At a time when the fate of Infosys’ and Wipro’s new campuses in West Bengal appear in jeopardy, the state’s information technology (IT) minister is trying to make use of the Cognizant success story to salvage matters.
“I am trying to impress upon both companies the fact that they can build and grow in Bengal without the SEZ (special economic zone) status as well. The proof is the Cognizant success story in Bengal,” said IT minister Partha Chatterjee.
Over the last week, it has become increasingly evident that without SEZ status, Infosys, which is the second largest IT service provider in the country, would go the Tata Nano-Singur way and shelve plan for the Rajarhat campus. It is the stated policy of the Trinamool Congress government under Mamata Banerjee that West Bengal should have no SEZs.
The “success” that Chatterjee is referring to comes from the fact that Cognizant Technologies now has 10,500 IT professionals working for it in Kolkata. Kolkata was the second city where Cognizant started operations, after Chennai, where the company now has in excess of 40,000 employees. This makes Cognizant the second largest IT employer in the state. Tata Consultancy Services (TCS), country’s leading IT service provider, has a strength of about 14,000 in Bengal.
Until last year, Cognizant had no campus in West Bengal. It had one fully-owned development centre in Kolkata, which accommodates 1,750 employees. Besides this, it has four leased facilities in Salt Lake.
“Cognizant employs more than 10,500 professionals in Kolkata. We started operations in Kolkata in 1996. This was our second location in India after Chennai,” said Subho Samanta, senior vice-president and head of Cognizant’s Kolkata Operations.
While Infosys is yet to start operations in Kolkata, Wipro, the fourth largest IT service provider in the country, has a campus spread over 14 acres in Salt Lake, which has SEZ status. “SEZ status allows us to gain scalability while making operations more profitable,” said an official at Wipro.
The dilemma facing the Bengal government, argue industry insiders, is intrinsic to the future of the industry. “Some companies have a policy of wanting to develop their own campus as opposed to working out of built-up space, plus most want to take advantage of the tax holiday that comes with the SEZ tag, which cannot happen in less than a 24-acre campus. This might be an inflection point given that land is a scare resource,” said an IT-ITES analyst with KPMG.
Ask others and the view is, a campus for an IT company is not about land grab and tax benefits that come with the SEZ tag. “There are issues of security and intellectual property (IP), which are much better secured with a campus, because this allows us to keep a closer watch on employees,” said the Wipro official.
Besides, a campus is a long-term investment, which allows the company to expand. “Most companies do not like the hassle of looking for space, every time expansion plans are on the anvil,” Wipro CFO Suresh Senapathy, had earlier told Business Standard.
Cognizant’s growth in Kolkata has been against this trend so far. Last year, the company inaugurated its first campus in Bantala at the fringes of Kolkata. This campus is spread over 20 acres in the Bantala facility, which has the SEZ status.
Interestingly, even as the company has started construction on the second phase of the campus, it is also simultaneously investing in built-up space in a 2,700 seater office in Unitech Infospace.
Chatterjee’s argument, however, falls flat in the context of the fact that even Cognizant had approached the state IT department for 30 acres. It is another story that Bengal has no land for Cognizant’s further growth.
“We do not have the land to allocate to them,” said Basudeb Banerjee, IT secretary, West Bengal. Cognizant has not asked for support on SEZ for the proposed 30-acre campus.