43 New IT Cities planned

The government is planning to build 43 new IT cities across the country to retain its top dog status in the business and to be in a position to tap the huge surge in demand for IT-enabled services over the next 10 years. The move to set up new satellite townships comes at a time when rising infrastructure and employee costs in big cities are threatening to blunt the country’s crucial cost advantage.While India has held on to its pre-eminent position, its IT and BPO companies are losing their global cost advantage with the emergence of countries like Vietnam and the Philippines which offer similar services at cheaper rates and are threatening India’s status as the world’s back office. Local firms have seen their cost advantage slip with rising expenses on account of office space and employees. Also, as the allure of BPO jobs dulls and attrition rates go up, companies are increasingly finding it difficult to recruit quality employees in the big cities. Infrastructure constraints in Bangalore, Gurgaon and elsewhere are other spanners in the work.The proposal, suggested by a high-level group on service sector, has been cleared by the Planning Commission.95% of the Indian IT & BPO sector is based in seven big cities, where infrastructure and other facilities are unlikely to keep pace with the growth in the IT sector in the next ten years .Through selfcontained satellite townships with commercial & residential space, education, healthcare, retail and recreational facilities .Each of the 43 IT cities will be set up in an area of more than 500 hectares and will generate employment for around 3.5 million people by 2018 Centre plans 40% of BPO business for new cities . According to officials, the IT and BPO business in the country is likely to grow by 2.5 times in the next 10 years, which cannot be absorbed in major cities.Under the ambitious proposal, the government plans to shift 40% of the business to the upcoming 43 cities by 2018.The new towns will be properly planned and laid out and endowed with modern infrastructure and good connectivity to the big cities and airports.