Build It, They will come
A recent report on emerging outsourcing locations around the world, rated Halifax at 35th position. (Report is available online here ) The report talks about how companies are talking in terms of ‘Cities’ now, as opposed to talking of ‘Countries’ before. Also the decision on which city to choose is also dependent on the specific process which the company wants to outsource. These are termed as the ‘Key Processes’ a city specializes in, an example the report cites is Shanghai which is better suited for Finance and Accounting (FAO) outsourcing, as opposed to contact centres. The methodology used by the firm to rate the cities is quite simple – an exhaustive set of data points are used to add up to a broad set of categories and they are – Scale and Quality of workforce, business catalyst, financial, infrastructure, risk environment and quality of life. While reading the report and the profile on the top 15 emerging centres in the report, one cannot miss the similarities that all these centres have – low cost, plenty of talent, government support, infrastructure – these stand out as the key factors. Out of these, what do we have going for us here in Halifax?
I am not sure if we can still boast of being a ‘low cost’ centre, with Canadian dollar at par with US dollar. Still, real estate and set up costs are cheaper compared to our friends south of the border and a bit lower wages and payroll rebate all rolled in, could make Halifax a low cost option, but it certainly is not the primary deciding factor in favour of us. Cost of setting up an IT outsourcing centre can also be brought down by making Halifax an ‘easy to do business with’ location, by cutting down red tape, being proactive in giving information and just by having a welcoming attitude.
Going back to the report, corporations are seeking specific talents now before they create offshore centres. So, while we have four degree granting universities in town (and couple more within the province), are we focusing on creating the talent pool that corporations are seeking? Our current ‘Key Processes’ are application development, maintenance and support and customer service. We need to create affordable education opportunities that create talent pools in these areas to take advantage of existing outsourcing opportunities. The word affordable is very important here. Most technology/programming courses offered by our universities are highly expensive. One of the reasons why Bangalore and Chennai are on top of the list is the availability of hundreds of private training facilities that offer courses to young professionals in all programming languages and other related areas. Halifax lacks heavily in this segment. A new entrant to the field of IT will have a hard time finding a suitable course that will meet both his needs and the needs of the potential employer. We should encourage private sector to invest in training facilities, we need to build our technology base.
How do the governments of India, China, and Philippines support the outsourcing? Tax breaks, easier visiting processes, expat visas and investment in infrastructure – all of these would seem to be the direct support from the government. But even before this outsourcing revolution started, these governments were doing something else – education. India churns out thousands of graduates every year. A well educated, English speaking graduate is available for corporations to take and mould them into the employee that they want. And we have a problem in our hands when enrolment in our universities is going down every year. Halifax stands out as one of the most expensive places in Canada for University education. So, we want to create a talent pool for companies, but few people can afford to go to University here. This is where we need government support. Let us think long term, let us create a vision that is longer than one year or five years or even twenty years. Let us build our talent pool, they will come seeking it.
In 1993, when I graduated with an engineering degree, out of the 500 odd people who graduated with me about 450 left Trivandrum, Kerala. This was to seek employment in other major cities like Chennai, Bangalore, Mumbai etc. Today, there are half a dozen engineering colleges in Trivandrum (there was only one in 1993) and even then, only about 50% of graduates leave the town. While Trivandrum used to have the worst success rate for many businesses and factories, one of the success stories of Trivandrum is the Technopark (http://www.technopark.org/) . Kerala is a predominantly communist state and labour strikes usually end up closing any new ventures, but Technopark was a different story. Thanks to the existing facilities, today all major IT firms have an office in Trivandrum including TCS and Infosys.
Relating that back to our report, what do the top 5 emerging cities have in common? They have a focussed IT infrastructure developed. Chennai is rated in the report as the number one emerging city. The IT corridor development project when completed will create one of the biggest IT concentrations in the world. A six lane highway, lined on both sides with companies like TCS, Infosys, Accenture, EDS, Satyam, Cognizant is a dream come true for corporations looking to relocate their offshore offices. The story is not different in Pune, Hyderabad or any other emerging city. Of course, Bangalore was one of the first cities to have a ‘IT park’ and the benefits are obvious. They were much ahead of the game to focus on IT and the rewards were on their way. What do we take from that? We need to have the required infrastructure for companies to relocate and start their centres here. Even the much hyped RIM had to face certain difficulties to obtain office space. So how can we promise that to an Indian firm that wants to set up its BPO operations here? Even if we don’t build an IT park, we should at least have it in our planning. The IT Park will need easy access, close by residential developments, eateries, other office services etc. Burnside Industrial park is fit for industries, heavy trucks and easy access to the highway for transporting goods in and out. What we also need is an IT park.
So, where does all this leave us? Are we happy with our rank as the 35th city? Or do we want to improve on our ranking? Our USP is our location, proximity to the US client base. Only Buenos Aires and Sao Paulo among the top 15 have this advantage, even they are no where as close to the US as we are. And this is a natural advantage that no competition can take away from us. So let us then focus on what specific talent pool that we should build here to make us more attractive. Some possible actions that can be taken include
- Attracting private investment on training institutions. The government should provide all necessary assistance for starting these centres. Attracting foreign firms is a thought. NIIT (http://www.niit.com/) revolutionized IT education in India. Given the proper consideration, an expansion to Canada may not be all that complicated for these training giants.
- Subsidizing University education is a key thing. If a country of the size of India, with far less resources and far more students, can subsidize University educations, why can’t we do that in Canada?
- We need an IT Technopark, if we are to become an IT outsourcing city. There is no two way about it, it has to be built if they are to come.
We do not have the same level of low cost advantage that many of the other top cities have. So we have to excel in other areas that will make Halifax an attractive outsourcing destination. We have to do it and we have to do it soon. Let us not sit on the side and wave to the world as it passes by, let us be part of the procession and let’s lead from the front. Let us build it, they will come.