IT Office Boom Likely In Tier II And Tier III Cities

September 1, 2007	(Be the first to rate this story!)  Loading ...
Print This Story   Email This Story Subscribe Newsletter

Great times ahead for commercial office real estate at tier II and tier III cities… Besides the sky-rocketing property prices and rentals, human resource issues like employee attrition and rising CTC have surfaced up as a major force to drive IT and ITES companies to smaller cities.

According to a report by global manpower consultant Ma Foi, the average attrition rate in the IT companies operating from Tier I metro cities of Delhi, Mumbai and Bangalore is between 25-40 per cent annually.

At the other end, the same at a Tier II city like Chandigarh and Pune for instance is comparatively low at 10-25 per cent. It is even being said that the attrition rate can be far low in Tier III cities.

Meanwhile, the IT companies are finding it increasingly difficult to retain talent at the time when they are expanding their businesses all across.

The Nasscom-McKinsey studies have already pointed out that IT and ITES industry together will require an additional office space of at least 100 million sq ft by 2010.

At the same time, industry experts admit that things in Tier I cities are going out of favor. Real estate prices are already at record highs, public infrastructure is under strain, and over this the issues of manpower have put IT companies into testing times.

Interestingly, the operating costs of IT companies have also risen substantially as they keep on raising the salary structure in a bid to retain the talent.

As per industry estimates, there is a difference of 25-100 per cent between Tier I and Tier III cities in employee salaries at entry level. This difference rises at exponential levels, anywhere from 100 to 300 per cent, in case of hiring experienced employees.

Definitely, there is a win-win situation for IT companies if they slip into smaller cities. The reports nevertheless confirm that IT giants like TCS, Infosys, Wipro and Satyam have candidly launched their operations in frontline Tier II and Tier III cities like Mysore, Goa, Chandigarh, Indore and Bhopal in the recent times.

News Published Under:   Real Estate India |

Comments