Coimbatore Can Become Potential IT-BPO Hub

The latest Nasscom-AT Kearney report released at the HR summit in Chennai on Thursday termed Chennai as an established IT & BPO destination and ranked Tamil Nadu among the top three for investment environment (2007). The study shows that Chennai enjoys a 10-13% cost advantage compared to other leading locations in the country. Nasscom president Som Mittal said that as per the report, Tamil Nadu is the only state to have three “challenger” locations — Coimbatore, Madurai and Tiruchi — which have significant growth potential to emerge as IT-BPO hubs in future. Salem figures under the aspirants category.

Cognizant vice-chairman and Nasscom past chairman Lakshmi Narayanan said Tamil Nadu has the maximum number of potential IT and BPO locations. The state’s growing IT and BPO potential in and beyond Chennai is also the result of the pro active support the industry has received from the state government. He said CTS is quite happy with its growth at the Coimbatore centre and will help the state government to showcase it as one of the success stories to attract more players to the city. According to the report, Chennai has a good talent pool relevant for the sector, a large incumbent pool with presence of major IT-BPO companies and good connectivity, good social and living environment.

Mittal said that it is time for the state government to develop integrated townships around Chennai like Mahindra world city. (The DMK government had shelved the proposal to develop a satellite township following opposition from the PMK, which was till recently was its ally). The report stated that industry participants felt that support for the IT-BPO sector development in Chennai had come down due to increased attention being focused on other locations in the State. There is a high rate of attrition in Chennai. Strong MTI (mother tongue influence) among graduates poses a potential challenge for international voice operations. Also, strong presence of “ core” industries makes it more difficult to recruit manpower, especially for BPOs. The other challenges are increasing real estate costs, increasing traffic congestion in the city and increasing occupancy levels for hotels.

The study states that a large pool of graduates with good technical skills makes Chennai a good destination for large IT companies. Significant presence of IT companies makes it easier to recruit talent, especially middle and senior management levels. It is also an attractive destination for talent returning from other countries (for example, North America). In the BPO sector, Chennai could position itself as the destination of choice for major BPO (non-voice) companies and smaller to medium scale voice-based BPO companies.

There is a good supply of accounting skills in Chennai along with a large number of students pursuing specialised programmes like CA, ICWA etc., indicating a strong opportunity for companies in the financial services industry or finance-related operations. The report said Coimbatore, with 34% cost advantage over leader locations, can become a potential IT-BPO hub with further investments in infrastructure. In IT, it can be positioned as an alternative to Chennai and Bangalore. In BPO, the city is attractive for non-voice operations and domestic voice operations in the native language — Tamil.

Madurai, which has 21% cost advantage, can become an attractive location by enhancing its talent quality, increasing supply and quality of infrastructure and by offering a supportive business environment. Trichy with 35% cost advantage, has a good social environment for attracting small and midsized IT-BPOs. It is a good destination for sourcing talent. Salem, with 36% cost advantage, requires significant development efforts to improve its attractiveness. It is a good destination for sourcing talent.

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