Kolkata: Call of the East!

Over the last couple of years, the West Bengal government has undertaken an
aggressive public relations and marketing campaign aimed at changing the
investor-unfriendly perception of the state and making it the vanguard of today’s
knowledge economy. The prime focus of this campaign has been to develop Kolkata
as a major BPO hub–a positioning that is expected to enable the state to
achieve its mission of garnering 25 percent of India’s BPO revenues by 2010.

In the initial stage at least, Kolkata’s BPO journey seems to be on track,
what with a host of home-grown companies already operational in the city. Some
of these early pioneers include BNK E.Solutions, Bayview Technology Solutions,
Convergence Contact Center and Vishnu Solutions among others. However, the
non-arrival of any of the country’s big names during these two years had given
rise to the apprehension that the much-touted BPO agenda might get derailed.
Such doubts might slowly get dispelled following announcements by AIG to launch
their second center in Kolkata this November and Spectramind set to commission
their facility in the city. GE is also likely to set up their fifth center in
Kolkata by next year. Satyam is doing a due diligence exercise for Nipuna, while
Msource and Digital Globalsoft have also evinced interest.

PLUSES Quality manpower for non-voice activities Lower attrition rate Lower salary level (15-20 percent lower than national average) Short geographical distances within city MINUSES Image of state with labor unrest Lack of scale-up by most players Migration of quality manpower

An attrition rate of around 10 percent, much lower than the national average
of over 40 percent, is one of the biggest advantages in Kolkata. For non-voice
activities the numbers are even lower. One reason could be that a large section
of vernacular medium manpower who have excellent skills in non-voice activities
is loath to relocate out of the city. Consequently, salary levels are also 15—20
percent lower than in Mumbai or Bangalore, which should be a big draw for BPO
players to move here.

Infrastructure, both telecom and power, is another big draw for BPO players.
Things are expected to look further up once Reliance and Bharti complete the
connection of Kolkata through their NLD backbone to Mumbai and Chennai. Road
conditions seem to be the only drawback but here too the shorter geographical
distances between different parts of the city ensures lower transportation costs
for BPO players than in other cities.

Another interesting character instrumental in catalyzing the growth of the
BPO industry in Kolkata has been the vibrant Marwari community who have been
around for ages.

Known for their strong business acumen, this community has amalgamated into
the cultural and social milieu of Bengal and has so far contributed 90 percent
funding of BPO ventures in Kolkata. Such entrepreneurial initiatives are
expected to have a spillover effect on investors who may explore the possibility
of setting up base in the region.

On the flip side all the call centers or BPOs operations in the city hover in
the 100-300 seat. Even their ramp up plans over the next 12-18 months would not
take them beyond 500 seats. Compare this with the picture in Bangalore, Mumbai
or Gurgaon and the stark contrast becomes visible.

In terms of total number of players, Kolkata lags behind even secondary
centers like Pune, Ahmedabad or Kochi. However, the arrival of Spectramind with
2,500 seats is expected to redress the first issue and after GE’s arrival,
Kolkata is expected to boast of both quality and quantity.

Another sore issue has been the migration of quality manpower from the city
to foreign lands or other Indian cities. However, this affects the IT services
industry more than the BPO and with private engineering colleges coming up in
larger numbers this should not pose much problem in future. With most of the BPO
facilities concentrated around Kolkata, the state government has made a smart
move to brand Salt Lake as Silicon Valley of the East.