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Old November 16th, 2005, 10:43 PM
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Re: Infosys Invited To Maharashtra

Quote:
Originally Posted by ShivSainik
IMO nobody will shut shops in B'lore and move to Maharshtra. I think Maharashtra should (and they are I think) concentrate on capturing growth of IT services giants like Wipro, TCS and Infy. What they should also target is US based product co.s which still does not have enough base in India. Pune is somewhat successful in getting attention from US based ISVs recently. Co.s like Nvidia, Amdocs and small co.s like Storability have setup their off-shore locations in pune. This year’s trend shows that a significant number of US-based parent IT companies are showing a preference for Pune as their Indian base. Of the 60 firms registered with STPI (Mah) between April and October this year, more than 20 are US-based IT majors.

Also we have example of off-shore devlopment center of worlds 4th largest ISV (Veritas - now Symantec Corp) which is running in pune for almost 7-8 years now.

Other positive point (which may not last forever) is low attrition rate in pune (5-10%) as compared to B'lore (almost 70%)

While Nashik could be interesting choice, according to P. Venugopal, director (Maharashtra), Software Technology Park of India (STPI) : "After the heavy rains which lashed Mumbai on July 26, the STPI had tried to convince some IT firms to consider these locations, but the interest shown was momentary".

And IMHO whether it is Kannad goons or ShivSena, this is non-issue with respect to IT industry growth.
At last a voice of reason. You are right in a way that surplus growth will move away from Bangalore. All the major Indian Software service companies are looking for new locations for growing which is better for the country and the city of Bangalore in a way.

However the going for Pune and other Indian cities will really be tough, simply because unlike 15 years ago almost all major states seem to have woken up to the potential of IT and every state is pulling up all kinds of sops to attract IT industry. Three weeks ago the CM of Himachal Pradesh was in Bangalore asking the Industry to put money in his state. This would have been unimaginable just 5 years ago. You name a state, and the CM is doing all it can to lure IT companies, Bihar excluded. You have CMs of Assam and Sikkim who want IT industry in their states.

As it stands today, Pune has absolutely nothing in favor of it when compared to Gurgaon or Noida. Closer to International airport, US consulate, better roads and public transport and no outsider/insider syndrome.

This is the main reason why I feel that the primacy of Bangalore is safe.

Second and the more important reason is that of people. Unlike Services projects which can be scaled up in a short time you just cannot do that in a product firm. Second reason is that in any services project in India the majority of the people are junior level staff who can be replaced any time.

Imagine a scenario where Wipro or Infy want to farm out their new project in a new city. All they need is to find a core group of willing people to move into the new project and build it around them. This model will never work in product firms.

You talked about NVidia. NVidia started out in Pune but today it has a larger center operating in Bangalore. What are the reasons? People, people and people. If NVida wants a graphics chipset engineer all it needs to do is make an offer to a guy in Intel or Philips offering him a 20-30% hike in salary. Ask the same engineer to relocate to Pune he will reject the offer rightaway. This is the advantage Bangalore has and no amount of infrastructre problems can ever remove that.

This will be the model in any product company. They will want people who have worked in that domain, and there is no better place to find the people apart from Bangalore.

This is the reason why every storage company in India, will move to Pune. Because it will be easy for them to staff by hiring/poaching a few key people from Veritas. And this is the key reason why Microsoft inspite of having a large development center decided to locate its research labs in Bangalore. Bad roads and traffic snarls not withstanding.

Finally attrition rates in Core IT industry in Bangalore is about 15-20% not 70%. 70% is in Call centers and other ITES.

And finally Vyomi, the second largest center of Infy is in Chennai. And at current growth levels that center will be the largest in 4 years.
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