The Hindu Business Line : Watching the action

FOR a State saddled with nearly four million unemployed, the present boom in business process outsourcing (BPO) sweeping across India should have come as a boon.

But even as BPO firms create thousands of new jobs in other States every month, Kerala seems to be watching the boom from the sidelines, rather than being a part of it.

It is ironical that BPO and other IT-enabled services (ITES) have not really taken off in a big way in Kerala, though the State is an ideal location for business to thrive. It has a vast pool of educated youth, good connectivity through VSNL's 15 Gbps international gateway (in Kochi), relatively lower power tariffs, lower employee attrition, supporting government policies and many other attributes that compare well with other States.

The State's biggest endorsement came in 2002 when the National Association of Software and Service Companies (Nasscom) rated Kochi, the commercial hub of Kerala, as the second best city to set up ITES business.

Kochi was ranked supreme in terms of rapid improvements in infrastructure such as power, international bandwidth and urban transportation as well as lower manpower costs because of the city's lower cost of living.

Three years later, Kerala is yet to be looked upon as the first choice for a BPO business. What's gone wrong?

Many experts, such as G. Vijaya Raghavan, first CEO of Technopark, Kerala's premier IT infrastructure, blame it on the persisting image of the State as a place where 24/7 operations are still not possible.

According to him, outsiders are not yet convinced that uninterrupted business is possible in Kerala because of frequent strikes. Though the number of such incidents has come down significantly over the years, Kerala has not really conveyed to the outside world that trade unionism has waned in the State and it is possible, like elsewhere, to conduct 24/7 business here too.

Another drawback in attracting significant investment in the ITES/BPO sector has been the absence of an `anchor company' in the State, says Sunil Mehta, Vice-President of Nasscom. He cites the example of Jaipur and Chandigarh, the two cities emerging fast as BPO hubs. "It's because GE and Dell have gone to these cities to set up their operations," he says. The prime reason for Gurgaon to emerge as a buzzing BPO hub is the decision by GE and American Express to set up their facilities there. "All others believed that if Amex and GE could go there, so could they," Mehta points out.

Kerala did have a chance for such an anchor company. Industry sources say that GE had come and looked around in Kochi to set up a BPO unit, but the company could not find any suitable facility. The Infopark in Kochi and Technopark in Thiruvananthapuram are now completely occupied and till new buildings come up, these two facilities can't offer any space.

Vijaya Raghavan says it is this lack of quality real estate that hampers the growth of BPO in the State. "If today you want a place for 500 people in Kochi, you don't have it," he says.

Even if the proposed Smart City project eventually happens, it could be a few years before the facility is ready. Industry sources also say it is time the State government changed its attitude and more aggressively chased investments to complement the IT policy it has framed.

"You can't compare Kerala with Andhra Pradesh and even West Bengal who are now aggressively pitching for investments. Kerala still has a `take it or leave it' attitude. This has to change," they say.

But one must say that in spite of these issues, Kerala has attracted a handful of good BPO/ITES companies. They include names such as Affiliated Computer Services (ACS), Allianz Cornhill Information Services and Outsource Partners International.

These companies are planning to rapidly expand their operations in the State in the coming months.

For instance, OPI will eventually have a 2,000-seat facility in Kochi at an investment of $6-7 million. Kerala also has units of McKinsey & Company and Ernst & Young running from Technopark.

That these companies chose to come to Kerala augurs well for the State. Now it is up to everyone involved to make more deals happen.

vipin@thehindu.co.in

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