It’s official now. Bangalore, India’s tech capital, has fallen behind in the race to play host to the new offices being set up by leading software and back-office services companies in India. Chennai, Hyderabad and Pune are the biggest gainers of such expansions.
Bangalore’s administration has been criticized by top managers of Infosys Technologies Ltd and Wipro Ltd, the second and third-largest tech vendors in India, respectively, for the city’s crowded roads, rising pollution levels and deteriorating infrastructure in the last five-six years.
Chennai leads the new crop of destinations in India, with the port-city expected to house more than 73,000 workers of the top three Indian information technology companies—Tata Consultancy Services Ltd, Infosys Technologies Ltd and Wipro Ltd—in the next three years, overtaking the number of employees these firms have in Bangalore. The trio, which together have around 55,000 employees in Bangalore, do not have any expansion plans in the city.
Infosys’ 25,000-seater facility in Mahindra City on the outskirts of Chennai, which is slated to run at full capacity by 2010, would be the company’s largest office in India. About 3,500 Infoscions, as programmers at India’s second-largest tech company like to call themselves, already work at the office.
Similarly, TCS’ upcoming facility, which will be completed by the end of 2008, would have a capacity of 22,000 seats, according to Ravi Viswanathan, vice-president and head of Chennai operations, TCS. The first of TCS’ six buildings in a special economic zone complex will be completed by July or August, and will house around 3,500. TCS expects to complete “one building per quarter” over the next six quarters. TCS, India’s largest software and business process outsourcing services firm, already has its strongest presence in Chennai, with about 16,500 employees, followed by Mumbai with nearly 11,000, and Bangalore that has over 10,500.
Infosys has about 6,500 people working in Chennai currently, says Sujeet Oommen, the regional manager for the company’s Chennai facilities. This includes 3,000 people in one facility at Shozhinganallur and 3,500 people in the work-in-progress Mahindra City facility, he said. When it reaches full capacity, it would overtake the company’s Bangalore facility located in Electronic City, on the southern outskirts of the tech capital, which seats about 18,000. Infosys human resources director T.V. Mohandas Pai said Infosys was attracted to Chennai because it “has good talent, the environment is conducive, and infrastructure is good”.
At Hyderabad, TCS announced plans last week to spend Rs400 crore to set up a 15,000-seat facility in an upcoming special economic zone promoted by the state government, growing the company’s workers in the city more than five times.
The company’s chief financial officer S. Mahalingam says the new office will be ready in three phases in 2009, 2011 and 2013, adding 3,000, 5,000 and 7,000 workers more at the completion of each phase. The location of TCS’ new offices are driven by “availability of quality talent pool and sound infrastructure”, Mahalingam said. He expects Chennai, Mumbai and Hyderabad to have 25,000 workers each in the next few years.
Pune has attracted Infosys and Wipro as well. Infosys will not reveal details but its latest financial results reveal a ‘work in progress’ of a 14,400-seater in this western industrial city. Earlier this month, Wipro chairman Azim Premji announced a new facility in Pune, its second in the city, at a cost of Rs400 crore. The company plans to nearly triple its workforce in the city to over 17,000 by 2008-09. Premji has been among vocal critics of the Karnataka government for ignoring Bangalore’s woes.
In anticipation of further expansion of tech firms in the new upcoming tech cities, prices of commercial space have shot up. Lease and purchase costs in Chennai, for instance, is more expensive than in Bangalore, said Ramesh Nair, south India head of markets at realty consultant Jones Lang Lasalle.
Recent administrative improvements could help stem the tide at Bangalore. New commercial land has been acquired and released by the Bangalore authorities within city limits attracting commercial developers.
“If the Tamil Nadu government can release some land here, then Chennai could also bring prices under control,” Nair added.
C.R. Sukumar contributed to this story.