IT Companies Trickle to Tier III Cities

In view of the appreciating rupee, high wages and increasing real estate prices, big, medium and small IT firms have made a successful entry into tier-II cities. Encouraged by their progress, many small IT firms are now exploring tier-III cities such as Udupi, Manipal, Hubli and Belgaum in Karnataka, Kozhikode in Kerala, Tirunelveli in Tamil Nadu, Jaipur in Rajasthan, and Durgapur and Kharagpur in West Bengal. The reasons are manifold. These cities have a good number of engineering colleges, and the firms do not find it difficult to meet their modest requirements of staffing, usually in the low hundreds, at affordable costs and without being plagued by high attrition. Smaller IT companies cannot compete with large brands in software services across domains. They have to specialise in niche areas and require a smaller workforce. It is easier for them to recruit in smaller towns where the big players are not competing. Consequently, they can bring down their operating costs, also. A case in point is Zeta Infotech which operates a remote R&D centre from Manipal for Synopsis, an electronic design automation software provider. Similarly, software product development services company Robosoft Technologies operates a centre in Udupi. The company has been able to attract local talent and Robosoft now employs more than 300 people. They have lower operating costs. The quality of life is good (less traffic problems, less pollution, good environs for creative work) for the employees. Udupi, Mangalore and Manipal have many educational institutes and engineering colleges. They have good healthcare facilities too. Another firm, Karmic, which offers design services, has set up a 220-member centre in Manipal. They have trained about 240 engineers in the difficult area of chip design and 220 of them are still with us. They have already opened a centre in Coimbatore and hope to open centres close to where professionals hail from, based on their inputs. Kochi as an IT destination is already witnessing the emergence of new locations. Thiruvananthapuram-based International Business Services (IBS), which provides IT solutions to the transportation and logistics sectors, is planning a 25-acre campus in Kozhikode. Jaipur, too, has its share of small IT firms. At present, there are eight firms working out of Jaipur. Intecons, which provides software services, has set up a centre in Jaipur. The company started with a target of local clients and Jaipur was comparatively less competitive with fewer software service providers. But it is a developed town and needs all IT-related facilities. They are targeting overseas clients and the company is 95 per cent export-oriented as of now.

Smaller towns in West Bengal such as Kharagpur and Durgapur are also attracting the attention of small players in the IT sector. Sankalp Semiconductor, which provides services to the semiconductor sector, is planning to open a centre, its third, in Kharagpur or Durgapur. At present, they have two centres in Hubli and Belgaum. They will start another centre in an engineering college in West Bengal. Kharagpur is home to an IIT and Durgapur has a regional engineering college. A high tech cluster is coming up in Kharagpur, which has new ventures promoted by IIT graduates, and can absorb regional talent down the line. NASSCOM has been promoting a number of secondary and tertiary cities with engineering talent.

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