High Price of real estate forcing BPO to shift in smaller city

The rush in real estate prices and a talent crisis in metros are forcing the $11 billion Indian BPO industry to shift to Tier II cities in the country, according to a study conducted by consultancy firm Everest Group.
“It is difficult to maintain the growth in Tier I cities because of the increasing real estate prices and talent crunch. There is no choice but to move to Tier II cities,” Everest Group’s Country Head (India) Gaurav Gupta said.
As of now, BPO industry is concentrated in seven cities namely Bangalore, NCR, Mumbai, Pune, Chennai, Hyderabad and Kolkata.
“Movement to lower-cost cities within India is likely to result in additional 15-30 per cent reduction in operating cost despite lower employability and higher management costs,” Head of Global Services at Everest Research Institute, Nikhil Rajpal, said.
Everest Group is a global consulting firm specialising in sourcing and offshoring advisory services. The study ranks several Tier II and Tier III cities on their potential to become BPO hubs for various domains in the future.
For finance and accounting services, Ahmadabad, Nagpur, Jaipur, Indore and Nasik emerge as ideal cities to host BPO firms. Similarly, Nagpur, Vishakhapatnam, Ahmadabad, Coimbatore and Mundra are ideal to have BPO operations in logistics domain.