Tier II cities emerge on IT map

Tamil Nadu is the only state in the country, which has four tier II cities of potential IT and BPO locations, including three in the challenger and one in the follower segments, according to a Nasscom-AT Kearney study on 'Location roadmap for IT- BPO growth: Assessment of 50 leading cities'.

According to the study, Chennai is the leader, while Coimbatore, Madurai and Tirchy are the challengers and Salem is the follower.

To move to the next level, these cities will have to create the required pull to attract talent, strengthen its infrastructure, improve the quality of life, and increase inclusivity to accommodate the demographic diversity that growth will accompany.

The Indian IT-BPO sector has been a frontrunner of economic development in select cities, providing employment to a large number of people and improving the overall quality of life and amenities like education and healthcare in these cities.

The growth projections of the industry indicate that though seven cities including Chennai, Pune, Bangalore, Hyderabad, National Capital Region, Mumbai and Kolkata would see significant growth, they would need proactive planning and meticulous execution to support this growth.

Today 70-80 per cent of the revenues comes from these major cities. To reduce the pressures and, in turn, balance growth there is a need to develop tier II cities, which give various advantages, importantly cost advantage.

Compared with Chennai, cost advantage in Coimbatore is 34 per cent, Madurai 21 per cent, Tirchy 35 per cent and Salem 36 per cent.

But the challenge in these cities is lack of quality commercial space, infrastructure development, quality hotels, public transport in peripheral areas, availability of recreational and educational facilities and rise in labour and real estate costs, it pointed out.