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Top Indian Cities for BPO & ITO |
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| Outsourcing
Services |
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Accounting
& Finance |
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Financial Accounting |
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General Ledger |
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Accounts Payable |
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Accounts Receivable |
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Billing |
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Payroll |
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Bank Reconciliation |
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Financial Analysis |
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Budgeting & Forecasting |
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Tax
Preparation Services |
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| 1. |
The
Study |
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i. |
NeoIT, an offshore outsourcing
consultancy, evaluated 27 cities for Business Process Outsourcing
(BPO) and IT Offsourcing (ITO). The evaluation was based on four primary
criteria: People (including population numbers, quality and
education system); Infrastructure (electrical power, telecommunications,
roads, airports); Financial (cost of living, real estate prices);
Catalysts (government support, supporting industries, social
and political stability, competing companies and weather). |
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ii. |
Multiple dimensions within
these four key competitiveness areas were scored on a scale of 1 –
5. The total rating for each factor was determined by the sum of the
individual ranking of each dimension. Weight was then assigned to
each of the four factors to determine the ultimate competitiveness
score for each city. The normalized score was calculated by assuming
the highest score as 100. This normalized score indicated the Offshore
City Competitiveness Index (OCC), for the city. |
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iii. |
NeoIT developed the offshore
city competitiveness (OCC) index in order to rank the relative competitiveness
of each city as a destination for BPO or ITO. |
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iv. |
Of the 27 cities evaluated
by neoIT throughout 2004, Gurgaon topped the rankings with Bangalore,
Pune, Hyderabad and Chennai following closely behind. Other cities
that received high rankings include Mumbai and Noida. Challenger cities
that are rapidly emerging as viable BPO and ITO offshore destinations
include Kolkata, Thiruvananthapuram, Chandigarh and Indore. Delhi,
a preferred destination in the early 1990's has dropped to number
20. |
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| 2. |
The
Shifting Scenario in City Preferences for the IT Industry
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i. |
Generation I - When
the IT industry was in its infancy in India in the early 90's, the
most attractive cities were those that clearly possessed manpower
and other catalyst conditions (government support, political stability,
strong city development) key to strong business growth. These cities
were Mumbai, Bangalore, Delhi and Chennai. |
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ii. |
Generation II - When
the IT industry attracted attention and started its growth phase in
the mid 90's, different cities began to compete with the leaders by
building infrastructure relevant for development of the industry.
The two cities that were able to significantly improve their competitiveness
were Hyderabad and Chennai. |
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Iii |
From 2000 onwards infrastructure
was in place in many cities across India, so new criteria came
into place. The financial impact to companies for cost of living expenses
and real estate prices were key factors to competitiveness. New cities
began to emerge as strong alternatives in Gurgaon, Noida, Chandigarh,
Kolkata, Thiruvananthapuram, Trichy, Mysore, Vizag and Coimbatore. |
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Iv |
BPO action began in late
90s and at that time Generation 1 and 2 cities were attractive: Hyderabad,
Pune, Mumbai, Delhi, Chennai and Bangalore. Recently, attractiveness
has made a shift toward Generation 3 cities. |
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| 3. |
Findings
- A look at STPI revenues in the OCC Index brings up interesting
findings for the future of the cities in India. As a result, four
distinct groups of cities emerge: leaders, challengers, unknowns and
laggards. |
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i. |
Leaders - The Leader
cities have a high OCC (Offshore City Competitiveness) Index and equally
high performance. They include Bangalore, Hyderabad, Gurgaon, Chennai,
Pune, Noida and Mumbai. Their current attractiveness is high, but
they need to continue to work through infrastructure constraints and
adopt policies and measures that will keep them competitive. |
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ii. |
Challengers - The
Challenger cities have a high OCC Index but their performance has
not been great. They have clear potential and are likely to challenge
the leaders in the near future. They include Kolkata, Thiruvanathapuram,
Chandigarh, Indore, Coimbataore, Mysore, Mangalore, Trichy, Vizag
& Kochi. These cities have all right things in place to emerge
as an attractive choice however they need to package and market them
properly. |
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iii. |
Unknowns - The Unknowns
are cities with a low OCC Index but high performance. These cities
are clearly in the declining stage and their future attractiveness
is questionable. Delhi, while once attractive is now Unknown because
of increasing infrastructure constraints and the rise of satellite
towns like Gurgaon and Noida. |
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iv. |
Laggards - The Laggards
cities have a low OCC Index as well as a low performance rating. They
clearly have lagged behind in the race and are unlikely to challenge
the leaders in the near future. Jaipur, Shimla, Bhubaneshwar, Nagpur,
Pondicherry, Guwahati, Goa and Ahmedabad make up the Laggard category.
These cities need to critically evaluate their competitive factors
and adopt concrete actionable plans to compete with other attractive
cities in the short and medium term before they are permanently left
behind. |
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| 4. |
The study also points that
in time, it will not be country vs. country in the offshore outsourcing
race, but city vs. city -- in other words, it stops being India vs.
the Philippines, and starts becoming Bangalore vs. Manila. |
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