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IT-enabled services: Advantage Chennai, says study

By Our Staff Reporter

CHENNAI, OCT. 13. Does Chennai have what it takes to become a favoured destination for IT-enabled services?

The answer is yes, according to NASSCOM and management consultants KPMG. A recent study jointly carried out by NASSCOM (National Association of Software and Service Companies) and KPMG pitches strongly for the city on various grounds. These include a relatively lower cost of living than other metros and lower rates of attrition among the IT workforce. These advantages add up to a further growth to the call centres and other non-voice BPO (Business process outsourcing) units here, they say.

The study states that State Government agencies are looking at a 20 per cent market share in the Indian BPO/ITES sector by 2008. Chennai, identified as a `primary cluster' or `Tier-1 city' for IT development, currently hosts 680 of the 750 software export units in the state. Of these, 35 are ITES/BPO companies. (Coimbatore and Madurai figure in the second and third tiers respectively.) The city has about 8.8 per cent of the ITES-BPO facilities operating in India (35 out of 400), employing around 30,000 people directly.

While listing Chennai's merits, the study says that the success of remote IT services (largely for banks) has helped draw attention to back-office processing support for companies in the financial services and healthcare sectors -- most of it captive.

Chartered accountants

Chennai also has a large number of chartered accountants, who could take care of such financial back-end work. One of the important factors working in favour of the city is its cost of living. According to the study, the cost of living in the city is 20 per cent lower than Mumbai and New Delhi. The attrition rate is also 50 per cent lower than the other two cities. However, this is expected to rise when more companies set up operations in Chennai. On the infrastructure front, the study states that Chennai could do with some catching up.

The city lacks ready-to-use facilities that IT-ITES companies require.

The average floor plate in the city was 13,000 sq.ft., compared to the 25-30,000 sq.ft. available in Mumbai and New Delhi.

But the scenario is changing fast with the Government moving to improve infrastructure. (At a recent conference organised by ELCOT in the city, representatives of various BPOs with units here said the Government could consider a single-window approach for setting up BPOs here.)

Special arrangements made by the Government to attract such companies include concessions on land clearance and FSI (Floor Space Index) limits.

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