The Hindu Business Line : `Chennai, Hyderabad may top outsourcing destinations'

HYDERABAD and Chennai could possibly replace Bangalore and Mumbai as favoured destinations for IT outsourcing by the year 2010, according to a Gartner analysis of Indian cities.

In a report entitled `IT outsourcing to India — Analysis of cities', Gartner has categorised and evaluated cities into four tiers based on factors such as infrastructure, skills availability, skills retention, access, cost of living, political support and interestingly quality of life.

The Vice-President of Gartner, Mr Partha Iyengar, in a statement said, "Bangalore and Mumbai will soon cease to be default centres for offshoring. Ready availability of skilled labour force with lower attrition rates in cities such as Chennai, Hyderabad and Pune will lead to companies setting up centres there instead. In the long run, other factors including global footprint of service providers, service line capabilities and Expatriate Index will also play a greater role for global MNCs or IT service providers setting up or expanding in these cities."

The drivers for these cities for their success would be improved infrastructure, overall skills availability, good quality educational institutions and active political support. The improved infrastructure in Hyderabad has enabled the city to top the ratings in the infrastructure category. However, the issue relating to attrition needs to be tackled.

For instance, Pune, which ranked lowest in infrastructure support, would need significant investment to be on par with Mumbai or Bangalore or even Chennai and Hyderabad.

While Bangalore, Mumbai and New Delhi have been classified under Tier 1, Chennai, Hyderabad, Pune, Noida, Gurgaon and Navi Mumbai have been put in Tier 1-1, and Kolkata, Mangalore, Mohali, Chandigarh, Bhopal are in Tier 2 and some others in Tier 3. The study maintained that Hyderabad, Chennai and Pune are at vantage point and are better placed to scale up the infrastructure.

Mr Iyengar said when choosing the destination for offshoring, companies could look beyond Mumbai and Bangalore. While factoring expatriate attractiveness, Gartner cautioned against parochial biases and to be guarded when an Indian was helping the decision makers.