Making Pune, India’s IT Capital

Making Pune, India’s IT Capital

Kishor Pate, CMD – Amit Enterprises Housing Ltd.

Chief Minister Devendra Fadnavis’ announcement of his intention to make Pune the IT capital of India has brought mixed reactions. However, this is not a Utopian dream but in fact becoming a reality even as we speak. Pune and information technology are already inseparable concepts today, and all it will take is a decisive push by the BJP government to establish it as the country’s foremost IT hub.

Pune is already a well-established IT destination, and has been giving the likes of Bangalore and Hyderabad very tough competition. The burgeoning IT industry in areas like Kharadi, Hinjewadi, Magarpatta and Tathawade are drawing massive amounts of information technology business into the city. This has also had a major impact on the city’s real estate sector.

Pune has over 50 established and prominent IT/ITeS companies who have their main offices in the city, including organizations such as Accenture, Amdocs, AtoS, Capgemini, Cognizant, Deloitte, GlobalLogic, Hexaware Technologies, Infosys, Larsen & Toubro Infotech, Mastek, MphasiS, SunGard and Symantec. These companies are generating scores of jobs for Pune’s highly qualified software professionals each year, in addition to hundreds of BPO jobs.

It is by now a well-established fact that Pune is one of the most preferred software and business-process outsourcing destinations in the country. There are many reasons for this beyond the wealth of IT professionals that it produces from its various top-notch educational institutions every year.

Information technology companies prefer Pune over a city Bangalore because of the lower real estate costs involved in setting up operations here. In fact, the more rational real estate costs in Pune provide another major plus-point. This is the fact that IT/ITeS employees who are looking at buying their own homes can easily avail of home loans and buy properties in the city which are conveniently close to the companies they work in, even on entry salaries.

Moreover, the city is replete with attractive rental options. In fact, Pune has the highest incidence of IT/ITeS professionals who start out in rented homes and graduate to purchasing homes in the city later on. Pune’s affordable housing rates are not the only factor at play in this dynamic. The city is also far more attractive in terms of the overall lifestyle quotient it offers, where it once again beats Bangalore hands down.

Another factor which is very important from an attrition management point of view is that commuting is not a big problem when compared to cities like Mumbai, Bangalore and Delhi NCR. Pune is a relatively compact city, and this ensures that employees can travel to and from work easily. This plays a very significant role in talent retention and overall employee satisfaction. Pune’s IT professionals are a far more contented lot than in any other Indian city.

Finally, IT/ITeS firms are attracted to Pune because it offers significant cost arbitrage on salary outgoings, specifically in terms of the dearness allowances payable to employees in various cities. In this respect, Pune presents a favourable proposition as it does not max out on the cost of living index the way cities like Bangalore and Mumbai do. For example, housing rental costs in Bangalore are 13.5% higher than in Pune. Though individual purchasing power in Bangalore is higher by around 3.5%, a large part of an employee’s income is spent on paying rent.

It could be argued that as chief minister of Maharashtra, Devendra Fadnavis should not ignore Mumbai. However, the financial capital capital’s rating on the cost of living index – which, as already stated, plays a big role in a firm’s capex on salaries, is way off the charts. Housing rentals are as much as 55.5% higher in Mumbai than in Pune, while purchasing power in Pune is about 43.5% higher than in Mumbai.

All these factors mean that in Pune, Devendra Fadnavis has definitely backed the right horse in the race for IT prominence in Maharashtra. Pune will eventually overtake every other city in the information technology sweepstakes, and there is no time like the present to stack all bets in this city’s favour.