Location Analysis: Emerging cities of India

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Location Analysis: Emerging cities of India

  1. 1. Location Analysis: Emerging cities of India April 2012 January 2012 Zinnov LLCZinnov LLC CONFIDENTIALThis report is solely for the use of Zinnov and Zinnov Clients.No part of it may be circulated, quoted, or reproduced for distribution without prior written permission
  2. 2. The location study covers 12 locations in India for assessment based on an exhaustivelist of suitability and cost parameters Tier – 1 Tier - 2 1. Bangalore 1. Chandigarh 2. NCR 2. Coimbatore 3. Chennai 3. Ahmedabad 4. Hyderabad 4. Vadodara 5. Pune 5. Jaipur 6. Nagpur 7. Trivandrum Locations - The study tries to analyze major - Infrastructure locations in India on a - Human Resource comprehensive list of parameters - Support Ecosystem - The objective of the study is to - Quality of Life help MNCs identify the optimal locations in India to setup their - Business Continuity Risk R&D centers - Cost 2
  3. 3. Agenda TRENDS RANKINGS CITY PROFILING 3
  4. 4. Agenda TRENDS RANKINGS CITY PROFILING 4
  5. 5. Prior to 2005, majority of MNC R&D centers were concentrated in tier-1 Indian cities Chandigarh  Till about mid 2000s, MNCs were NCR looking at tier-1 cities in India primarily due to high talent Jaipur availability, investment friendly policies and high quality of life Ahmedabad  Tier-1 cities constituted almost 100% of R&D talent pool in India. Vadodara Nagpur  Gradually, growth of tier-1 Pune locations exposed issues like poor Hyderabad urban infrastructure, rapidly increasing operating costs, higher cost of living, high attrition, etc. Bangalore Chennai Coimbatore Trivandrum 1990 2004Source: Zinnov Analysis 5Note: Map not to the scale
  6. 6. Post 2005, MNCc started looking at tier-2 Indian cities as future R&D hubs Chandigarh  MNCs started expanding to tier-2 cities due to advantages like higher NCR catchment area, lower attrition, cost arbitrage, etc. Jaipur  Tier-2 cities, which were initially looked upon for IT/BPO services, Ahmedabad now are serious contenders for setting up R&D centers due to the Vadodara distinctive advantages they Nagpur provide. Pune Hyderabad  Companies also started looking at tier-2 locations for creating a hub- &-spoke model especially in automotive sector. Bangalore Chennai  But tier-2 are still in nascent stage Coimbatore in terms of establishment as IT Trivandrum hubs and constitute around 2% of MNC R&D talent pool in India. 2005 2012 ……………Source: Zinnov Analysis 6Note: Map not to the scale
  7. 7. More than 50% of the MNC R&D talent pool is concentrated in Bangalore Region;tier-2 cities are effective sources of fresh talent pool Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations 2.0% Fresh Talent Pool distribution 9.8% Bangalore by location 3.7 NCR 19.2 Chennai 10% 13% NCR 4% 6% Hyderabad Other 17% 7% Pune Locations 8% Coimbatore 13% 16.5% Mumbai Region 12.5% 9% Jaipur 12% Hyderabad Region Nagpur Bangalore 23.0 31.1 Trivandrum Region Others* Chennai 6.5% 35% 52.7% Region 24.0 102.5 MNC R&D Talent pool in India is growing at the rate of nearly 9 Total MNC R&D Talent in India in 2011 ~ 204,196 percent every year and is expected to reach ~250,000 by 2015. M Mean Value :Headcount per MNC R&D CenterSource: Zinnov Analysis 7
  8. 8. Bangalore still dominates overall and software MNC R&D ecosystem in India; otherlocations like Pune and Hyderabad are catching up Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations MNC R&D centers distribution in India by Software MNC R&D centers distribution in locations India by locations 11% 12% 11% 11% 40% 43% 4% 4% 13% 15% 6% 11% 13% 6% NCR Chennai Others Pune NCR Chennai Others Pune Mumbai Hyderabad Bangalore Mumbai Hyderabad Bangalore Discussion  96% of MNC R&D centers in India are still concentrated in tier-1 cities, tier-2 cities constitute just around 4%  Pune, backed by strong service provider and academia ecosystem, has emerged as a preferred choice of MNCs in software verticalSource: Zinnov Analysis 8
  9. 9. While Bangalore is the clear leader in semiconductor vertical, automotive vertical ismuch more scattered Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Semiconductor MNC R&D centers Automotive MNC R&D centers distribution distribution in India by locations in India by locations 10% 9% 9% 22% 3% 1% 24% 54% 11% 9% 1% 11% 13% 24% NCR Chennai Others Pune NCR Chennai Others Pune Mumbai Hyderabad Bangalore Mumbai Hyderabad Bangalore Discussion  All 4 tier-1 cities (Hyderabad, Chennai, Pune and NCR) are gaining good traction among MNCs in Semiconductor vertical  Chennai and Pune are the two largest automotive hub of India, accounting for just less than half of automotive MNC R&D centersSource: Zinnov Analysis 9
  10. 10. MNCs are looking to expand to tier-2 locations to setup their secondary centers due tothe unique advantages provided by tier-2 locations Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Key DriversExamples of MNCs in tier-2 cities Company Tier 2 location FTE Bosch Coimbatore ~800 Quark Chandigarh ~300 Allscripts Baroda ~250 Cignex Ahmedabad ~150 Radiance Ahmedabad <50 Source: Zinnov Analysis 10
  11. 11. MNCs are looking to expand to tier-2 locations to setup their secondary centers due tothe unique advantages provided by tier-2 locations Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Saturated Most companies with Business Talent Market Most companies beyond 2,500+ more than 1000 Continuity Risk (Narrowed headcount in one city.headcount in one city/one (People, Geo talent net, Companies in some domains building political, Cost Attrition, become the hunting ground for escalation etc.) Relocation large companies etc.) Contribution to Infrastructure more than 5% saturation of the talent in the city Pressure to Cost Benefits grow an of Tier 2 Cities acquired siteSource: Zinnov Analysis 11
  12. 12. MNCs are looking to expand to tier-2 locations to setup their secondary centers due to the unique advantages provided by tier-2 locations Vertical Expansion to Start-up Academia Manufacturing Proactive state IT Talent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Number of companies with multiple locations 575 Discussion • 84% of the US based MNCs have only one location No. of companies for R&D center in India • Close to 13% of US based MNCs have R&D centers at two locations in India 93 22 • Around 14% of Europe based MNCs have R&D 6 centers at two locations in IndiaNo of Locations One Two Three Four Companies with 2 locations Companies with 3 locations • Amazon • AMD • Dell • Adobe • Nvidia • Broadcom • FreeScale • Atrenta • AT&T • Avaya • BMW • Applied Materials • Nokia • D-Link • Mentor Graph • Halliburtun. • Invensys Source: Zinnov Analysis 12
  13. 13. Of the ~2100 product companies started in India in last 2 decades, 55% are based inBangalore and NCR regions, but off late tier-2 cities have started gaining traction Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Though the number of start-ups originating from Product start-ups split across regions tier-2 cities is minimal, many start-ups originating Kolkata out of tier-1 cities are expanding to the nearest tier- NCR 2 cities to lower the cost of operations. In the 51 486 last 5 years, tier-2 cities have witnessed more than 40 such start-ups.Mumbai Region Cities 326 Bangalore Bangalore, Mysore, Belgaum, Gulbarga, Hubli Hyderabad Hyderabad, Secundrabad, Vishakhapatnam, Vijayawada Pune Kolkata Pune Pune 142 Pune Chennai Chennai, Calicut, Trivandrum, Hyderabad 238 Madurai, Coimbatore, Cochin, Vellore Bangalore Chennai Hyderabad Mumbai Mumbai, Goa, Ahmedabad, 625 244 Vadodara, etc. Bangalore NCR Delhi, Gurgaon, Noida, Chandigarh, Mohali Kolkata Kolkata, Patna, BhubaneswarNote: The cities marked in bold are emerging Tier-II cities for product startupsSource: Zinnov Analysis 13
  14. 14. With new IITs and NITs coming up in tier-2 and tier-3 cities, these locations are poisedfor a major growth in academia infrastructure Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations2520 Tier-2  8 of the 9 new IITs have been set up in /Tier-315 tier-2 or tier-3 cities and 9 new NITs are Locations coming up in tier-3 cities, giving a major10 Tier-1 boost to education infrastructure in these 5 Locations locations. 0 Established Upcoming Established Upcoming  ‘Indian Institute of Software Engineering’ IITs IITs NITs NITs is coming up in Pune in association with Carnegie Mellon University, USA. Engineering Colleges distribution by location Bangalore  NCR and Pune are the best locations in NCR the country in terms of technology 6% 3% 4% 13% university ecosystem. Pune is known as Chennai 7% the “Oxford of the East” due to presence Hyderabad of historically strong university 8% 19% Pune ecosystem. 8% Coimbatore 15% 15%  3 out of every 10 colleges^ in India are Jaipur present in tier-2 cities, with Coimbatore Nagpur and Jaipur being the leaders Trivandrum Others*Source: Zinnov Analysis 14Note: * Others include Ahmedabad, Chandigarh and Vadodara, ^ Analysis is only for the 12 cities taken into consideration
  15. 15. Fast growing manufacturing hubs like Ahmedabad have good potential to attractMNCs in to set up their R&D centers in the long run Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Pantnagar Availability of Ahmedabad Strategically located greenfield land and NCR in central India well developed ports Speedy execution Investor friendly and transparency in policies and ease of Kolkata dealing doing business Pune(Western Ghats) Chennai Ahmedabad Advantages Emerging Automotive Established Automotive Manufacturing Hubs Manufacturing Hubs  Some of the big automotive companies which have their manufacturing plant in Ahmedabad are Tata Motors, General Motors, Ford Motors and Peugeot.  Chennai, often referred to as the "Detroit of India“, is still the largest auto hub in India, accounting for 60% of the countrys automotive exports.Source: Zinnov Analysis 15
  16. 16. Many state IT associations in the country are making proactive efforts to establishtheir states as major IT hubs Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations IT & ITES Industry Gujarat Electronics & Software Exporters’ association of AP Software Industries Association of Pune Association  ITSAP representing the  GESIA was started in  SEAP was started in 1998 software industry in 1995 to promote and now has more than Andhra Pradesh; started Electronics Industry in 100 registered members in 1991 with 15 people Gujarat; now it has 280+ which includes all the and has more than 300 registered members. major IT/ITES companies registered members till  GESIA played a key role operating out of Pune. 2011. in development of  SEAP acts as an umbrella  ITSAP has played a vital Gujarat as a major IT hub under which various role in recommending by recommending technical and marketing and lobbying for incentives and branding issues can be discussed incentives policy and initiatives (Vibrant and learning opportunity branding AP as an IT Gujarat is the most provided within the destination. successful branding member companies campaign in India). through SIGs.Source: Zinnov Analysis 16
  17. 17. Tier-2 cities provide a huge cost advantage over tier-1 cities but costs in these citieshave shown an exponential surge in last couple of years Vertical Expansion to Start-up Academia Manufacturing Proactive state ITTalent Pool Cost Focus tier-2 cities Ecosystem Ecosystem Ecosystem organizations Average Commercial Real Estate Rentals/sq.ft Cost of Living Index 66 37.9 36.6 35.1 58 55 34.2 33.7 33.1 53 32.6 32.4 32.1 50 48 29.8 47 40 39 38 38 34  Commercial Real Estate prices in tier-2 cities are Tier-2 are 15-20% lower than the tier-1 cities on an average. Rentals in Chandigarh and Trivandrum are on the higher side, partially due to presence of just one technology park these cities  In the last couple of years, tier-2 cities have witnessed a major surge in Commercial Estate costs and Cost of Living due to infrastructure development and increased traction. Commercial Real Estate Prices have risen sharply in Nagpur after the offset of Multi-modal International Cargo Hub and Airport (MIHAN), which is the biggest economical development project in India in terms of investments.Source: www.magicbricks.com, www.numbeo.com, Zinnov Analysis 17
  18. 18. Agenda TRENDS RANKINGS CITY PROFILING 18
  19. 19. R&D Suitability Index across different locations 4 Bangalore 3.5 Pune 3 Hyderabad 2.5 NCR Chennai Suitability* Ahmedabad 2 Coimbatore Trivandrum 1.5 Chandigarh Vadodara Nagpur 1 Jaipur 0.5 0 0.5 0.6 0.7 0.8 0.9 1 Differential Cost*  There is a sizable gap between tier-1 and tier-2 locations in terms of both Suitability and Cost. Bangalore continues to top the suitability index followed by Hyderabad and Pune; NCR tops in Cost parameter  Tier-2 cities are more clustered compared to tier-1 cities in suitability ratings but are quite scattered in cost ratings, with Chandigarh being the costliestSource: Zinnov Analysis 19*Note: Suitability is the weighted average of ratings on various sub-parameters; Differential Cost includes rentals cost and people cost
  20. 20. Vertical wise city ranking Software Product Core Engineering Embedded R&D* Development R&D* 1 BANGALORE 1 BANGALORE 1 PUNE 2 PUNE 2 NCR 2 BANGALORE 3 HYDERABAD 3 HYDERABAD 3 CHENNAI 4 NCR 4 PUNE 4 NCR 5 CHENNAI 5 CHENNAI 5 HYDERABAD COIMBATORE, 6 TRIVANDRUM 6 AHMEDABAD  Bangalore continues to be the leading R&D hub of India but Pune is the leader in Core Engineering vertical due to strong manufacturing ecosystem and presence of indigenous companies & MNCs  Cities like Coimbatore and Ahmedabad are coming up in core engineering verticalSource: Zinnov Analysis 20Note: Embedded R&D includes R&D in Telecom, Semiconductors, Storage, Networking and Computer Hardware; Core Engineering R&D includes R&D in Automotive, Energy, Industrial and Aerospace
  21. 21. City wise Infrastructure Ranking1 BANGALORE  Excellent IT infrastructure but Poor Transportation infrastructure  Good rating on all parameters 2 CHENNAI 3 NCR  Excellent IT infrastructure but Poor Civic infrastructure 4 HYDERABAD  Good Transportation infrastructure but Poor Civic infrastructure 5 PUNE  Good IT infrastructure but poor international connectivity 6 JAIPUR  Good Hotel infrastructure but Poor IT infrastructure  Average Transportation infrastructure but Poor 7 TRIVANDRUM international connectivity 8 AHMADABAD  Excellent Civic infrastructure but Poor international connectivity 9 COIMBATORE  Average Physical and Civic infrastructure but no international airport 10 NAGPUR  Average transportation infrastructure but Poor Hotel infrastructure 11 VADODARA  Good Physical infrastructure but no international airport 12 CHANDIGARH  Average transportation infrastructure but no international airportSource: Zinnov Analysis 21Note: Rankings based on weighted average of sub-paramerts ratings
  22. 22. Infrastructure - Sub Parameters Rating Transportation within Physical and civic International Cities IT Infrastructure Hotel Infrastructure city infrastructure ConnectivityTier-1BangaloreChennaiNCRHyderabadPuneTier-2AhmedabadChandigarhCoimbatoreJaipurNagpurVadodaraTrivandrum - Poor - Fair – Good – Very Good - ExcellentSource: Zinnov Analysis 22
  23. 23. Tier-2 cities have shown major improvement in Infrastructure and are poised for amajor revamp in coming years  Overall tier-1 and tier-2 cities have comparable Physical and Civic infrastructure ; tier-2 cities have advantages of lower population and size, which is easy to govern.  Ahmedabad was ranked best city in India in terms of civic infrastructure by survey done by Times of India-IMRB  All tier-2 cities suffer from poor to zero international connectivity especially to USA and Europe countries.  International connectivity of Pune is expected to improve with the new airport  New international airports are coming up in Chandigarh (2012) and Coimbatore (2013)  Ahmedabad BRTS is the most successful BRTS project in India; it also won the most Sustainable Transport Award in the world (2010)  Vadodara City Bus Service implemented through PPP model has been one of the most successful projects among peers.  Metro Rail projects are undertaken in many tier-2 cities like Jaipur, Nagpur, Chandigarh  NCR has the best Hotel infrastructure among Indian cities; tier-2 cities lack considerably in presence of quality hotels  15 new hotels consisting of 3,502 rooms are expected to become operational in Pune by 2013Source: Zinnov Analysis 23
  24. 24. City wise Human Resource Ranking 1 BANGALORE Excellent talent pool and in- 2 PUNE country movement of talent Excellent in-country movement 3 HYDERABAD of talent and good installed Excellent fresh talent pool and talent pool in-country movement of talent 4 NCR5 CHENNAI Excellent fresh talent pool but average installed talent pool.Excellent fresh talent pool and 6 COIMBATOREgood expatriate movement Good Fresh Talent pool but poor In country movement of Talent 7 JAIPUR Good Fresh Talent pool but 8 NAGPUR expatriate movement of talent Average in-country movement of talent, but poor talent pool 9 AHMEDABAD 10 TRIVANDRUM Good in-country movement of Good Fresh Talent pool but poor talent, but poor talent pool 11 CHANDIGARH In country movement of Talent Average talent pool and poor expatriate movement 12 VADODARA Average in-country movement of talent, but poor talent poolSource: Zinnov Analysis 24Note: Rankings based on weighted average of sub-paramerts ratings
  25. 25. Human Resource Availability - Sub Parameters Rating Cities Installed Talent Pool Fresh Talent Pool In country movement Expatriate movementTier-1BangaloreChennaiNCRHyderabadPuneTier-2AhmedabadChandigarhCoimbatoreJaipurNagpurVadodaraTrivandrum - Poor - Fair – Good – Very Good - ExcellentSource: Zinnov Analysis 25
  26. 26. City wise Quality of Life Ranking NAGPUR 12 Very low pollution levels but less number of 1 BANGALORE weekend outing locations Excellent climate and a number of languages spoken VADODARA 11 2 PUNE Excellent cultural diversity but poor Excellent climate and medical facilities medical facilities AHMEDABAD 10 3 HYDERABAD Good medical facilities but poor Low pollution levels but less number of climate weekend outing locations CHENNAI 9 4 NCR Excellent medical facilities but high pollution Large number of languages spoken levels but low cultural diversity 5 COIMBATORE JAIPUR 8 Excellent climate but low cultural diversity Large number of weekend outing locations but poor climate 6 TRIVANDRUM CHANDIGARH 7 Excellent climate but low cultural diversity Large number of weekend outinglocations but poor medical facilities Source: Zinnov Analysis 26 Note: Rankings based on weighted average of sub-paramerts ratings
  27. 27. Quality of Life - Sub Parameters Rating Weekend outing Cities Climate Languages Spoken Pollution levels Medical facilities Cultural diversity optionsTier-1BangaloreChennaiNCRHyderabadPuneTier-2AhmedabadChandigarhCoimbatoreJaipurNagpurVadodaraTrivandrum - Poor - Fair – Good – Very Good - ExcellentSource: Zinnov Analysis 27
  28. 28. Tier-2 cities provide advantages like good hospital infrastructure, low pollution levelsand weekend outing options which can be a major plus for them 1 Climatic Conditions - Jaipur, Nagpur, Vadodara and Ahmedabad 2 have drawback of very extreme climatic Cultural Diversity Quality of conditions compared to other locations- Cities like Chennai, LifeAhmedabad are notperceived to be open to 5 Pollution Levelsother cultures and 3 5 - NCR is the most polluted location and Chennaireligions which can prove is the least polluted location among all citiesto be a major roadblock in 4 - On an average, tier-2 cities pollution levels areattracting talent 20% lower than tier-1 cities Weekend outing options Medical Facilities - Nagpur and Chennai figure low in weekend outing options - Coimbatore is a major center for medical compared to other cities tourism; there are nearly 750 hospitals in - Cities like Pune, Bangalore, Chandigarh provide many options and around Coimbatore with a capacity of for weekend outings due to their geographic advantage 5000 beds - Lonavala, a hill station on Pune-Mumbai expressway, is fast - 12 new multi-specialty hospitals are emerging as a preferred choice for second homes for many expected to come up in Hyderabad in the people working in Pune or Mumbai next 5 years Source: Zinnov Analysis 28
  29. 29. City wise Support Ecosystem Ranking Excellent MNC R&D and Start- Up ecosystem Overall good Innovation ecosystem Excellent academia ecosystem but poor Start-Up ecosystem Excellent academia eco-system but Excellent Research and start-up poor Start-Up eco-system ecosystem Good academia ecosystem but Good academia eco- overall poor innovation ecosystemsystem but poor Start-up Good academia ecosystem ecosystem but overall poor innovation ecosystem Overall poorInnovation Ecosystem Overall poor Innovation Overall poor Innovation Ecosystem Ecosystem Overall poor Innovation ecosystem Source: Zinnov Analysis 29 Note: Rankings based on weighted average of sub-paramerts ratings
  30. 30. Support Ecosystem - Sub Parameters Rating Cities Academia Ecosystem Research Labs MNC R&D Ecosystem Start-up EcosystemTier-1BangaloreChennaiNCRHyderabadPuneTier-2AhmedabadChandigarhCoimbatoreJaipurNagpurVadodaraTrivandrum - Poor - Fair – Good – Very Good - ExcellentSource: Zinnov Analysis 30
  31. 31. City wise Business Continuity Risk Ranking 1 CHENNAI Low crime rate 3 CHANDIGARH but above Low crime rate average political 5 TRIVANDRUM and less prone risks. to natural 7 NCR Low crime rate but calamity. Less political risks has experienced 9 PUNE but risk of natural calamities. Politically stable terrorist/ but has communal attacks. 11 HYDERABAD experienced Overall below terrorist/commun 2 COIMBATORE average business al attacks. Low political risks continuity risk. 4 NAGPUR and low crime 6 JAIPUR Low political risks rate. and average Less prone to crime rate. 8 VADODARA natural calamities Low political risks but high crime 10 AHMADABAD but has rate.12 BANGALORE Politically stable experienced but high crime terror/ communal High crime rate rate. attacks. but less prone to natural calamities. Source: Zinnov Analysis 31 Note: Rankings based on weighted average of sub-paramerts ratings
  32. 32. Business Continuity Risk - Sub Parameters Rating Terrorist Attacks/ Cities Crime Rate Natural Calamities Political Risks Communal RiotsTier-1BangaloreChennaiNCRHyderabadPuneTier-2AhmedabadChandigarhCoimbatoreJaipurNagpurVadodaraTrivandrum - Poor - Fair – Good – Very Good - ExcellentSource: Zinnov Analysis 32
  33. 33. Degree of business continuity risk is distributed across all locations and each locationhas its own pros and cons  According to National Crime Rate Bureau, Jaipur registered maximum number of crimes under IPC in 2010, followed by Bangalore. Crime  Chennai registered minimum number of registered crimes under IPC, just Rate next were Coimbatore and Chandigarh. Natural  Overall all the cities possess very low risk of any natural calamities.  Only exceptions are Chennai and Trivandrum, which have history of Calamities natural disasters like Tsunami Terrorist  Tier-2 cities are less prone to terrorist attacks compared to tier-1 cities Attacks/  Ahmedabad and Vadodara and the 2 cities which have the history of Communal Riots communal riots. Political  Overall all the cities possess very low political risks and have stable Risks political structure in place  Hyderabad has some political risks pertaining to creation of new state Telangana.Source: National Crime Rates Bureau reports, Zinnov Analysis 33
  34. 34. Agenda TRENDS RANKINGS CITY PROFILING 34
  35. 35. Bangalore – Silicon Valley of India TALENT COST ECOSYSTEM Key Drivers Quick Facts  Bangalore has a well developed eco-system of skilled resources and managerial talent; it Fresh Talent Pool 40,000 employs 35% of India’s talent pool  Thriving start-up ecosystem with more than MNC R&D Talent 1,08,220 60% of the product start-ups in India Pool originating out of Bangalore  Infrastructure in terms of steady supply of real STPI Exports (Rs) 58,850 Crores (2010) estate, in the form of SEZs is improving. New power generation and Metro Rail projects have Software Exports 23% (2009-10) been major boost to city infrastructure growth Pros and Cons Illustrative list of companies present PROS  Good Academia and IT Infrastructure, Large Human Resource, Favorable Climate, CONS  High Operations Cost, High AttritionSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 35Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  36. 36. Hyderabad - The Cyberabad of India TALENT COST ECOSYSTEM Key Drivers Quick Facts  Compared to other metros, the cost of living and lease rentals are lower in Hyderabad by Fresh Talent Pool 39,000 around 10-20%.  Andhra Pradesh is one of the largest supplier MNC R&D Talent 25,520 engineering students in the country, majority of Pool them being from Hyderabad and adjoining areas STPI Exports (Rs) 27,000 Crores (2010)  Strategically located – equidistant from Bangalore, Pune and Chennai Software Exports 24.5% (2009-10) growth Pros and Cons Illustrative list of companies present PROS  Good Academia and IT Infrastructure, Ease of doing business, Good physical infrastructure CONS  Relatively higher business continuity risk, poor city perceptionSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 36Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  37. 37. Chennai – Detroit of South India TALENT COST ECOSYSTEM Key Drivers Quick Facts  Chennai has a large human resource pool at all levels. The presence of an industrial base Fresh Talent Pool 42,000 (automotive and engineering sectors) has lead to strong skill sets in these sectors. MNC R&D Talent 13,270  Infrastructure availability is quite good Pool especially reliable power, supply of office space, national and international connectivity. STPI Exports (Rs) 22,400 Crores (2010)  Cost of living and real estate costs are 10-12% lower than Bangalore, the nearest IT hub which Software Exports 14% (2009-10) is a big plus growth Pros and Cons Illustrative list of companies present PROS  Good Academia and IT Infrastructure, Good physical infrastructure, Lower pollution levels CONS  Poor city perception, Low cultural diversitySource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 37Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  38. 38. NCR – 2nd largest metropolitan city of India TALENT COST ECOSYSTEM Key Drivers Quick Facts  Delhi has well developed infrastructure including steady supply of office space and 52 Fresh Talent Pool 55,000 SEZs (spanning 900 hectares) in the NCR region. National and international connectivity from MNC R&D Talent 20,000 Delhi is also among the best in India Pool  Very strong academia infrastructure due to the 21,700 Crores (2010) presence of more than 100 engineering colleges STPI Exports (Rs) and research institutes  Places like Noida, Faridabad provide significant Software Exports Almost 0% cost advantages compared to other metros growth Pros and Cons Illustrative list of companies present PROS  Excellent IT and transportation infrastructure, Excellent international connectivity. CONS  Relatively average start-up ecosystem, High pollution levels, history of terrorist attacksSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 38Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  39. 39. Pune – Oxford of East TALENT COST ECOSYSTEM Key Drivers Quick Facts  Proximity to “the financial capital of India” has helped Pune to emerge as center of IT services Fresh Talent Pool 30,000 and support arm of some of the major global banks MNC R&D Talent 24,000  Pune boasts of very strong manufacturing Pool ecosystem STPI Exports (Rs) 29,000 Crores, (2010)  Pune is home to some of the oldest education institutes and prominent research institutes in India Software Exports 40% expected (2011-12)  Thriving Physical infrastructure with projects growth like new airport, metro rail and 18 new SEZs Pros and Cons Illustrative list of companies present PROS  Good Academia and IT Infrastructure, Favorable climatic conditions, Strong service provider ecosystem CONS  Poor international connectivitySource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 39Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  40. 40. Coimbatore – Manchester of South India TALENT COST ECOSYSTEM Key Drivers Quick Facts  More than 40,000 SMBs primarily in textiles, automobiles and other engineering component Fresh Talent Pool 25,000 industries  Commercial Real Estate costs are around 20- STPI Exports (Rs) 570 Crores (2010) 55% lower than tier-1 cities  Coimbatore being one of the educational hubs Software Exports of South India ,has abundance of graduate 90% (2009-10) growth talent available  Strategically located –equidistant from both Bangalore and Chennai Pros and Cons Illustrative list of companies present PROS  Good Academia Infrastructure, Favorable Climate, Low Business Continuity Risk CONS  Absence of international airport, Average transport infrastructureSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 40Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  41. 41. Nagpur – The Orange city TALENT COST ECOSYSTEM Key Drivers Quick Facts  Rapidly growing infrastructure due to the Multi- modal International Cargo Hub & Airport Fresh Talent Pool 20,000  Educational hub of central India with more than 40 engineering and medical colleges and good STPI Exports (Rs) 140 Crores (2010) availability of fresh talent  Major engineering hub with presence of Software Exports companies like Mahindra & Mahindra, NECO 10% (CAGR in last 3 years) growth Ltd, Bajaj Auto, etc.  Commercial real estate costs are around 40% lower than the tier 1 cities on an average Pros and Cons Illustrative list of companies present PROS  Very Low pollution levels, Favorable state government laws, strategically located in central India CONS  Extreme Climate, Average medical facilities , poor international connectivitySource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 41Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  42. 42. Chandigarh – The Pensioners Paradise TALENT COST ECOSYSTEM Key Drivers Quick Facts  Chandigarh ranks 1st in India in terms of Human Development Index and quality of life, thereby Fresh Talent Pool 10,000 .attracting a large number of professionals from other locations STPI Exports (Rs) 470 Crores (2010)  The city has a 10-50% cost advantage in comparison to tier 1 cities in terms of Software Exports Commercial Real Estate Costs 20% (2009-10) growth  Availability of Good fresh talent pool and strong university ecosystem due to universities like Panjab University is a big advantage Pros and Cons Illustrative list of companies present PROS  High quality of life, Moderate climatic conditions, low crime rates CONS  Relatively small fresh talent pool, poor international connectivity, average power infrastructureSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 42Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  43. 43. Trivandrum - The highest literacy rate TALENT COST ECOSYSTEM Key Drivers Quick Facts  Abundant available business space (around 20 million sq. ft. ) with natural beauty of the city is Fresh Talent Pool 12,000 ideal for MNCs to set up their delivery centers  Strong Research Ecosystem due to presence of STPI Exports (Rs) 1120 Crores (2010) research institutes and academic institutes like CDAC, Indian Institute of Science, Education and Software Exports Research, Indian Institute of Information 5% (2009-10) growth Technology and Management, etc.  Onset of huge companies like Oracle for development of next gen products is a big plus Pros and Cons Illustrative list of companies present PROS  Highest literacy rate in the country, Excellent climatic conditions CONS  Poor international connectivity with EU and USA, relatively small fresh talent poolSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 43Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  44. 44. Ahmedabad – Detroit of East TALENT COST ECOSYSTEM Key Drivers Quick Facts  Ahmedabad is one of the fastest growing cities 10,000 Fresh Talent Pool in India in terms of infrastructure and attracting investments  Commercial Real Estate cost is 20-40% less than STPI Exports (Rs) 490 Crores (2010) that of tier-1 cities  Huge and fast growing auto manufacturing base Software Exports 72% (2009-10) with onset of companies like Tata, Ford and growth Peugeot Pros and Cons Illustrative list of companies present PROS  Investor friendly policies, Very good infrastructure, High quality of life CONS  Extreme Climate, Relatively small fresh talent pool, history of communal riots and floodsSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 44Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  45. 45. Jaipur – The Pink city TALENT COST ECOSYSTEM Key Drivers Quick Facts  Flourishing infrastructure with the construction 22,000 Fresh Talent Pool of Mahindra World City(Indias largest integrated IT SEZ) and World Trade Park  Good service provider ecosystem due to STPI Exports (Rs) 410 Crores (2010) presence of all major Indian service providers  Cost advantage of 20-40% in Commercial Real Software Exports 50% (2009-10) Estate costs compared to tier-1 locations growth  Due to the city’s proximity to NCR, Jaipur can be grown as supporting location to create a hub-&- spoke model Pros and Cons Illustrative list of companies present PROS  Excellent hotel infrastructure, Many weekend outing options, Low Crime Rate CONS  Poor power infrastructure, Extreme weather, Relatively high pollution levelsSource: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 45Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  46. 46. Vadodara – The Knowledge City TALENT COST ECOSYSTEM Key Drivers Quick Facts  Vadodara offers a cost advantage of over 25% with respect to compensation levels and around Fresh Talent Pool 8,000 20-40% with respect to cost of living in tier-1 cities STPI Exports (Rs) 310 Crores (2010)  Presence of companies like ABB, L&T, Alstom, Siemens and Bombardier have given a major Software Exports boost to Vadodara’s industrial ecosystem 70% (2009-10) growth  Thriving civic infrastructure (Vadodara City Bus Service implemented through PPP model has been one of the most successful projects among peers) Pros and Cons Illustrative list of companies present PROS  Good Industrial Ecosystem, Investor friendly policies, growing civic infrastructure CONS  No international airport, High pollution, Has witnessed floods, earthquakes and communal violence.Source: Zinnov Talent Pool Study, STPI India, Indiastats.com, National Crime Rate Bureu report, Zinnov Analysis 46Note: Red, Yellow, Green colours highlight Good, Aerage and Bad respectively
  47. 47. Glossary Term DefinitionR&D Includes product software development, product testing and futuristic research Doesn’t include IT services, IT Enabled services, BPO/IT Support, etc.Tier-1 cities Cities which have established themselves as R&D destinations and contribute significantly towards R&D ecosystem in IndiaTier-2 cities Cities whose contribution towards Indian R&D ecosystem is very small and are emerging as future R&D hubsSuitability Measures how suitable is the location for setting up a MNC R&D center. It is calculated using a weighted average of ratings of various sub-parameters like support ecosystem, human resource, etc.Differential Cost Measures the differential cost of locations relative to most expensive location (NCR in this case). Cost is approximated using a weighted average of Rentals cost and People costSoftware Product Includes R&D in verticals such as Software products/InternetDevelopmentEmbedded R&D Includes R&D done in Telecom, Semiconductors, Storage, Networking and Computer Hardware verticalsCore Engineering Includes R&D done in Core Engineering R&D includes R&D in Automotive, Energy, Industrial andR&D Aerospace verticalsFresh Talent Pool Approximated based on number of engineering colleges in the location 47
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