Gartner survey finds smaller cities more alluring for IT
By Our Infotech Bureau | 17 Dec 2004
Small cities beckon IT investments, says Gartner.
Can Bangalore be 'Bangalored'? Yes, says global IT consultant Gartner Inc (NYSE: IT and ITB). And it won't take very long to happen; just five years. In its report IT Outsourcing to India - Analysis of Cities, Gartner Inc predicts that smaller cities like Hyderabad and Chennai will soon replace metropolitan cities like Bangalore and Mumbai as the most favoured Indian destinations for IT outsourcing by 2010.
But it is the even smaller cities like Pune that can emerge as the real long-term challengers to the better established IT destinations, if their administrators take the right decisions today, the survey indicates.
The Gartner study has categorised and evaluated the cities into four tiers based on various factors including infrastructure, skills availability, skills retention, access, cost of living, political support and quality of life.
The report also stated that certain drivers make these cities favourable destinations for outsourcing. These include improving infrastructure, overall skills availability, good quality educational institutions and active political support. The improving infrastructure in Hyderabad has enabled the city to top the ratings in the infrastructure category.
Factors that inhibit a city's attractions and need to be addressed are increased attrition, inadequate infrastructure, escalating costs and lack of good quality real estate. For example, cities like Pune — which ranked lowest in infrastructure support — will need significant investment to come on par with Mumbai and Bangalore or even Chennai and Hyderabad, in the future.
According to the study, the Tier-1-1 cities like Hyderabad, Chennai and Pune are at a vantage point. These cities have most, if not all, of the capabilities of the Tier-1s, but, for various reasons, have not achieved the same level of mindshare and visibility. They are likely to take on the mantle of Tier-1 in the near future, either by adding to or replacing the current Tier-1 cities. Hyderabad rates almost at par with Mumbai on all factors evaluated, but has scored much higher on the cost of living and quality of life, where Mumbai has received the lowest ratings.
On recommendations to companies planning to set up centres in India, Iyengar said: "When choosing the destination for offshoring, companies should look beyond Mumbai and Bangalore. They will need to assess the strengths and weaknesses of various cities, as what they plan to outsource or in-source could very well determine the location. They should also factor the Expatriate attractiveness of the location, which could be an emerging 'swing' factor. Further, if an Indian is involved in the selection, care should be taken to overcome the parochial biases and preferences of the individual in making the selection."
Key highlights of the study indicate:
- Smaller cities are more alluring for IT
- Mumbai ranks lowest in cost of living and quality of life
- Chennai and Hyderabad will replace Bangalore and Mumbai to be the most favoured destinations for offshoring by 2010
- Attractiveness of the location for expatriates will be an emerging 'swing' factor by 2006.
