Discussion at ET NOW – NASSCOM Round Table
As we seek to fast forward development of Manesar as an IT/BPO hub, we should answer two key questions:
- What is the value proposition of Manesar for IT/BPO industry?
- What should be done to improve the value proposition of Manesar?
Manesar Value Proposition
Manesar’s value proposition is its proximity to Gurgaon and therefore an opportunity to extend the Gurgaon IT/BPO industry ecosystem. The most obvious opportunity is that IT/BPO companies present in Gurgoan extend their operations in Manesar. There is some discussion about Manesar developing as a competitor for Gurgaon. I think this discussion is misinformed. Developing a brand new IT/BPO ecosystem is difficult and takes a long time. Therefore, top 6 IT/BPO centres in India account for 85-90% of the total demand. Trying to develop Manesar as a stand-alone ecosystem and competitor to Gurgaon is perhaps short-sighted. Extending the Guraon IT/BPO ecosystem is in itself a significant opportunity. Gurgaon is one of the largest BPO hubs in India and for that matter the world. However, increasingly companies are finding it difficult to grow in Gurgaon because of cost pressures and infrastructure bottlenecks. Manesar could offer an option to ease that pressure on Gurgaon.
To understand the value proposition of Manesar, we should learn from the hits and misses of Gurgaon.
Advantages:
- Being part of NCR and having access to the talent pool in Delhi
- Proximity to the international airport (32 kms)
- NH8 running through the town making it well connected to Delhi and Jaipur
- State government intent to encourage industry as seen by development of the IMT in Manesar
Disadvantages:
- Lack of local talent pool that will require companies to “import” talent leading to higher staff costs. Lack of local talent is one of the biggest problems in Gurgaon that has resulted in Gurgaon becoming one of the highest wage cost destinations in India in a short span of time. This is likely to be a much bigger challenge for Manesar. In this respect, Manesar will face challenge from Rohtak which is also close to Gurgaon and has much higher availability of local talent given the education infrastructure there.
- Lack of local transport and connectivity to Delhi. It is a paradox – while proximity to Delhi is an advantage; however, connectivity is a problem. Even for companies in Gurgaon, cost of transportation is a significant and additional cost head. It is one of the biggest challenges in running an IT/BPO company in Gurgaon. That is likely to be an even more acute problem in Manesar
- Perception of an industrial township. Like attracts like. State government’s focus seems to have been to attract manufacturing industry to Manesar and that is what we largely see there today. It creates a social environment and perception (e.g., Maruti labour unrest) that might not be conducive for the services industry. Even in Gurgaon, the old and new Gurgaon have emerged as rather segregated worlds!!
Policy Initiatives to improve value proposition of Manesar
While Manesar offers an interesting value proposition, it is by no means a “finished product”. Much needs to be done to make the value proposition of Manesar more compelling for the IT/BPO industry. For this government has to understand the specific needs of the IT/BPO industry that might be very different from the Manufacturing industry:
- Improve connectivity to both Delhi and Gurgaon. Extend the metro rail link to Manesar. In addition, improve local transportation options with Gurgaon
- Facilitate development of ready to use office infrastructure for the IT/BPO industry. Unlike manufacturing companies, most IT/BPO companies might not be in a position to invest in infrastructure of their own. In particular, it will be important to have a ready to use SEZ.
- Encourage development of world class social infrastructure that will attract talent to come and stay in Manesar. This includes hi-quality residential townships, schools, hospitals and entertainments facilities. In addition, improve safety and security especially important given the perception of it being a troubled industrial township
- From a long term perspective, the most important initiative that will ensure a sustainable industry is availability of local talent. For this, government needs to invest in education infrastructure and in particular initiatives to improve employability of talent. Government should seek to partner with the IT/BPO industry and tap their expertise to improve the employability of talent especially at a college level. However, this will need to be supplemented by initiatives at a primary/secondary school level that help strengthen the foundation.
Development of Manesar as a destination for IT/BPO industry is inevitable given its proximity to Gurgaon. As Gurgaon continues to extend further out, it will likely start to merge into Manesar and industry will naturally come there. However, the above suggested policy initiatives can help fast forward development of Manesar as a destination for the IT/BPO industry.
