IT is destination Pune
The city is a strong contender for the position of the `Silicon Valley of India'. But why, you might ask.
ZEROING IN: With Pune offering the advantages of both a small and big city, IT companies are now evincing greater interest in it. Here, the Infosys campus.
IT's Saturday evening at one of Pune's swankiest pubs. The music is both blaring and groovy. The scene is phantasmagorial. Quite skittish really. The night is young. The party fever is on the rise. Celebrating in a corner, are a couple of IT geeks that's a compliment, these days gorging on succulent reshmi kababs and drinking the finest whiskey. They're young, in their early thirties. Both, Bill-Gates-wannabes, with billion dollar dreams glinting in their eyes.
Prashant Deshpande (31), a software professional of six years at a leading multinational company in Pune, is on his third peg. And is contemplating a fourth. It's only on weekends when he can let his hair down. The other days, his life eddies around his work, round the clock. "Our company's reputation rests on our shoulders," he says. "We have to deliver quality software to our clients. And on time. So that means slogging all day." But Prashant's not complaining. In the last 12 months, he has seen his company witness a near 100 per cent growth and 70 per cent increase in its work force. Already earning an impressive seven-figure salary, he's expecting a significant raise next month. "It's like boom time in Pune," says his friend, Mahesh Patil (30). Mahesh has been working as a senior technical analyst at another software major, for the last six months. His new job has allowed him an enormous 140 per cent pay hike, compared to his last job at a smaller software firm, where he'd worked for six years.
Pune has been at the centre of IT activity for the past few years. Software exports have touched Rs. 5,841 crores this year, compared to last year's Rs. 4,200 crores. Software exports stood at just Rs. 2,000 crores four years ago. Pune crossed the $1 billion (Rs. 4,500-crore) mark in software exports this financial year; not really a feat, if you compare it with Bangalore, which has crossed the stupendous $6 billion (Rs. 27,000-crore) mark this year. Hyderabad crossed the $1 billion mark in 2003. Its exports rose to Rs. 8,270 crores this year. Chennai crossed the $2 billion mark this fiscal year. Its exports touched Rs. 10,800 crores.
Catching up with Bangalore
Yet, despite the huge difference in export figures, several IT companies are evincing greater interest in Pune, a Tier II city, over all Tier I cities like Bangalore, Hyderabad, Chennai or Delhi. It's slowly becoming the hub of huge IT-ITES (Information Technology-IT Enabled Services), BPO (Business Process Outsourcing) investments. The city has seen a precipitous growth in the last 12 months. And if the gamut of activities going on in the city is anything to go by, the city is competing strongly with other IT strongholds to be the IT capital of the country. To be the next outsourcing hub of India. And it's a strong contender for (against Bangalore) the position of "Silicon Valley of India".
Pune is home to all the major IT companies Infosys, Wipro, Zensar Technologies, Cognizant, KPIT, Kanbay, Tata Technologies, Tata Consultancy Services (TCS) to name a few. There are in all 109 companies registered with the Software Technology Park of India (STPI), Pune. From multinationals to Indian majors, BPO units are choc-a-bloc in Pune. The big bulls EXL, MsourcE, Convergys, HSBC, Aviva etc have all set up shop here. And many of these companies are venturing out of their nerve centres in Bangalore and Hyderabad, to make Pune the hub of their expansion plans.
For instance, Infosys, which held just 25 acres till 2003, acquired 100 acres of land during the second phase of its InfoTech park in Pune. "It plans to invest Rs. 250 crores in the next few years and house an additional 5,000 professionals," says their spokesperson.
Cognizant has been steadily growing and expanding in Pune too. "We recently announced plans to build a new techno complex at the Hinjewadi Park in Pune which is next to our existing techno-complex. Compared to our present complex that measures 1,35,000 sq. feet and can accommodate 1,000 professionals, our new one will admeasure around 180,000 sq. feet and will accommodate over 1,800 professionals. Cognizant has also taken several thousand square feet of leased property in the city," says Lakshmi Narayanan, Cognizant's President and CEO, on e-mail. Cognizant proposes to add 900 professionals this year, taking its head count to 2,200 professionals.
BURGEONING DEVELOPMENT: A housing society at Magarpatta City.
"We've seen 30 per cent growth this year," says Ganesh Natarajan, deputy Chairman and MD, Zensar Technologies. Zensar intends to double its IT space this year. "Our new facility at Kharadi is spread over 10 acres. Our facility was half the size earlier. Our strength is up to 3,000 professionals from last year's 1,400."
Deere & Company, $184 billion United States farm equipment major, is constructing a huge business processing and engineering centre at Magarpatta city in Pune. Sybase Software (India) chose Pune to open its India development centre at cybercity in Magarpatta city in Pune late last year. The company intends to invest $5 million in India every year. The $1.4 billion, BMC software, which has Pune as its second largest R&D station after Houston, plans to invest $5.5 million in R&D in its city centre, early next year. It also plans to increase its head count by a staggering 1,000, according to their spokesperson.
These are just a few examples of the burgeoning IT development in Pune.
The software industry's expansion plans have triggered a real estate boom in the city. Real estate is very affordable. Facility rentals are, in places, as low as Rs. 5 to Rs. 50 per sq. feet. Considering the boom, commercial space prices are likely to plummet. Builders are rushing to take advantage of the 2 FSI granted for the IT sector in Pune. Pune's IT parks at Hinjewadi, Kharadi, Talewadi and Magarpatta City boast world class infrastructure. And a slew of other IT parks has been sanctioned this year an impressive eight lakh sq. feet International Convention Centre; Weikfield IT City Park totalling 1.2 million sq. feet; a two million sq. Kumar IT Park; a million sq. feet IT park in DSK Vishwa township. These expansion plans imply that in the next couple of years, an additional 10 million sq. feet of IT space will be readied.
Today there are 1,80,000 people employed with IT and BPO firms in Pune. Going by the expansion plans, the figure could rise by almost a lakh this year.
Although attracting maximum investments, most of the Tier I cities have reached a saturation point in terms of infrastructure such as power, roads and airports. The paucity of skilled and qualified IT professionals is also posing a serious impediment. Traffic congestion, escalating transport costs and a high cost of living are cause for concern too.
So why Pune, you might ask. Well, the city offers advantages of both, a small and big city. Smaller distances ensure that logistics can be managed easily. Commuting times are shorter. Pune is also close to Mumbai, the financial capital of the country. The express highway has ensured reduced travelling time between the two cities. The clearance of an international airport in Pune means it'll soon be directly connected with the world.
Large talent pool
Pune being "The Oxford of the East" has no dearth of a talent pool either. The city churns out 80,000 engineering graduates each year. There are specialised education institutes here and a large base of scientists working on research and development. While Chennai, Bangalore and Hyderabad suffer from the accent factor, the BPO industry has Pune to look to, for a large English speaking public.
Pune has undergone a metamorphosis from a city of decrepit wadas (ancient houses from the Peshwa era) to a city of suave IT parks and stellar business achievements. It boasts of a high standard of living. And yet the cost of living here is nearly 40 per cent lower than a city like Mumbai. There's a new cosmopolitan culture here. A mall-and-multiplex culture. A lifestyle to celebrate. There's the Kentucky Fried Chicken. And McDonalds. And Shoppers Stop. And Pantaloons. And Gold Adlabs. All emblematic of a sumptuousness in a city that had earlier earned itself the sobriquet, "Pensioner's Paradise" for its sedate pace of life and simple lifestyle. It's slowly emerging as a city of dreams. A city where the bourgeois is given the prospect of a very good life, at an affordable price.
"I like Pune's lifestyle," says Abdul Kalam, 30, a graduate of the Indian Institute of Technology (IIT), Delhi and working with a leading multinational company in Pune. Kalam has even worked in the software sector in Bangalore and Hyderabad before. "In Bangalore and Hyderabad, one needs to shell out much more money to enjoy the same lifestyle."
Pune has the highest PC penetration among households, even more than Bangalore. The telecom infrastructure is fast improving.
The city has an Intelsat Standard C-Band earth station, which provides connectivity to any point of the globe. The Software Technology Park of India, Pune, has tie-ups with 18 international carriers to provide connectivity anywhere in the world.
However, there's still a lot that needs to be done. Pune's growing shortfall of 150 MW to 200 MW of power is worrisome. There are three to four hours of load shedding, five days a week.
BOARD GAME WITH A DIFFERENCE: Cognizant's Pune office.
Last year when Microsoft, India, wanted to expand and use Pune as an R&D hub for high-end technologies, it did an internal survey of six cities in the country. Pune was an abysmal number four on the list. It scored low on poor road conditions, high air pollution and an appalling number of power trips through the day. "You cannot run an IT company on diesel generator sets," Mr. Ravi Venkatesan, Microsoft India Chairman, says.
"If Chandrababu Naidu and S.M. Krishna (the former Chief Ministers of Andhra Pradesh and Karnataka respectively) put their States on the IT map and captured the imagination of the CEOs of the world, the Maharashtra Government hasn't done enough to promote the State aggressively."
National Association of Software and Service Companies (NASSCOM) chief Kiran Karnik was heard lashing out at the civic administration in Pune for its slack performance and for doing little to improve the city's infrastructure. "Don't go the Bangalore way," he warned.
Deepak Shikarpur, Chairman of the IT committee of the Maharashtra Chambers of Commerce, Industries and Agriculture (MCCIA), agrees.
A case for `Pumbai'
"Pune should capitalise on the fact that Bangalore and other Tier I cities have reached saturation point. Just fathom this: In Bangalore, it used to take 10 minutes to travel from the Taj Hotel to the Airport, 10 years ago. Now it takes one hour and 10 minutes. But I also fear that Pune might slip too, just like Bangalore," he says. "Infrastructure must be a priority for the Government of Maharashtra to maintain the thrust of IT exports out of Pune. We should merge Pune, Mumbai and Navi Mumbai because of the narrowing gap due to the expressway. The combined entity, `Pumbai', as I suggest, could stand up much better against Bangalore. Pune not being the State's capital, has its own drawbacks. The city should have its own guardian IT minister from the government to take care of the infrastructure problems. We need a 24-hour airport here. If infrastructure issues like road, transport and power are taken care of, nothing can stop Pune from being the `Hannover of Asia'."
Despite all its problems, Pune still poses stiff competition to all other Tier I cities. According to NASSCOM, Pune is numero uno in terms of growth percentage. It has witnessed a near 40 per cent growth this year, when the industry average is just about 30 per cent to 35 per cent.
Pune's story of technological achievements is a beacon for several other small Tier II and Tier III cities in the country. It's an inspiration for them to expand and grow. To spearhead another technological revolution in the country.
Now, after IT, ITES and the BPO revolution, Knowledge Process Outsourcing (KPO) is being touted as the next big thing to hit India. With its immense talent pool, Pune is also poised to be the next KPO hub of India. Now just wait till that happens in Pune.
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