As existing havens for outsourcing and shared services become increasingly saturated, newer cities are emerging as centres for these services. These cities offer new and improved incentive packages and talent availability is on a par with existing centres.
The emergence of these cities has been documented in a KPMG report ‘Exploring Global Frontiers — the new Emerging Destinations’.
KPMG identified 31 such relatively unexplored cities. Though dominated by cities in developing countries, the list also includes some on-shore or near-shore developed city-country pairs which may be valid competitive alternatives to the existing favoured locations such as Bangalore, National Capital Region, Chennai, etc. Interestingly, Ahmedabad, Jaipur and Nagpur have been identified by KPMG as emerging cities for the IT-BPO industry in the country.
The report said enterprises are moving offshore not only to benefit from lower costs and access to a diversified talent pool, but also to get an added “first-mover” advantage if they tap relatively unexplored cities.
They can also acquire various incentives such as government grants due to a heavier hand at the negotiation table as “first-movers”. Countries in the developing markets are offering lower cost destinations for outsourcing services, and also access to their markets , which have high growth potential.
A favourable business environment, access to a good supply of talent, good quality of life and lower costs are some of the factors that are being sought out by Information Technology- Business Processes Outsourcing (IT-BPO) companies investing in emerging locations. Some of these destinations are hot tourist spots, and therefore, are more visible on the world map. Then there are other locations which are relatively unheard of, but are seeing traction as they have historically had a good education system and are working on improving their infrastructure.
Besides cities like Bangalore, Mumbai, National Capital Region (NCR), Chennai, Pune and Hyderabad, which are now regarded as “emerged destinations”, several smaller Indian cities (Tier II and Tier III) have the potential to attract IT-BPO investments, notes the report.
Reasonable infrastructure, the speed at which it was sought to be improved, incentives provided by state governments, availability of human recourse and low risk possibilities were some of factors that were looked at for cities that made the list.
