Kolkata is providing yet another option for BPO companies hungry for expansion within India. Despite being a metro, the city has commanded much less attention, compared to other metros - Mumbai, Delhi, Chennai, and even Bangalore, Hyderabad and Pune. Corporates have been unwilling to invest in the state due to its communist-dominated regime and high level of trade union activity. The decades-long experience of the manufacturing sector has set a negative precedent, and Kolkata has suffered economically as a result.

But times are changing for the West Bengal capital, with the government taking up an aggressive stand in promoting Kolkata and ensuring a positive business environment. IBM's decision to invest in Kolkata in 2004 provided a huge fillip to the new pro-business image, with more IT companies expected to follow suit. In 2005, the Videocon Group, spurred by encouraging response from the West Bengal state government announced an ambitious plan to set up a BPO unit employing 25,000 people.

                                                              Source: ValueNotes Research

The Salt Lake area of Kolkata offers potential for about 10 million square feet of real estate development. It also promises planned infrastructure, which is finding great favor with outsourcing companies as cities like Bangalore, Mumbai and Pune are bursting at their seams.

Apart from providing the usual sops of tax benefits, incentives and the likes, some aspects in favor of Kolkata include:

• An extension of the suburban metro railway to the Salt Lake area, ensuring better infrastructure.
• Much higher per capita spending on education compared to other states, promising a quality talent pool.
• Lower proclivity of youth to move out of the city compared to those in Mumbai, Bangalore, thus reduced attrition levels
• Far lower real estate costs than any other metro or Bangalore.
• No power shortages!!

The 'City of Joy' may have made a slightly delayed entry into the outsourcing race, but shows signs of catching up very fast. Although the recent incidents surrounding granting of agricultural land to Tata Motors for an automotive unit at Singur may pose to be a setback, the outsourcing industry infrastructure is located around cities (Kolkata), and is not that much dependant on agricultural land, and definitely not in the quantities required by an automobile plant. At different times, the proactive positioning of Bangalore, Chennai and Hyderabad by the respective state governments has shown how much good the right amount of political intervention is capable of doing.

But the most powerful attraction for Kolkata lies in the problems being faced by all other major destinations: accelerating real estate and wage costs, crumbing infrastructure and acute manpower shortages. Right now, Kolkata scores on all four major parameters (government support, real estate availability, talent availability and relatively decent infrastructure). So unless, Bengali politics excels itself in creating obstacles for itself, Kolkata should see lots more action for a while - at least on the BPO front.

Related Items:

1. Indian Global Companies: Expanding and Hedging
2. Bangalore: still the hotspot
3. Indian vendors go global!
4. Chennai: The STM Publishing hotspot!