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News & Views on Indian Real Estate

Monday, July 07, 2008

Warning bells ring over B`lore as BPO destination

Warning bells are ringing on Bangalore's future as a leading BPO destination. It is not a full-blown crisis yet but the portents are disturbing. Of late, we don't hear of too many companies coming to Bangalore, whereas we have seen many BPO companies starting operations in cities like Chennai, Noida, Kolkata and Kochi. I feel Karnataka is losing its advantage as a BPO destination. Industry sources say that BPO hiring numbers in Bangalore have been lower by up to 30 per cent in the April-June quarter, but these are expected to pick up in the current quarter. The decline in the number of new companies from the US or Europe setting up shop in Bangalore is the high cost of operations in the city, economic crises in their home country and 2008 being an election year in the US. Currently, it is only the existing companies located in Pune, Chennai, Hyderabad and Gurgaon that did not have a base in Bangalore are now setting up operations. On the other hand, large firms which already have 10,000 or more staff in the city are automatically looking elsewhere for expansion. It is not gloom all around. The primary reason cited by the industry for Karnataka's failure to attract new BPO investment is lack of infrastructure. Industry nodal body Nasscom has sounded off a warning that Bangalore has displayed symptoms of warding off investments on account of increasing cost of operations.

Rehaan Kapoor said...

The Bangalore real estate market has made some interesting stories recently. These stories may be exaggerated a little but it is true that real estate values around Bangalore have shot off the charts since 1991. Land on the outskirts of Bangalore that was selling for US $0.10 per square foot rose to $2.00 per sq. ft. Prices started to drop in 1995 and are now beginning to show gains again. Real estate investors and real estate developers in Bangalore have been on a wild ride.Of course, much of the rise in real estate values can be attributed to speculation but some of it has to do with solid market factors

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