Lure of the Smaller Cities
But it is the lure of the smaller cities that is scripting a new story. Cities such as Chandigarh , Jaipur, Kolkata, Kochi , Managalore and Mysore are being seen as a panacea for talent shortage — the biggest ill that the industry is plagued with. While salaries are only marginally lower in these cities than in the larger Indian cities, it is staff loyalty and less attrition that attract companies to these cities. Because there is less competition in these cities, people are less likely to be tempted to change jobs.

“Attrition [in smaller cities] is lower by two percent to eight percent depending on the city as compared to Bangalore ,” says Laxman Badiga, Corporate VP and CIO, Wipro Technologies. Apart from most large cities, Wipro has both IT and BPO centers in Kochi and Mysore , and its center in Bhubaneswar is likely to be operational in six to eight months. It is also actively considering Coimbatore , Vizag, Mangalore, Jaipur, Chandigarh and Nagpur . (See map for location of all cities discussed in this article.)

Given that growth in offshore operations is directly proportional to scale, surely cost is an important factor, too, for companies to set up centers in smaller cities? Not entirely. Salary costs are almost the same across the country — you don't pay a developer in Bangalore substantially more than you do in Mysore . Infrastructure costs — power and telecom — too are more or less the same across locations.

The difference in cost can be seen in the rental cost of real estate. But, since real-estate space is more readily available in such cities, companies are coming round having to pay large rentals by building their own centers. Incremental running costs, the industry concludes, is hence not much different from city to city.

But the picture is not perfect — while the bulk of the junior positions can easily be filled in such cities, middle and senior level people are difficult to find. Companies “fix” this problem by sending managers from their established centers on short relocation programs.

“Hiring talent at the lowest level takes some time in a new city until people get to know your brand,” says Amitabh Chaudhry, CEO and MD, Infosys BPO. “But the critical issue is that of mid management.” Infosys BPO set up a center in Jaipur, close to Delhi and away from its stronghold Bangalore , last year, and the company is getting in a lot of its middle-level managers from its other established centers. Many of these are Infosys employees who belong to Jaipur, and are happy to go back to their hometown.