This is the first and perhaps the most critical decision (apart from the choice of the Site Leader) that needs to be made. This is not exhaustive, but only dwells at a higher level. Some of the popular choices and their pros and cons.
Bangalore: Contributes over 40% of the exports. The Silicon Valley of India. High availability talent pool, Home to most large and medium sized MNCs, HQs of Indian behemoths like Infosys and Wipro, lately a glut of start-ups including unicorns, top educational units, California like weather etc., all make Bangalore a no-brainer (even after accounting for the potential bias of a Bangalorean!). However, salaries tend to be a tad higher increasing the overall cost. The infamous Bangalore traffic has taken some sheen away.
Hyderabad: As Bangalore started getting saturated, and competition amongst different states increased to woo investments, Hyderabad has grown by leaps and bounds. Anchored by biggies like Microsoft and Amazon, Hyderabad offers most of the things that Bangalore offers. Might not be the preferred option of migrant population as Bangalore remains popular.
Chennai, Mumbai, Pune and NCR (National Capital Region): Lately companies have started expanding into these cities. Chennai boasts of lot of manufacturing activities, Mumbai has been the media/finance/entertainment hub, Pune has a lot of automotive industry and NCR is dominated by firms that have a large regulatory need. However, it is still not comparable to Bangalore in terms of the sheer size of the talent pool. However, it makes perfect to open a center in these places if the nature of the business is closer to the type of activity happening in these cities.
Other Tier 2 cities: Lately, native entrepreneurs and biggies like Infosys (who hire in 1000s) have moved to Tier 2 cities to reduce their cost. However, the nature of work isn’t deemed cutting edge and they struggle to attract top talent.
Some companies come to India inorganically i.e. they acquire some company so that they get a fast start. When this is the case, it is always better to start in the same place where the acquired company currently exists and think of opening a second center only after crossing atleast 250 in head count.
Good to know:
- Due to highly competitive schooling, people with school going kids won’t move out of a city that easily (compared to my observations in western world).
- Couples will move only if both of them get good offers that is in line with their career goals.
- State taxes are negligible and the central governments Income tax remains the same across the country. Prices of groceries, white goods etc., remain mostly the same across India. House rent is a major variable and usually the only item that helps save compared to Bangalore/Mumbai/NCR. It is therefore very hard to woo someone to say Pune, with lesser salary compared to Bangalore. As salary costs form a very high percentage of cost per employee, it is difficult to get cost arbitrage moving to non-Bangalore/Hyderabad locations.
One should have a very strong reason if they want to open a center in a non-Bangalore location.
Related posts on "Setting up a GCC":
- Introduction
- Choice of the Site Leader
- Regulatory approvals
- Hiring the core team
- Hiring enabling team
- Infrastructure
- Scaling up and Staffing models
- Setting-up the India team to succeed
- Cultural Sensitivity
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