LOCATION: Pune the Prodigious

Not long ago, Pune was looked at as a sleeping weekend jaunt for holidaying Mumbaikars. Considered the cultural hub of Maharashtra, this mini metro has undergone a complete paradigm shift over the last few years. The city has claimed in quick succession to first being India’s Detroit (given a cluster of automotive companies on the periphery of the city), then Oxford of the East, and now to the Silicon Alley to Bangalore’s Silicon Valley, thanks to the numerous IT ventures dotting it. But with the BPO bug biting India really hard, even Pune seems not to have escaped its sting. 

According to the latest data from DoT, as many as 21 call center/BPO companies have already registered to open a facility at Pune. This includes the already operating units. While in terms of sheer numbers, it stands next to the three big



destinations–NCR, Mumbai, Bangalore–and the other two south cities, Chennai and Hyderabad, what is impressive is the quality of the BPO crowd that has decided on
Pune. 

Round-up



The list of companies that have announced/already set up their facilities at Pune is a virtual who’s who. Want to take the roll call? Wipro Spectramind, the No 1 BPO company in India; WNS, the No 2; EXL, the No 4; Vcustomer and Msource, two other top 10 BPO companies. 

And guess who is the latest to put a decisive vote in Pune’s favor–none other than Convergys, the No 1 call center company in the world. Yes, the US major is the latest to decide on making Pune its third location, after Gurgaon and Bangalore. That’s really something.

But certainly not everything. 

IT companies have also chosen Pune, not too surprisingly though. While Msource started it all in Pune, in the Marisoft Software Park in upmarket Kalyani Nagar, Wipro’s Spectramind has its center at Hinjewadi IT park on the outskirts of the city. Even Infosys is setting up another center for its BPO arm Progeon at the newly developed Magarpatta City on the Pune—Sholapur Road, which is expected to be operational by October. The list carries on with other IT biggies readying to deliver their BPO work from Pune–Xansa, Zensar, Cognizant, Patni, and Syntel are just some notable names. 

Captive centers are also not far behind. Global shipping major P&O Nedlloyd’s Indian shared services center (ISSC) has an operations in Pune since 2001 where its back-office operations include logistics, data management, import/export documentation and dangerous cargo. Others who have announced their plans are HSBC and

Suzlon. 

Among others are Oceans Connect (operational since the beginning of this year with capacity of 900 seats), Tracmail (to be launched next year), and Inaltus. A UK-based provider of contact center services, Oceans Connect has over 200 professionals, including physically challenged candidates from the Paraplegic Center nearby. 

EXL is investing $6.5 million to set up the Pune center with 1,025 seats on a three-shift basis, while Tracmail plans to raise about $5 million for a 200—300 seat BPO operation. Vikram Talwar, CEO, EXL Services, says, “Our fourth center at Pune enables us to de-risk our business by extending geographies. While we are entering new business verticals, it will further strengthen our domain expertise in banking and insurance.” Arjun Vaznaik, COO, Tracmail, adds, “We are in discussion with five to six lenders for raising the requisite fund and the transaction is in the process of being firmed up.” Also, on the anvil for Inaltus is a second 800-seat center, expected to come up at Pune as part of its disaster recovery initiatives.

Although Pune is yet to reach a critical mass in terms of attracting BPO companies, those that are there and those coming in the near future seem to be evenly distributed between the call/contact center, data processing/management/digitization, and back-office businesses.

Human Power

of so many diverse but big companies have decided to go to Pune, arguably it is because of the sheer quality and quantity of workforce that the city boasts of. According to a report sponsored by the Planning Commission, in 1998—99, more than 53,930 students had registered in 81 colleges in Pune (who would pass out in 2002—03). And some of these colleges are considered to be far better than the ones in the five metros. 

With the exception of Mumbai, Pune houses the largest number of English-medium schools. Housing a large number of good quality colleges and universities, Pune has rightfully earned the sobriquet of ‘Oxford of the East’. While this ensures a steady supply for the basic transactional functions, the existence of software development arms of IT companies for a long time has resulted in ready availability of domain experts too. And the close proximity to India’s true megapolis Mumbai ensures that Pune never has a dearth of niche domain experts required for airlines and shipping operations. 

Infrastructure too…



Pune also happens to have one of the most robust telecom infrastructures in the country. The city boasts of an Intelsat Standard C-Band earth station to provide connectivity to any point of the globe. Ku-band earth stations have also been set up at Nashik and Kolhapur with additional fiber connectivity from Pune for redundancy. STPI Pune has tie-ups with 18 international carriers for worldwide connectivity. 

Yet, Bottlenecks Remain



Pune does have several drawbacks that resulted in its coming last (ninth position) in a Nasscom study on BPO destinations in India last year. First of all, the city lacks a reliable and continuous power supply system. Currently, BPO companies need to have their own backup power systems to supplement the utility’s supply. A rickety public transport system forces most firms to spend much more than normal on transportation. Additionally, the road network needs to be expanded on a fast track.

Despite the Maharashtra government’s sops for BPO units on the FSI norms, real estate rates in Pune are gradually rising, even though it will take a long time to reach the level of

Mumbai.

Perception plays an important role in deciding the location of new units. Cities should market themselves well both in India and overseas to attract MNCs. Bangalore was ranked the highest in the Nasscom study because of the state’s IT policy. Similarly, Hyderabad, with its IT-friendly government, was also a preferred city. However, Pune lost out on the perception factor too, primarily because of the inactivity of the Maharashtra government and its lack of hard selling. Also a city’s entrepreneurial history helps attract investments, apart from the fact that entrepreneurs hailing from such a city are more likely to base their companies there. Pune loses out on that count too.

The Outlook



The decision of big companies to invest in Pune explains why Pune seems to have arrived almost suddenly, unlike cities like Chennai and Hyderabad, which have been seeing some activity or the other since 1999—2000. Most of the Pune centers have been announced in the last six to nine months. Since most of them are really big companies, they have gone to Pune for expansion, not as the first location. These are the companies that have established themselves and are looking for rapid growth. 

What does it mean for the city? Simply speaking, it is in safe hands. In 2006—07, the number of active BPO companies in Pune would be far more, not less. That can be said about few other locations. The growth of Pune would be far more sustainable among all non-metro cities. 

Rajneesh De with inputs from Nanda Kasabe