Outsourcing to Nagpur

Pratibha Verma

With the development of proper infrastructure, leading IT firms are expressing interest in the city. Companies like GE, Microsoft, Patni and L&T Infotech have purchased land for IT parks within the SEZs around the MIHAN area

Nagpur, which has always attracted people for its Mandarin oranges, has not left any opportunity to attract foreign investment in IT-BPO sectors. Being an industrial, commercial and transportation hub in Maharashtra, this city also marks the geographical center of India.

The city's economic development started with the creation of the Multi-modal International Hub Airport at Nagpur (MIHAN) project –  the project which aims to exploit the central location of Nagpur and to convert the present airport into a major cargo hub with integrated road and rail connectivity. This is considered to be the biggest economical development project underway in India in terms of investment.

With the development of proper infrastructure, leading IT firms are expressing interest in the city. Companies like GE, Microsoft, Patni and L&T Infotech have purchased land for IT parks within the SEZs around the MIHAN area.

Shashikant Chaudhary, the VP, Head--Mobile BU of GlobalLogic, which is an outsourced service provider with an R&D center in Nagpur, says, "City's infrastructure is getting equivalent to big cities with clean and big roads and 3 IT parks. MIHAN project s expected to provide employment to 100,000 people. This has 600 hectares of space reserved for IT. Many majors like Avendus, L&T, Mantri are building state-of-the-art facilities here. The infrastructure cost is also 30 percent less than the other cities."

GlobalLogic opened a center in Nagpur in Nov. 2000. Being specialized in mobile product engineering, the company decided to provide R&D services to mobile application development companies from here. The areas of its specialization includes LBS, Media and Messaging domains.

Chaudhary reveals, "In 2006, we started our operations here after acquiring Lambent Technologies, which focused on mobile product engineering. We had access to a lot of young talent here. This city gives us an opportunity to develop and nurture “niche play” and not competing for resources with very large companies. There is still not much competition. Everybody operating out of Nagpur has his own space. We have around 100 companies in Nagpur --no super big companies. If at all there is competition, it is to hire senior level people."

Being the city with the second highest student population in Maharashtra, Nagpur has 35 engineering colleges along with a number of engineering, MCA, M.Sc and engineering diploma colleges within 250 km periphery. The total number of professionals graduating out of this region is more than 10,000 per year.

An estimated $25.9 million (2007-08) for the combined IT-BPO exports from Nagpur, suggests that the city is all set to compete with other outsourcing destination of India. More than 90 companies are operating from the city and prominently provide IT services, embedded software engineering services and healthcare BPO services such as medical transcription, according to KPMG.

Being centrally located, Nagpur offers tremendous advantages for IT and ITeS companies looking towards emerging destinations. Cities like Jabalpur, Raipur, Bilaspur, Amravati, etc, which boast of a strong academic background and hence a vast pool of highly skilled young manpower, fall within 150 km of the city. The cost of doing business is much lower as the cost of living is comparatively lower than most other cities.

This city is also an educational hub with 27 engineering colleges, 11 medical colleges and more than 40 graduate colleges for science and commerce education. The city attracts students from nearby cities like Jabalpur, Amravati, Bilaspur and Raipur.

Although, the talent pool is largely available here, English language skills are currently average. Experienced managerial talent is in relatively short supply as students prefer to migrate to larger cities such as Mumbai, Pune, and Hyderabad. Companies are making efforts to attract local talent to relocate to Nagpur and internally develop people to handle managerial responsibilities, says KPMG.

Nagpur is also witnessing a boom in the construction of commercial office space (IT Parks). Approximately 110,554 sq.m. of commercial office space is expected to come into the market by 2009, KPMG reports. The city is a hub for power generation and therefore has fewer breakdowns and outages compared with other cities in Maharashtra. There are separate sub-stations for IT companies and power for areas having IT-BPO companies.

The city currently has three software parks, with another planned to come up. Besides, a SEZ has been notified as an integral part of the MIHAN. The SEZ is expected to have dedicated areas for IT parks, healthcare, gems and jewelry, garments and textiles, and banking companies.

The government has also taken some initiatives to promote the growth of outsourcing to this city. Special capital incentives for companies in Nagpur Municipal Corporation areas are-30 percent of gross Fixed Capital Investment with a ceiling of $ 50,000; refund of octroi duty for 100 percent of FCI for 9 years in municipal corporation limits, 12 years for other areas, and exemption from Electricity Duty.

Empowered committee has also approved the charging of sales tax at a minimum floor rate of 4 percent on all IT products and non-IT products essential for IT and IT-enabled services units. Read More.