base to these cities
The Challenger cities have the potential to increase attractiveness and promote
balanced growth across the country as the IT-BPM industry is progressing to newer
verticals, services and delivery models. Some of the important steps that need to be
taken on a sustained basis to promote these cities as established IT hubs are:

 A dedicated policy aimed at further growth of the industry with adequate

support from the state government. It should not be an ad-hoc approach with
shared/part resources
Ensuring regular supply of infrastructure real estate in the form of land, physical
infrastructure (such as roads, public transportation, security, uninterrupted
power supply, etc.) and social infrastructure (such as medical, educational and
recreational facilities); should be developed within easy reach of IT parks and SEZs
Developing educational curriculum in partnership with the industry to ensure that
it maintains its qualitative and financial competitive advantage; ensure that firms
can provide more diverse and higher skilled jobs and not just low paid, low skilled
jobs within these cities
Encouraging a cosmopolitan culture within the city to ensure that firms can attract
and retain the best talent from all over; catering to global lifestyles that IT-BPM
employees are used/exposed to

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

In the past few years, increased focus on non-linear

growth, serving new customer segments, verticals and
geographic markets, attracting domain knowledge and
emergence of digital technologies have 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
Certain Indian emerging locations such as
Kolkata, Ahmedabad, Kochi and Jaipur have
significantly improved their value proposition for
IT-BPM services delivery

14

Indian IT-BPM Industry:

Current Scenario
Evolution/Background
With revenues of USD 118 billion, the Indian IT-BPM industry has cemented its
leadership position in the global sourcing arena.
The industry has been growing and evolving rapidly since the last 15 years at a
compounded annual growth rate of 22 per cent and has reached an estimated
level of USD 118 billion by the end of FY2014 from a mere USD 5 billion in
FY1998. The increasing ability to offer end-to-end services and providing niche
domain capabilities are the crucial factors behind this remarkable growth journey
of the Indian IT-BPM industry.
IT-BPM Revenues Break-up (USD billion)*

118

108

32

CAGR*
22%

32
69

28
2
Domestic
Exports

3
FY1998

10

22
76

86

FY2013

FY2014

47

18
FY2005

FY2009

*In the last 16 years

Source: NASSCOM

IT-BPM exports have recorded a compounded annual growth rate of

13 per cent in the last five years and is estimated to cross USD 86 billion in
FY2014
The domestic IT-BPM market (including hardware) accounts for a little over
27 per cent of the overall industry revenues and is estimated at USD 32 billion
in FY2014

*includes hardware

15

 Increased consumer play, emergence of digital technology, consumer-centric

services, unmet demand from emerging cities and higher adoption of IT in
emerging verticals like retail, healthcare, education, amongst others are the key
factors driving the domestic growth

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

Verticals Break-down (USD billion)*

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

IT - BPM Industry Key Segments

Each of the four components of the IT-BPM industry have matured in a unique
manner by following different strategies.
Changing business models, solutions around disruptive technologies and verticalised
structures are enabling the industry to emerge as a strategic partner for their customers.
IT-BPM Export Revenues Segment-wise (USD billion)*
0.4
IT Services
BPM
Software Products and ER&D
Hardware

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

2. Business Process Management

a. Expected to grow at ~14.3 per cent in

FY2014 to reach nearly USD 52 billion

a. Strong ecosystem with >500 players,

Indian players contribute almost
50 per cent to the export revenues,
MNCs (15-20 per cent) and the rest is
contributed by GICs (>20 per cent)

b. >60 per cent share in total IT-BPM

exports
c. Traditional segments sustaining
average growth rates CADM:
~13.6 per cent and system
integration: ~13 per cent in the last
five years
d. Emerging segments growing faster;
IS outsourcing and software testing
witnessed an uptake with CAGR
of 18 per cent and ~16 per cent
respectively

c. Knowledge services fastest

growing segment with >15 per cent
growth rate
d. Data analytics, legal services - fastest
growing sub-segments

3. Engineering and R&D

Services (ER&D)

4. Software Products

a. USD 12.4 billion in revenues; driven

by domain-specific solutions

a. Software exports grew steadily at a

rate of ~9 per cent over `2013

b. One-fifth share in total exports;

Growing at >11 per cent year on year

b. Landscape maturing: Time taken to

cross INR 5 crore down 2.5X since
2006

c. ~200 R&D centres by G500 firms

d. ~50 per cent of ER&D exports from
telecom & semiconductors

18

b. Nearly one-fourth of industry exports;

expected growth of over 11 per cent
over FY2013 to reach USD 20 billion

e. Engineering analytics an
upcoming opportunity; ~3X growth
expected by the end of 2017
f. Convergence, fuel efficiencies,
localisation along with digitisation

c. 3,500+ product firms in India

d. 500 firms setup yearly; ~3X growth
since 2005
e. Retail, healthcare, education hot
emerging verticals
f. Investment avenues like PE/VC,
incubation centres and angel funding

IT-BPM Industry: All Pervasive impact on India

The IT-BPM industry has become one of the most significant growth catalysts for
the country. In addition to fuelling Indias economy through significant addition
to the countrys GDP and foreign exchange earnings, the industry is also positively
influencing the lives of its people through active direct and indirect contribution to
various socio-economic parameters such as employment generation, improvements
in income resulting in improvements in standard of living and promoting diversity of
economic activities.

8.1%

Highest relative industry share

in national GDP

3.1

Largest private sector

employer

38%
share

Largest share in total

services exports

25+

Highest outsourcing experience

million

years

60-70%

>1

million

55%
share

Highest net value-add sector

Largest private sector

women employer

Leadership position in global

sourcing market

Source: NASSCOM

19

Growth Drivers of the Industry

The Indian IT-BPM industry has demonstrated its existence and establishment on six
core pillars that it has nurtured and evolved over the years to acquire its unique
value proposition.
With global customers increasingly engaging with Indian service providers as a
strategic partner, rather than just dealing with pure technology service providers,
the industry has re-aligned its synergies to capitalise on growing opportunities
across verticals.

Human Capital Leadership

>5 million workforce,
5 million graduates

Cost Leadership
3-4X cheaper
than the US

Maturity
16,000+ firms, 25+ years
of experience

Customer Focus Leadership

100 per cent coverage
of outsourcing
engagements

Ecosystem Leadership
~43 Tier II/III cities

Scalability,
Security, Leadership
~78 countries, ~600 ODCs*

20

*Overseas Delivery Centers

India - Uniquely Positioned as a Strategic Country With Over

50 Delivery Locations
During the last decade, the industry has undergone numerous changes due to external
and domestic conditions involving economic, political and social factors including
the emergence of many new international delivery locations to serve the needs of
this growing industry. India is the only country in the world that offers 50 delivery
locations, of which 43 are Tier II and III cities, which serve as potential scalable
options for the technology industry, and also offer business continuity options
within the same country.
One of the key changes that have impacted the industry and its functioning in India
is the industrys gradual shift to Tier II cities due to the availability of infrastructure,
sincere regulatory reforms and political support from the government, in addition to
their cost advantage over Tier I cities. Many organisations are focusing on emerging
cities to widen their operational base and improve their product and/or service
offerings, whilst also boosting their revenues and profit margins. This could also be
one of the key methods in staving off the increasing competition from other countries
to Indias outsourcing industry leadership.
Emergence of Tier II and III locations as delivery hubs owing to conducive business
environment, relatively lower people costs and attrition rates, lower real estate
costs and improvement in infrastructure have led to the emergence of hub and
spoke model within the country. Hubs being the established Leader locations like
Bengaluru, Mumbai, Hyderabad, Delhi-NCR, etc. and network of other emerging
locations considered as spokes. In addition to the cost advantages, delivery
locations across the country offer scalability, business continuity and stability,
economies of scale, risk mitigation for clients and access to a larger as well as
well-qualified talent base. In addition, these cities provide stronger cross industry
ecosystem along with emergence of community start-ups.

21

NASSCOM - AT Kearney Report categorization of delivery locations

in India

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

High value, low volume

High focus on operational efficiencies with growing
advent of technology, leading to a shift in realisation per
employee. The focus is now on to do more with less

2013
2009

Revenue per employee up by ~1.2X

Non-linearity A new imperative

Non-linear growth in revenues i.e. higher revenues with
lower employee base
Employee addition per USD billion of revenues has gone
down by 1.6X in the last five years, leading to improved top
as well as bottom line

Total addressable opportunity of USD 1 trillion from SMAC

by 2020

100
1.2x

Employee addition
per USD billion of
revenues added
2013

62

2009

100

New business segments

SMAC has identified new revenue opportunities which
enable productisation of services

116

1.6x
Revenues from
SMAC (% share)
5-10%

Source: NASSCOM

25

Global delivery models

Indian IT-BPM industry has been growing in size, scale,
maturity and domain expertise serving global customers
across industry segments, and addressing the changing
customer needs. The industry has been catalysing business
transformation for global clients through global delivery chain
with ability to provide anytime, anywhere service
t
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and markets, managing risk and serving clients globally;
global service delivery networks and their management
have only gained more importance
t
'VUVSF
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access and serving specific client needs
t
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Number of countries in
which industry has Global
Delivery Centres (GDCs)

78

':

':



Following the Customer Global Network Indian firms

have presence in over 78 countries and have established
over 600 offshore development centres
Employee engagement
Employee engagement is a key dimension to improve
productivity of businesses. Industry is maturing and new
themes are emerging for better employee engagement
Work from home, part time labour, subcontracting,
effective and reliable transport infrastructure are some of
the benefits offered by the organisations to increase
efficiency and control attrition leading to increased loyalty,
ensure continuity as well as maintain attractiveness

26

4PVSDF
/"44$0.

Talent mobility

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Talent Scenario in India

The growth of IT-BPM industry is largely dependent on a number of parameters, the
most important being the talent pool with requisite skill sets to cater to the rapidly
growing needs of the industry. Ample talent with desired diversity and rich domain
skills in niche segments is driving non-linear revenue growth for the industry. To
sustain growth levels in future, the IT-BPM industry needs considerable talent
base, augmenting the demand for talent to further levels

People (millions)

Leadership in
talent

Employable pool

t
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FNQMPZBCMF
UBMFOU
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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

t
The diversity of the IT-BPM

workforce in India is a strong
point wherein other graduates
and specialists bring in added
advantage, domain
competencies and make the
sector more sustainable

Ph Indi
ilip a
pi
ne
Ch s
in
a
Br
az
il

India enjoys a leadership position in

terms of talent availability as against
its closest competitors

4%
3%
13%

t
The six leading IT-BPM locations:

Bengaluru, Chennai, Delhi-NCR,
Hyderabad, Mumbai and Pune witness
more demand than supply for talent
However, other cities offer talent supply
in excess, thus pointing towards a need
for organisations to reconsider their
location strategy
in India
Over 50 per cent of the IT-BPM workforce
come from emerging locations

Source: NASSCOM

Educational qualifications of
IT-BPM workforce

5%

Human capital leadership:

Worlds most diverse talent pool

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

The Next Evolution

Indian IT-BPM exports are expected to cross USD 175 billion while the domestic
market can grow to USD 50 billion by 2020. Going forward, the thrust to go digital
will drive the future growth for the industry.
IT spending is driven by increased R&D around technologies focused on automation,
human-machine interface, green technologies, etc. Thus, it is clear that the value
proposition of the industry will be further attuned to the changing requirements of
the world.
Industry prerogatives:
a) Help clients go digital
b) Understand and acquire new customers for clients,
c) Grow their business will be on the top of the agenda in the next evolution.
Transformational outsourcing (value, technology and innovation) will drive future
growth for the IT-BPM industry.
Next Evolution of Technology Industry

Value proposition
- beyond cost to
delivering business
outcomes

Convergence
of services/
solutions SMAC

28

Next phase of
growth projects
to platforms

The next decade will

witness an increasingly
software powered world, with
technology becoming even
more cognizant, sentient and
ubiquitous an inextricable
part of not only our
environment but ourselves

Impact on Tier I Locations

Transformation of the Leaders of IT-BPM locations
Over the last couple of years, transformation in delivery models has altered location
strategy of IT-BPM organisations. A large number of firms have steadily increased their
footprints in the peripheries of existing Leader cities. For example, Whitefield and
Outer Ring Road (ORR) in Bengaluru; Gurgaon and NOIDA-Greater NOIDA in Delhi-NCR;
Andheri-Kurla Road and Thane-Belapur Road in Mumbai; Hinjewadi and Kharadi in
Pune; Madhapur and Gachibowli in Hyderabad and Perungudi-Taramani in Chennai.
Some of the primary driving forces for this transformation are discussed below.

Tier I locations expanding their boundaries

Growing talent pool

Availability of large-sized, quality spaces at attractive

rentals coupled with necessary social and physical
infrastructure
DPOOFDUJOH
UP
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29

Impact on emerging locations

Transformation of the Challengers
Given the multiple benefits that the IT-BPM industry offers to the economy and the
cascading impact that it has had on the growth and development of the top six Leader
cities, almost all other emerging cities have also tried to push the growth story further.
However, unlike Leader locations, the emerging cities are carving their niches and
trying to create visibility based on the inherent capabilities existing within these cities.
For example, Ahmedabad has emerged as a choice for software product and support
services along with support from other ancillary industries; Jaipur is establishing itself
as an emerging financial services hub due to its inherent talent skills.
In the last few years, we have observed that many emerging locations are following
the footprints of Leader locations.
Challenger cities are recognised by the stage of development of IT-BPM industry and
growth in talent base along with improvement in infrastructure aided by favourable
and focused government policies.

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ecosystem

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30

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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.

Advantages Offered by a Challenger Location as an IT-BPM Delivery

Centre
The following advantages add to the appeal of these locations as alternate delivery
centers for expansion or new set-up by IT-BPM companies:
Focus Area

Advantages Offered By Challenger Locations

Increased
breadth and
depth in
offerings

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33

Major Concerns in Operating Out of Challenger Locations

There has been an accelerated penetration of IT-BPM organisations to alternate delivery
locations in the last couple of years, however, at the same time it has not been, all in
all, a smooth ride. The collated results of our survey indicate certain areas that need
to be tackled proactively in the light of altering industry dynamics. The next phase
of growth could be very well-determined by the ability of domestic and international
organisations in resolving the issues below, as highlighted by the respondents:

Manpower issues

Eco-system

Talent availability, especially for

senior to mid-level workforce

Dedicated focus for the sector is limited in many cities as well as

implementation of IT policies; delayed approvals for business

In some cities, educational

curriculum is deemed insufficient
and firms need to provide
time consuming training

Local authorities are more keen on attracting large players

rather than encouraging the growth of local entrepreneurship
and start-ups

Limited career growth path can

lead to employee dissatisfaction

Poor infrastructure

34

Perceptions about
quality of life

Irregular power supply and increasing

infrastructure costs affecting
business operations

Working spouses and children of transferees are skeptical of

shifting to a Challenger location due to limited employment
and education options

Last mile connectivity is inconsistent,

increases cost of transportation
for employees

Some cities lack adequate social infrastructure to fulfil the

aspirations of the upwardly mobile employees

Detailed Survey Findings

Although at a broader level, the factors considered for location strategy were almost
similar for both international as well as domestic firms, the importance of these
factors differed between the two. In the following section, the findings of the survey
have been analysed and presented separately. As per the survey results, different
parameters are sub-divided into two factors:
Motivating factors - the ones which increase the satisfaction and on which the final
decisions are based
Other factors - also called hygiene factors are considered to be the basic
requirements, as they do not motivate firms to finalize the location but if absent,
disqualifies the location even for initial consideration
The roles of the different parameters are explained in the subsequent section

Rank of Parameters for Determining Location Attractiveness

For domestic IT-BPM organisations: The biggest reason for choosing a Challenger
location was the fact that the founder/s or senior management belonged to that
particular city and therefore they felt more convenient to commence operations in a
familiar environment where they had better access to different support structures.
However, for choosing a location without this inherent conflicting bias, there were
other factors which came to the fore.

35

Rank
Location
parameters

Talent pool

Cost
competitiveness

Infrastructure

Business
environment

Government
policies

Real estate

36

Motivating

factors

Source: Cushman & Wakefield Research

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

Cost advantages in terms

of operating and fixed
expenditures consisting
of lower people costs,
real estate costs,
maintenance, etc.

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

Government support for

entry and expansion of
IT-BPM firms through the
right policies

Adequacy of office space

and land governs the
cost dynamics of setting
up office.SEZs with tax
exemptions provide cost
advantage to firms targeting
exports

Performance of Challenger Cities on Each Parameter in City Level Surveys

Based on the survey findings, the performance of the select Challenger cities is
presented hereafter:

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
4
3
2
1

kh

ap

at
n

am

ur
am
ap
an
th

Vi
sa

at
a
lk

i
ch
Ko

r
ip
u
Ja

do
re
In

ba
to
re
m

Ko

ru
va
n
Th
i

Source: Cushman & Wakefield Research

Co
i

Ch

an
d

ig
ar

sw
ar
ub

an
e

ad
Bh

ab
ed
Ah
m

37

II. Cost Competitiveness

Cost competitiveness is a derivative product of the entire ecosystem within the
city consisting of all the hygiene factors like business environment, talent pool and
infrastructure. Depending on the hygiene factors and other intrinsic factors that
are specific to a particular business model followed by the firms, cost advantages
differ from one firm to the other. However, it is the relative cost advantages and the
synergies derived that are finally considered while zeroing on to the location for
setting up an IT-BPM delivery centre.
Cost advantages in Bhubaneswar, Coimbatore, Thiruvananthapuram and Kochi are
derived from lower people costs. Low commuting time in Thiruvananthapuram and
Kochi has obliterated the need for providing the employees with transportation
facilities as against few Leader cities by many firms. Further, acquisition of land and
construction costs for developing campuses and facilities usually require substantial
amount of fixed capital investments, but in most of the cities land has been allotted by
the state government at subsidized prices.
Thiruvananthapuram and Coimbatore also enjoy lower rental values for built
commercial offices, which also guided firms in finalising their location decisions,
especially in the case of start-ups, Small and Medium Enterprises (SMEs) and
homegrown firms which are extremely sensitive to costs.
Importance of cost competitiveness for location strategy as per IT-BPM
organisations surveyed in these cities
5
4
3
2
1

kh

ap

at
n

am

ra
m
Vi
sa

ru
va
n

an
th
ap
u

at
a
lk

i
ch
Ko

ur
ip
Ja

re
do

Ko
Th
i

Source: Cushman & Wakefield Research

In

Co
i

m
ba
to
re

h
ig
ar
nd

Ch
a

ne
ba
Bh
u

Ah
m

38

ed
ab

ad

sw
ar

III. Physical Infrastructure The Backbone of an Effective Ecosystem

in IT-BPM Locations
Components

Details
Connectivity to the leading cities through domestic
flights and trains is imperative

Connectivity

Transportation

Electricity

Internet
Connectivity

Part of hygiene factors for setting up IT-BPM operations

Standout Cities
Ahmedabad, Kochi,
Thiruvananthapuram and
Kolkata

Presence of an international airport with connectivity

to international destinations is an added convenience,
especially for international organisations
Intercity transportation network should be well
developed; means of public transportation like public
buses, metro rails, flyovers, etc. are major factors that
firms look for before setting up their campuses or
acquiring leasing space

Relatively lower
commuting time in
cities like Jaipur,
Indore and Ahmedabad

Low power outages in

Indore, Kochi, Kolkata
and Ahmedabad led
to firms ranking them
higher
Last mile connectivity from city to outer locations where
many firms have their offices is a major driving force to
attract employees
Well-developed expressways and bus routes makes
it easier for employees to travel for work and other
engagements

Stable power supply is a key requirement of firms and

lower tariff is also important as the power requirements
are huge for IT-BPM companies. Start-ups and SMEs
are especially sensitive to this and so, good power
infrastructure becomes a motivating factor
Presence of high speed internet connection is
imperative for the industry, so the presence of
high bandwidth under sea cables make Kochi a
preferred location

Healthcare

Education

A good healthcare infrastructure comprising public and

private hospitals, healing centers and nursing homes
provides better quality of life to employees

Kochi, Ahmedabad,
Jaipur, Kolkata and
Chandigarh

Education facilities are an important factor for

non-local employees to relocate with their families
to a Challenger city. Almost all the Challenger
cities did well on this parameter in terms of
schooling and technical higher education. However,
underdevelopment of soft/social skills was also
highlighted in many locations

Jaipur, Kochi and

Kolkata relatively
better in soft skills

39

Components

Details

Standout Cities
Kochi offers modern
social infrastructure

Adequate social infrastructure like entertainment,

tourist attractions, shopping centres, etc. to fulfil the
needs and aspirations of the employees

Retail and
hospitality

Kolkata, Kochi,
Chandigarh,
Jaipur, Indore,
Thiruvananthapuram
and Ahmedabad

Sufficient hotels to cater to business travellers is also

a basic requirement for firms to help serve their clients
and employees from other locations; adequate facilities
for Meetings, Incentives, Conferences and Exhibitions
(MICE)
Good law and order situation
Clean and green environment and low pollution ensures
better quality of life. Presence of sports, cultural and
recreational facilities also contribute to well-rounded
societies in Kochi and Chandigarh

Others

Low crime rate

in Kochi and
Thiruvananthapuram
make them preferable
for habitation

Importance of infrastructure (social and physical) for location strategy as per

IT-BPM organisations surveyed in these cities
5
4
3
2
1

Source: Cushman & Wakefield Research

va
n

am
at
n
ap
kh

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ru

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IV. Business Environment

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.

Since presence of interconnected businesses lead to higher productivity of firms

present in a cluster Kochi, Thiruvananthapuram and Ahmedabad are preferred by
firms. In a positive business environment, competitive advantage is reaped by both
domestic and international firms as witnessed in these three cities. However, the
business environment can have a negative impact as well, for example, the presence
of large number of unfocused competitors signals numerous opportunities but at the
same time, leads to higher attrition and talent costs, as in the case of Kolkata. While
well-developed business environment in Ahmedabad, Kochi and Thiruvananthapuram
have been instrumental for IT-BPM organisations; in Visakhapatnam the rudimentary
business environment has acted as an impediment.
Importance of business environment for location strategy as per IT-BPM
organisations surveyed in these cities
5
4
3
2
1

am
at
n
ap
kh

Vi
sa

ap
an
th

ru
va
n
Th
i

Source: Cushman & Wakefield Research

ur
am

at
a
lk
Ko

i
ch
Ko

ur
ip
Ja

re
do
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rh

ba
to
re
m
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i

ga
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ab

w
ar

ad

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
1

Relaxation in Floor Space Index (FSI), single window clearances, etc.

am
kh

ap

at
n

ur
am

an
th
ap

Vi
sa

at
a
lk

i
ch

ip
ur

Ko

Ko

ru
va
n
Th
i

Source: Cushman & Wakefield Research

Ja

re
do
In

m
ba
to
re

Co
i

an
d
Ch

es
an
ub
Bh

ig
a

w
ar

ad
ab
Ah
m
ed

42

rh

VI. Real Estate

Availability of land parcels at comparatively cheaper prices is much sought for by
the firms. Attractive land parcels were offered by the state governments in Jaipur and
Kochi that helped existing firms to create more jobs within these cities and develop
their local economies and ensure overall growth. Further, availability of good quality
office space at competitive rentals developed by private developers in Coimbatore,
Kochi and Thiruvananthapuram has been quite vital in keeping the real estate
expenditure comparatively low, till date. However, high rentals in Kolkata and lack of
adequate IT parks and SEZ space in Ahmedabad and Bhubaneswar at affordable rents
have proved to be deterrents for these cities. In Visakhapatnam, lack of adequate
office space in close proximity to the city resulted in a low rating by the firms.
Importance of real estate for location strategy as per IT-BPM organisations
surveyed in these cities
5
4
3
2
1

kh

ap

at
na

ur
am
Vi
sa

Th
i

ru
va
n

an
th

ap

ka
ta
Ko
l

i
ch
Ko

ur
ip
Ja

re
do
In

ba
to
re
m

rh

Source: Cushman & Wakefield Research

Co
i

ga
di

Ch

an

sw
ar
ne

Bh
ub
a

Ah
m

ed

ab

ad

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

Talent: Student enrollment is significantly higher in

Challenger locations as compared to Leader locations
Higher retention: Challenger locations have attrition
rates that are half the level of Leaders implying higher
employee retention in addition to lower hiring costs
Infrastructure costs: Average office rentals in
Challenger cities is 60 per cent lower than Leader cities
Cost competitiveness: Challenger cities offer
cost advantage in the range of 10-25 per cent over
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

In order to ascertain whether the Challenger locations (identified in the 2008

AT Kearney - NASSCOM report) have improved their standing as IT-BPM destinations,
Cushman & Wakefield Research and NASSCOM conducted exhaustive field surveys of
the 10 cities. Besides evaluating state and local governments policies aimed at the
IT-BPM industry, other enablers such as availability and quality of talent pool, support
from local industry bodies, support infrastructure like local transport, healthcare and
real estate, etc. were also analysed.

45

Business Environment: Providing a Sound Ecosystem that Enables Growth

Though all the ten cities have depicted positive trends in the overall business
environment in the last five years, some of them have performed outstandingly well.
A number of SMEs have seen a significant rise over the years. A large number of
entrepreneurs have set up IT-BPM firms taking advantage of their familiarity with
business environment and talent pool. Over the years, the scope of services offered
by IT-BPM organisations has diversified to newer processes such as Search Engine
Optimization (SEO) activities, medical transcriptions, embedded systems, knowledge
services, products development, SMAC offerings, etc.
Average Growth in Revenues

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

Source: Cushman & Wakefield Research and NASSCOM

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

like manufacturing, automobiles, etc. Also, investments to promote research

and innovation with provision for incubation space in cities like Ahmedabad and
Coimbatore has supported the rise in headcount.

Growth (in multiples)

Business Performance since 2008

4.0X
2.7X

2.5X
1.8X

1.8X

1.8X

1.7X

1.1X

1.6X

1.6X

1.0X

IT-BPM exports revenues (USD billion)

Growth (in multiples)

30.0X
3.3X
2.4X
1.4X

1.4X

2.1X

1.8X

2.0X

2.0X

2.1X
1.3X

Growth (in multiples)

Employee headcount in IT-BPM organisations

3.3X

2.8X
1.2X

1.4X

1.2X

1.0X

1.4X

1.4X

1.6X

2.1X
1.5X

No. of IT-BPM units registered

Tier I Benchmark
Coimbatore
Kolkata

Ahmedabad
Indore
Thiruvananthapuram

Source: STPI/SEZ, Cushman & Wakefield Research and NASSCOM

Bhubaneswar
Jaipur
Visakhapatnam

Chandigarh
Kochi

47

Talent: Most Important Determinant for Setting Up Businesses

Availability of good quality talent was ranked as one of the key determinants while
choosing a delivery location for majority of the respondents.
The demand for talent in the IT-BPM industry comprises students from science,
engineering and management disciplines. With active participation from both the
government and private sector, existing colleges have increased their student intake
and many more new institutions have opened up in the last five years.
The number of students enrolling for technical courses has increased in the range of
20-80 per cent across the Challenger cities, clearly surpassing the Leader location
benchmark of 23 per cent growth over the last five years. Prestigious institutes such
as National Institute of Technology (NIT), Indian School of Business (ISB), etc. have
expanded in these cities. Most of these cities are hubs of higher education in their
respective regions and boast the presence of many colleges and universities.
Number of students enrolled

Attrition rate

Kolkata
1.8X
Jaipur
1.7X
Visakhapatnam
1.6X
Tier I
Benchmark
1.2X

Source: Cushman & Wakefield Research and NASSCOM

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.

Growth (in multiples)

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

Source: Cushman & Wakefield Research and NASSCOM

49

Infrastructure: Supporting Growth by Providing Accessibility and Comfort

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

Growth (in multiples)

11.1X

4.5X
2.2X

1.9X

2.2X

1.6X

1.6X

1.0X

1.5X

No. of under-construction residential units

Growth (in multiples)

13.3X
2.4X

3.6X
2.4X

2.1X

2.4X

2.4X
1.8X
0.9X

100

2.1X

1.4X

Average rental values for Grade A office spaces

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

Source: Cushman & Wakefield Research

Bhubaneswar
Jaipur
Visakhapatnam

Chandigarh
Kochi

51

Average rental value for

Grade A office space
(`/sf/month)

'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

Growth in mall inventory

Source: Cushman & Wakefield Research

52

The living environment is a direct reflection of

the availability and quality of healthcare services,
entertainment facilities, pollution levels and many other
aspects of social infrastructure. Hi-tech industries such as
the IT-BPM industry requires superior living environment
to attract and retain well educated talent. Conversely,
development of the IT-BPM industry adds to the growing
demand for such facilities and services in the city.
The Challenger cities have witnessed tremendous
growth in mall spaces in the last five years, with three
of the cities more than tripling the mall inventory which
is higher than the leader cities growth benchmark.
These malls have most of the prominent domestic and
international brands present, to cater to the tastes and
needs of the global IT-BPM workforce.

Support infrastructure
(growth since 2008)

90X

Growth (in multiples)

3.7X

2.3X

1.7X

3.4X

2.2X

1.4X
1.0X

1.0X

1.0X

Mall inventory (msf )

Growth (in multiples)

2.4X

2.3X

2.0X

1.9X

1.7X

1.5X

1.3X

1.2X

1.3X

1.2X

1.4X

Growth (in multiples)

No. of hotel keys

1.4X

1.2X

1.7X

1.5X
1.0X

1.1X

1.1X

1.1X

1.3X

1.1X

1.2X

No. of Hospital Beds

Tier I Benchmark
Coimbatore
Kolkata
Source: Cushman & Wakefield Research

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

Growth in hospital beds

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.

Growth (in multiples)

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

Growth (in multiples)

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

The presence of IT-BPM organisations across geographies makes good connectivity an

imperative feature. The airport infrastructure in India is going through a much needed
revamp since the last few years. All the Challenger cities have witnessed an increase
in the total number of passengers travelling by air over the last five years.
Infact, most of these cities beat the Leader locations, benchmark growth of 33 per
cent in number of passengers over the last five years. The number of flights in most of
the the Challenger cities have also grown significantly.
Growth in no. of passengers

Growth in no. of flights

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

Cost Differential: A Clear Advantage

Overall Cost Differential
w.r.t Tier I cities
Thiruvananthapuram
20-25%
Kochi
~25%

Cost differential is one of the most important aspects

that make these cities attractive for setting up operations
compared to the established Leader locations. These cities
exhibited lower people cost as well as other costs
which include real estate cost, travelling and transportation
cost, etc.

Coimbatore
20-22%

15-20%

In percentage

15-20%

Cost differential w.r.t Tier-I benchmark

Approx. 25%
Approx.
20-22%
20%
15-20%
15-18%

20-25%

Approx.
20%

5-10%

Ahmedabad
Indore
Thiruvananthapuram

Bhubaneswar
Jaipur
Visakhapatnam

Chandigarh
Kochi

Coimbatore
Kolkata

Source: Cushman & Wakefield Research and NASSCOM

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

Strong stance of homegrown firms; favourable business

ecosystem provides immense potential for future growth
Advantage Ahmedabad: The state government support, established infrastructure and cost advantages

Active state
involvement

Quality
infrastructure

Industry Profile

Building Blocks

Lower
costs

Strong
manufacturing
industry

Employment**

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58

Tier I cites represent Bengaluru, Mumbai and Delhi-NCR

*Based on surveys
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The government needs release an updated IT policy to

further attract large IT-BPM firms to capitalise citys
strong business infrastructure
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Advanced infrastructure compared to other prominent

emerging cities

Engineering Colleges*
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18

2013

Total Number of Flights#

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59

INDORE

Active government support and a well-laid out IT policy

makes the city an attractive IT-BPM destination
Advantage Indore: Presence of large talent pool; government incentives on skill gap training likely to further enhance resource quality
Building Blocks

Active
industrial
base

Skilled talent
pool

Good
support
infrastructure

Industry Profile

Government
Support

Employment**

Cost Differential*

Industry

Talent

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Tier I cities
People Cost

Indore
Other Cost

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Approx.
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Overall cost differential: approx. 20%

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60

Tier I cites represent Bengaluru, Mumbai and Delhi-NCR

*Based on surveys
**Based on STPI registered units (BPMs in Indore with significant
domestic revenues)
^Other cost includes real estate, electricity charges, travel, maintenance
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auto and auto components, iT-BPM, food processing, manufacturing, textiles, etc.
t
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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
FNQMPZ
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; 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
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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
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stretch of AB Road between Rajiv Gandhi Square and Niranjanpur
t
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Infrastructure

Improved connectivity and physical infrastructure along

with commencement of operations of proposed IT-BPM
majors will further provide impetus to the industry growth
Significant growth in intake; Well qualified entry level talent

Well connected to cities across India; sound existing

physical infrastructure with plans for further improvement

Engineering Colleges*
2008

35


2013

44


"*$5&
BQQSPWFE

Total Number of Flights#

t

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DFOU
JODSFBTF
JO
FOHJOFFSJOH

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JO
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WF
ZFBST
t
5FDIOJDBMMZ
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UBMFOU
TPGU
TLJMM
USBJOJOH
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UP

MFBE
DMJFOU
JOUFSBDUJPO
SPMFT

 

Student Enrolments

2008
 
o
 
FOHJOFFSJOH
TUVEFOUT

t
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PG
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B
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CZ
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C
9
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PG
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t
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OFFE SZ
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DPOO PS
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FDUJW
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M

2013
 
o
 
FOHJOFFSJOH
TUVEFOUT

9
HSPXUI
PWFS
UIF
MBTU
WF
ZFBST

Significant growth in Grade A stock; low rentals

Stock Grade A IT Parks &
SEZs (msf)

Average Grade A Rentals

(`/sf/month)

Information for financial years

*Residential units
under-construction

 

_
JODSFBTF





Entry of prominent names in healthcare,

construction and hospitality

9
SJTF



9
SJTF

t
#35
4
P
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* Includes high-rise apartments in standalone buildings and
complexes



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61

COIMBATORE

Ample talent with strong focus on technical courses;

government needs to position the city as an IT-BPM
location in order to meet industry expectations
Advantage Coimbatore: Connectivity to prominent IT hubs like Chennai and Bengaluru adds to immense potential of the city; broad base availability of technical talent

Availability of
technically
sound talent

Proximity to
prominent
IT hubs

Lower attrition
levels

Industry Profile

Building Blocks

Enterprising
Community

Employment

t
Headcount growth in the last five years: ~30 X

t
IT-BPM employees over 15,000

Industry

t
Growth in number of IT-BPM firms in the last five years: ~2.8X

t
Renowned firms present: Dell, Cognizant, Robert Bosch, HCL Technologies

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**

t
In the last five years, growth in total export revenues: ~1.8X

t
Notable concentration of BPM operations along with IT services and products

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%1
HSPXUI
SBUF



t
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Tier I cities
People Cost

Coimbatore

Business Environment

Approx.
20-22%

Other Cost

Overall cost differential: 20-22%

People cost lower by 15-18%
Other cost^ lower by approx. 30%

62

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

t

*OGPSNBUJPO
$PNNVOJDBUJPO
5FDIOPMPHZ
*$5

1PMJDZ

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SFMBYBUJPO
JO
'4*

exemption in stamp duty and registration fee, provision of single window clearance, etc.
t
5BNJM
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4&;
VOJUT
FOTVSJOH

adequate power and water supply, providing legislative support, etc.
t
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Anna university
t
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accommodating over 15,000 employees
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establishments came into existence in the last 3-4 years
t
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Kochi, Thiruvananthapuram, etc.
t
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linear line connecting Eastern and Western part of the city
t
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Road streching over 18.6 kms

Economy
Government
incentives

Educational
ecosystem

Real estate

Infrastructure

Focus towards hard infrastructure, proposed BRTS and

monorail to enhance connectivity within the city
High focus on technical courses, ample talent pool

Power situation playing a dampener; proposed transport initiatives

Engineering Colleges*
2008

42

2013

62

Total Air Passenger Traffic#

t

JODSFBTF
JO
FOHJOFFSJOH

DPMMFHFT

t
5FDIOJDBMMZ
HPPE
UBMFOU

JNQSPWFNFOU
JO
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EFTJSFE

2007-08 2012-13

"*$5&
BQQSPWFE

Student Enrollments

2008
 
o
 
FOHJOFFSJOH

TUVEFOUT

t
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Q
B
USB TTFOHFS

D
I
JODSF BT

B
9 TFE
CZ

2013
 
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1.5X growth over the last five years

Availability of quality ready to move in office space

Stock Grade A IT Parks &
SEZs (msf)

Average Grade A IT Park Rentals

(`/sf/month)

t
$SJU
JDB
XJUI
B M
QPXFS
TJU
V
W
CFUX FSBHF
QP BUJPO

F
X
QFS
E FO

IP FS
DVU

VST
BZ

t
1SPQ
PT
#354 FE

LN
T

t
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PT
DPOO FE
NPOPS
FDUJO
BJM

H

JNQP
SUBOU
B
SFBT

Information for financial years

*Residential units
under-construction

Transitioning phase to mall culture, developing

social infrastructure

9
SJTF

2.0
2008 2013

9
SJTF

~8%
JODSFBTF
26

0.2

2008

28

2013

t
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IBT
JODSFBTFE

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TQBDFT

2008

t
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*
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complexes

t
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PG
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LFZT
IBWF

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9

PWFS
UIF
MBTU
WF
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LFZT

2013

t
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PG
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PG
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#54

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63

VISAKHAPATNAM

Growth in export revenues supported by small and

medium enterprises in IT-BPM and software products;
ideal for start-ups
Advantage Visakhapatnam: Lower attrition rate, lower commuting time has made it a cost-effective destination with high employee productivity
Building Blocks

Proximity of
distances

Growth of
industry in the
last five years

Industry Profile

Entry level cost

efficiency

Employment**

Dominance
of domestic
firms

Industry

Talent

t
Headcount in IT-BPM Industry has increased by 3.3X since 2008

t
More than 100 IT-BPM firms have emerged in the last five years
t
Mainly homegrown IT firms
t
Renowned firms present: HSBC, IBM, WIPRO, Tech Mahindra, Patra
t
Average attrition rate of 4-5%
t
Low literacy rate of 66.91%, below national average of 74%

Export
revenues**

t
In last five years, growth in total export revenues: ~4X

Nature of
operations

t
IT and software products: 60-65%; BPM: 35-40%

t
IT-BPM activities include medical transcription, software development embedded and
enterprise, website development, mobile apps development, knowledge services, insurance
back-end processes, CRM, etc.

Cost Differential*
t
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QPSU
JT
POF
PG
UIF
CJHHFTU
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JO
*OEJB
CZ
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BMPOH
XJUI
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district headquarters it is also the seat of Eastern naval Command of Indian Navy
t
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4&;T
XJUI
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*5#1.
JOEVTUSZ
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largest steel plant in India

Tier I cities
People Cost

Visakhapatnam
Other Cost

Overall cost differential: Approx. 20%

People cost lower by 10-15%
Other cost^ lower by 15-18%

64

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

Business Environment

Approx.
20%

Economy

Government
t
*5#1.
VOJUT
BOE
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OPUJFE
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incentives
Regulations
t
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Educational
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in Rushikonda
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Real estate

t
Minimum travel cost: ~8-10% lower compared to Tier I cities

t
Proposed BRTS network and widening of roads; Part of Golden Quadrilateral offering direct
connectivity to Chennai and Kolkata via NH-5
t
1MBOOFE
JOJUJBUJWFT
GPS
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VQ
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Infrastructure

Slow economic development and limited infrastructure;

government support and initiatives can change the game
for this idyllic destination
Good quality talent pool with technical know how

Improving physical infrastructure; power availability can

be improved
Total Number of Flights#

Engineering Colleges
2008

25

2013

34

t
8 per cent increase in

engineering colleges
t
Technically good talent; lacks
communication and project
management skills.
2007-08 2012-13

*AICTE approved

Student enrolments

2008
12,000 13,000
engineering
students

t
.P
SF
U
fligh IBO
 
t
/VN ts annuall 


y
C
passe FS
PG

n
by 1.9 gers incr
eased
X

2013
21,000 22,000
engineering
students

1.6X growth over the last five years

Information for financial years

Average Grade A IT Park

Rentals (`/sf/month)

*Residential units
under-construction

Limited expansion in social infrastructure;

quality of life better because of natural beauty

2.1X
rise

2.85

t
2008 2013

11.4X
increase

~75%
increase

2008

2013

t
Stock has increased by

11.4X times in the last five
years; 1.65 msf currently
under-construction

2008

Average house rent near existing IT clusters:

lower by 50-55% than Tier I cities
* Includes high-rise apartments and villas in standalone
buildings and complexes

35

20

0.25

t
No
pre
and B sence of M
t
Ove RTS netw RTS
ork
rcr
buses owded AP s
S
; erra
tic se RTC
rvice

Growing demand of quality spaces from IT companies

Stock Grade A IT
Parks & SEZs (msf)

t
%BJM
Z
Q
4-6 h PXFS
PVU
BHF
P
t
*5
ours
G

SN
powe T
FYFNQU
FE
GSP
r cuts
N
week
ly po subject to

wer h
olida a
y

Number of hotel keys increased by 1.9X over

the last five years; 600+ upcoming keys

Number of hospital beds increased to 1.2X over

the last five years

Total mall inventory comprises Grade B

spaces which is 0.3 msf, all of which came up
after 2010

2013

t
-PX
TVQQMZ
IBT
MFE
UP

massive rental
appreciation, however,
significantly lower by
50-60% compared to
Tier I cities

Note:
1. Stock doesnt include Build To Suit (BTS) and campus developments
2. Average rents of Tier I cites comprise key IT locations of Chennai, Bengaluru,
Mumbai and NCR such as Outer Ring Road, Whitefield, Malad, Goregaon, Gurgaon
and NOIDA

65

BHUBANESWAR

Entrepreneurial fortitude and adequate availability of

talent has fuelled the growth of homegrown IT-BPM firms
Advantage Bhubaneswar:
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TLJMMT
QSPWJTJPO
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Building Blocks

Budding
homegrown
entrepreneurs

Improved
intra and
inter-state road
connectivity

Industry Profile

Large talent
pool across
management
levels

Attractive
government
policy

Employment**

Cost Differential*

Business Environment

People Cost

Bhubaneswwar
Other Cost

Overall cost differential : 15-20%

People cost lower by 10-15%
Other cost^ lower by 30-35%

66

Industry

t
(SPXUI
PG
*5#1.
SNT
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WF
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t
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5$4
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18$
FUD

Talent

t
Attrition rates: 8-10%

t
&OHJOFFSJOH
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CBTF
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9
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WF
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Export
revenues**

t
451*
FYQPSUT
HSFX
UP
9
JO
UIF
MBTU
WF
ZFBST

/BUVSF
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operations

t
*5
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BOE

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t
BPM: 25-30% (business process re-engineering, technical support, human resource solution, etc.)

t
(4%1
HSPXUI
SBUF




t
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paper and cement industries

15-20%

Tier I cities

t
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HSPXUI
JO
UIF
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WF
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9

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

t
5IF
OFX
*$5
1PMJDZ
TUBUFT
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KOLKATA

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CHANDIGARH

With its innate drivers of high literacy, conducive business

environment and excellent quality of life, Chandigarh has
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70
Tier I cites represent Bengaluru, Mumbai and Delhi-NCR
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2013

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THIRUVANANTHAPURAM
One of the premier IT park in the country, Technopark
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Apart from larger IT firms, Thiruvananthapuram continues

to witness good presence of small and mid-scale
enterprises aided with support from government
Steady increase in enrollments across engineering colleges

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infrastructure initiatives

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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

Source: Cushman & Wakefield Research

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

Best Practices for Developing More IT-BPM Hubs

As these Challenger cities strive to increase their footprint globally to attract more
IT-BPM companies, we have identified several best practices, which if replicated have
the potential to accelerate the pace of development and give these locations more
visibility.
Best Practices

To Develop Local Talent Pool

To Attract Investments

To Develop a Healthy Eco-System

Modules on specialized IT skills

in syllabus, active contribution
by IT companies

Single window clearance

mechanism to ensure that
companies can set-up quickly

Development of Hi-tech Zones and Software

Park Clusters within or in proximity to educational institutes and training centers to ensure
greater industry-talent pool connect

Representatives from IT-BPM

companies through their
association can conduct
regular workshops in various
colleges to increase awareness
amongst students about the
industrys requirements

Priority Sector status to the

IT-BPM industry with dedicated
government mechanisms to
promote the interests of the
industry and foster its growth

Creating industry specific cluster of related

companies Innovation Centers, which gives
them competitive advantage and increases
collaboration

Sponsor budding entrepreneurs

by organizing competitions in
various colleges and institutions

Ensure continuity of business

operations at all times, including
24x7 operations even during
events such as strikes, hartals, etc.

Seed Funding - provide funding to budding

entrepreneurs and make other sources of
financial capital easily accessible

High-level training in English and

certifications depending upon
various levels of proficiency- right
from the highest level to basic or
intermediate-level

Consistency in approach;
introduction of Dividend Distribution Tax and Minimum Alternative
Tax on SEZs mid-way has deterred
fresh investments

Ensure that cities grow in all aspects and can

offer physical and social infrastructure that
can meet expectations of a talent pool that is
globally exposed and highly demanding

81

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82

Sitara Achreja
Director, Marketing & Communication
+91 (124) 469 5555
sitara.achreja@ap.cushwake.com

For more information about Cushman &

Wakefield Research, contact:
Siddhart Goel
Director India, Research
+91 (22) 6657 5555
siddhart.goel@ap.cushwake.com
Authors of the report:
Siddhart Goel
Director India, Research
siddhart.goel@ap.cushwake.com
Megha Maan
Regional Manager, Research
megha.maan@ap.cushwake.com
Virendra Joshi
Senior Manager, Research
virendra.joshi@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

Definitions and Notes

Ahmedabad: Ahmedabad locations include Gandhinagar
BPM: Erstwhile BPO; now rebranded as BPM includes processes that may be
IT-enabled, do not necessitate onshore presence and are hence, offshoreable
Capital values for mid-end segment: Base price per square feet for mid-end category
residential properties
Cost of operations: Includes various operational costs such as rents, fit-out charge,
electricity charge, building maintenance charge, expenses on utilities, salary cost,
maintenance cost, training cost, etc.
DMIC: Delhi Mumbai Industrial Corridor
Engineering Services and Research & Development (ER&D): Engineering services are
those that are associated with the creation of a product or service, as well as those
associated with maximising the life span and optimising the yield associated with the
product or asset. This not only includes design elements of the product or service
itself, but also encompasses the infrastructure, equipment and processes engaged in
manufacturing/delivering them
R&D services involve providing research and development for hardware and software
technologies, as well as development of software running on embedded systems.This
includes Computer Aided Designing (CAD).
EOU: Export-Oriented Units
FSI: Floor Spacing Index is the ratio between built up area allowed and land
area available
Grade A stock: Buildings with good construction quality, ample parking space,
large floor plates, good efficiency, built by prominent builders, mostly having
100% DG backup, good tenant profile, etc.

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

Sources and references

ICT Policy, 2014 Bhubaneswar
Indian Brand Equity Foundation (IBEF)
IT Park Officials
Kolkata Metro Rail Corporation Ltd.
Ministry of Commerce and Industry
Ministry of Statistics and Programme Implementation (MOSPI)
Ministry of Human Resource Development
Ministry of Railways
NASSCOM
National Crime Records Bureau Ministry of Home Affairs: Government of India
National Sample Survey Organisation (NSSO)
Newspaper Articles
Railway Budget
Representatives of IT Companies
Respective City Municipal Corporation
Respective State Socio-Economic Review 2007-08
Respective State Socio-Economic Review 2012-13
Respective State Electricity Regulatory Commission
Respective State Water Resource Department
Science and Technology Department: Respective State Governments

86

 Special Economic Zone Website

Software Technology Parks of India
Thirteenth Finance Commission
Torrent Power
University Grants Commission
IT Company Websites
West Bengal Electronics Industry Development Corporation Limited

87

Copyright 2014

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Published by
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Designed & Produced by

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88

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