Will Bengal Be The Next IT/ITES Hub Of India?

The IT/ITES sector is going through challenging times especially with a large number of companies facing margin pressures. The double whammy is that IT/ITES sector which has built cost-reduction as its value proposition may not be a real cost efficient location after all. With high real estate prices and increasing wages, companies are in a tough spot to look for cost reductions.

One obvious way for IT/ITES companies is to look at new areas for establishing delivery/development centers. Bangalore for long has been called the Silicon Valley of India and is undoubtedly the hub for IT/ITES sector as well. Even as other regions like Pune are fast emerging as IT hubs, given the size of the sector and people centric model there is a scope for developing other regions as well.

Well, Bengal might be the next IT / ITES hub, going by how the state authorities are focusing their attention on this sector under the new government. The highlight is Mr. Narayana Murthy’s appointment as the Chief Mentor-IT for the state government. Mr. Narayana Murthy is a thought leader in the IT space and for the lack of a better phrase "he has seen it all and done it all".

Now that he has freed himself from his duties at Infosys, he has followed the approach followed by other Infosys co-founder Mr. Nandan Nilekani and is looking to make a difference in the state’s use of technology. Obvious scepticism with government functioning aside, having Mr. Narayana Murthy can definitely aid Bengal’s ambitious plans to establish itself in the IT/ITES sector.

The state government seems highly focussed on developing the region’s brand in the IT/ITES sector and is looking to do what it takes to foster the culture. The state IT minister was quoted saying,

The government is committed towards giving more thrust to IT industry and IT enabled sector. We want the industry to top the charts. The government will provide all help possible to SMEs for their development

Well, having multiple IT/ITES hubs never hurt the economy. Bengal for its part really needs to improve its attractiveness as a business destination. After what transpired with the Tata Group at Singur, the region needs to project a investment friendly approach to ensure it attracts investment. Outsourcing is not new in the region and I think a lot of SMEs in Bengal actively provide IT and related outsourcing services.

A thrust from government in the sector will not only provide impetus for SMEs to expand but also encourage talent and skill development in the region.

The outlook of the state government seems positive and with Mr. Murthy playing chief mentor, there is a possibility that Bengal might become an IT/ITES hub in the years to come. Accenture seems sold on this initiative and is already looking to set up operations in Bengal.

What are your thoughts on the Bengal’s push for establishing itself as an IT/ITES hub?