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Bangalore losing ground to Gurgaon

The millennium city is next hot spot for Business Transformation Outsourcing, reports Sanjeev K Ahuja.

india Updated: Dec 09, 2006 04:49 IST

Bangalore, currently considered the hub of IT and IT-enabled services (ITeS), is slowly losing ground to Gurgaon.

The millennium city that has already made a mark in offshoring business is the next hot spot for Business Transformation Outsourcing (BTO), according to a study conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM).

According to the study titled "BTO: Third Generation Outsourcing," the potential worldwide for BTO services is estimated at a huge $500 billion. "Of this, share of India's BTO market as per current estimates is estimated at $6 billion against Gurgaon's share at about $1 billion. By 2007-08, the All India BTO market will be around $7.5 billion in which Gurgaon's share will be over $1.4 billion," said DS Rawat, Secretary General, ASSOCHAM.

So what makes Gurgaon the best choice? Gurgaon's mega development plans and Bangalore's crumbling infrastructure base is the big reason behind the shift.

The Haryana government has already announced plans to spend Rs 1,456 crore to boost infrastructure in Gurgaon: Rs 776 crore for civic infrastructure and Rs 680 crore for Metro.

The chamber is busy assimilating the findings of this study that would be published in January 2007. By 2010, the All India BTO market will touch $18 billion, said Rawat.

And Gurgaon has a special place in this offshoring segment.

"Bangalore, which currently takes a lead in BTO vendor services with its current BTO market size of over $ 2.5 billion, will touch $8 billion level by 2010. However, it will be badly congested by then as its infrastructure has already started crumbling. Gurgaon provides for the best infrastructure facilities and its proximity to Delhi and policymakers gives it an edge over Bangalore."

The advantages will be so large and pronounced that in the next couple of years, leading IT & ITeS companies would be tempted to encourage their BTO vendors to set up centres and shops within Gurgaon as the city provides for large space, handsome infrastructure and perhaps best tax incentives, the study says.

The Haryana government has already given IT & ITeS companies large incentives, said Rawat. Apart from this, the need to drive down costs is pushing companies to choose centers like Gurgaon that has a large cost advantage.

Email Sanjeev K Ahuja: skahuja13@gmail.com