Though Nagpur has much to offer in terms of manpower, infrastructure and other facilities, the city isn’t usually found on India’s IT map. But several entrepreneurs have been making innovative use of the city’s biggest advantage—cheap, but highly skilled manpower. What does Maharashtra’s second capital has to offer India IT Inc.
Nagpur is Maharashtra’s second capital, India’s second greenest city and an orange lover’s paradise. But beyond tourism brochures, Nagpur has close to 40 educational institutes in the vicinity, a technically skilled workforce that is available at relatively lower salaries, and the city also features an international airport in the making. With such credentials one would have thought India’s burgeoning IT and ITeS industries would have jumped at the opportunity with eyes closed. On the contrary, the city rarely even gets mentioned in India’s IT circles.
But this hasn’t deterred several smart entrepreneurs from turning the negatives around to their advantage. Companies like Premier Technologies, Persistent Technology Group, Lambent Technologies and Control IT India, among many others, are some of the success stories that have emerged from this city due to the smart utilisation of available resources.
Catch ‘em young
Shashikant Chaudhary, president and CEO of Lambent Technologies, which today boasts of more than 150 employees, was the first to realise the huge potential offered by the myriad engineering institutes located in and around the city. While on a teaching assignment at one of the city’s engineering colleges, Chaudhary in association with his colleagues decided to get students started on their projects from the second semester itself. The idea was to provide students with an environment that would help build their confidence. This step was also expected to help get rid of the stigma attached to private engineering colleges since merit was rarely the criteria used for admissions.
In the course of this initiative Chaudhary realised that around 10 percent of the students were very sharp. Says he, “Judging from the work done by them on their projects we realised they were capable of doing three to four times the work done by an average student.” To tap this opportunity Chaudhary set up a software company of his own.
But there were no clear methods for identifying these students. It was then decided to identify the top five projects at the end of the year and provide these students placements in the software companies present in the vicinity of Nagpur. This method served a two-fold purpose. The students were given the opportunity to work on live projects while the company providing them the opportunity had the benefit of availing of some of the best brains at a small stipend. And to add to everything, there was very little attrition in this mechanism. Most companies retain close to 90 percent of these students. Of these, more than 50-70 percent stay back even after they have completed their education.
According to Chaudhary, this method works best for companies that are fairly new, as it is a means of capacity building. There are around 16 engineering colleges in the city itself, with an average of 500 students per college. Just 10 percent of this number would account for a huge pool of technically skilled employees. Other than engineering students these companies can also avail of MCAs and students from the C-DAC institute.
But cheap manpower is not everything. To run a successful organisation there’s also a need for experienced employees, people with managerial skills, and people who have successfully completed projects for international clients. Also, good connectivity, power supply with zero downtime and fast access to metros like Mumbai that serve as a gateway to international businesses are vital elements for successfully building a business.
Advantage Nagpur
The obvious advantages are there for all to see. Nagpur has the advantage of being a central location. Regions like Jabalpur, Raipur, Bilapur, Amravati, etc, which boast of a strong academic background, fall within 150 km of the city. This makes available manpower that is around 15 percent cheaper when compared to metros like Bangalore or Mumbai or Delhi. Also, 60 percent of students are locals.
Says Anant K Datir, managing director of Control IT India, “A vast pool of highly skilled young manpower is available here. 30-40 percent of students may not make the mark. But the rest will end up as top class professionals.”
The cost of doing business is also much lower. Since the cost of living is comparatively lower than most other cities personnel acquisition cost is that much lower. Even in terms of space, real estate costs are considerably lower than in most other cities. Says Mangesh Khadilkar, director, Premier Technology Group, “Property taxes are lower than in most metros. Another benefit is that people do not have to spent a lot of time in commuting as distances between places are short.”
Connectivity and power supply are the other key issues for all IT and ITeS companies. According to Nilesh Bhansari, assistant director, Technical, STPI, Nagpur , connectivity is as good as in any other city, and so is the tax and power situation. Says he, “In terms of power supply Nagpur is even better than Pune. It is a hub for power generation so there are far fewer power breakdowns and shutdowns.” The government has also announced electrical duty exemption to companies that are set up in the IT parks. Also, there are separate sub-stations for the IT parks in Nagpur. In addition to this, MSEB recently announced its zero downtime policy, which should soon be operational.
There are multiple connectivity options, as there are various ISPs providing services to these areas. According to Bhansari, ISPs like VSNL, BSNL and Bharti have been providing 155 Mbps Internet connectivity.
Even the state government sponsored STPI has made efforts to provide the best possible connectivity. Most of the available space in the two parks that are currently functional have been taken by various companies thanks to reports of the excellent infrastructure provided by MIDC. Two more parks are in the offing, one being a private IT park being put up by Lambent Technologies.
The Maharashtra government recently announced its decision to set up the state’s second international airport at Nagpur. Though this might still be a few years in the offing it is expected to re-position the city on the country’s IT map.
Challenges
Lack of visibility has been the city’s main bane. Availability of senior management personnel also poses a serious problem. People who have worked four to five years in a metropolis don’t like to shift to Nagpur. Companies here have been tackling this situation by building their own people. But it limits the number of people you can have and in turn limits the growth of the company. Good quality senior management will come once companies here have stabilised. But this will prove to be an impediment for fast moving companies.
Says Khadilkar, “Employees who joined us four to five years ago can today take up the challenge of managing projects. As we are a product company it is really essential to have a senior person who has grown with the company, and who knows everything about our products.”
There’s also a perception that Nagpur is inaccessible either by air or road. To some extent this does hold true. While Nagpur is very much accessible, the time take to commute from a financial hub like Mumbai is still considerable, when it comes to road or rail. In terms of air accessibility, most companies who outsource work to companies in Nagpur are in the SME space. These are generally smaller companies in the US where decision making is not a convoluted process as is the case with larger companies. Hardly 5 percent of these clients opt for an actual site visit. But larger companies like to visit the site and verify the facilities offered before outsourcing any work. Thus, the lack of direct air access would prove to be an impediment to getting larger contracts.
Finally
Today, there are close to 60 software companies located in Nagpur. Around 65 percent of the companies in Nagpur are export-oriented while the rest mostly cater to the domestic market. And most of these companies roughly fall under three broad categories—at the top are those that boast of 100-plus employees and at the bottom are companies that have below 20 employees. The second tier is made up of companies that fall in between these two categories.
But these companies will have to build a brand name before bigger names get attracted to Nagpur. An IT body has been formed to promote Nagpur on an active basis. This body has been conducting a series of seminars and conferences intended at providing more visibility while portraying what the city has to offer. The moment reputed players come in critical mass can be attained.
Says Amitabh Khanna, director-ACES e-technology Solutions and also a member of the special task force, “Experienced professionals may be hard to come by but companies that are willing to invest time and money are bound to benefit in the long run. Nagpur can serve as a good farming ground for companies to take in freshers, train them and then send them to their main centres. This is more cost beneficial in Nagpur as compared to other cities.”
The city stands a great chance in the BPO/ITeS space because of the availability of a large pool of technical manpower. Accent neutralisation is also not a big problem. In fact, according to Khanna, Infosys and Wipro are seriously considering Nagpur as a possible destination for their BPO centres.
This article first appeared in Express Computer.
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