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Chennai is BPO hot spot

Kolkata is also emerging as a credible alternative to cities with established offshoring services industries.

india Updated: Apr 04, 2006 11:03 IST

Chennai has elbowed out all the traditional markets, including NCR (Gurgaon, Faridabad, Noida), Bangalore and Mumbai, as the most attractive destinations for offshoring services.

The other city emerging as a credible alternative is Kolkata, according to global management consultancy firm A.T. Kearney’s Indian City Services Attractiveness Index 2005.

Kolkata is emerging as a credible alternative to cities with more established offshoring services industries. The cities have been benchmarked as attractive based on three major categories of financial costs (compensation costs, infrastructure costs, cost of living); people skills and availability (availability, educational skills and attrition rates); and the business environment (city infrastructure, quality of life and government support). Chennai emerged as a clear leader across all categories followed by Hyderabad, NCR and Bangalore.

Announcing A.T. Kearney’s Indian City Services Attractiveness Index 2005, Marcy Beitle, Partner and Vice-President, Organisation and Transformation Practice, said, “India has rightly focused on the development of IT and IT infrastructure during the past decade. Today, India offers the most mature supply base for offshore work across services and verticals.”

Nine Indian cities of Chennai, Hyderabad, NCR, Bangalore, Mumbai, Kolkata, Pune, Kochi and Jaipur were assessed for their attractiveness for placing offshoring services. While NCR, Bangalore and Mumbai remain attractive, they are challenged by cost pressures and high attrition.

Mohit Rana, Principal, Communication and Technology Practice, A.T. Kearney  said, “Our analysis indicates that India will continue to be the most attractive destination for BPO services with a potential to achieve over $18 billion in ITES exports by 2008, accounting for 65 per cent of the total offshore market. Globally and in India, the exponential growth in offshoring is putting significant pressure on skilled labour availability, particularly in Tier 1 cities. In most offshore destinations including India, Philippines and Mexico, we see a trend of vendors developing Tier 2 locations.”