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Pune Special

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DQI Bureau
New Update

Moment of Truth



1/2/3 BHK flats available for sale/lease for IT professionals," scream

large hoardings on virtually every street corner of the city. Sounds familiar?

Perhaps it reminds you of Bangalore in the early '90s, when the Infosys-led IT

boom was catching up in India and the sleepy Karnataka city was on its way to

becoming the country's premier IT destination. History always has that uncanny

habit of repeating itself-the same scenario is enacting itself nearly

frame-by-frame today in yet another sleepy town, whose only claim to fame

hitherto was that it was regarded as a weekend getaway for Mumbaiites. No prizes

for guessing the obvious identity of this erstwhile supine town: Pune. This is

the venue optimists believe will replace Bangalore as India's number one IT

city in the next 18-24 months.

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A

realistic assessment of this new phenomenon is in order. With Bangalore's

resources tapped way above the saturation level, simple law of nature demands

the emergence of a second IT hub. But it is also a city ingrained indelibly into

the global IT psyche, it would be not just impudent but also naïve to imagine

that a second city can supersede Bangalore. But then, do we really need to

replace the reigning icon in order to welcome a new one? Instead, it is very

much possible that Pune might become Indian IT's new Mecca, even as Bangalore

remains its hallowed Jerusalem, sustaining its decade-long position.

There are other pretenders besides Pune to the sobriquet of "Next Best

Thing in Indian IT": there are Chennai, Hyderabad and Kolkata. But Chennai

is rather conservative, Hyderabad post-Naidu has lost its IT sheen while Kolkata

hasnt yet fully come out of its Marxist lethargy. Until then, at least, Pune,

the embodiment of Marathi pride, honor and culture, can undoubtedly stake its

rightful claim without real threats from elsewhere.

A Tale of Two Cities



Pune and Bangalore-a tale of two IT cities, one aspiring, the other already at
the zenith, co-existing at the top, something like today's matinee idol

Shahrukh Khan sharing the same screen with the evergreen Amitabh Bachchan. The

story could, however, well have been reversed. Here is what Vishwas Mahajan, CEO

of Compulink, a Pune-based software products company, has to say: "In the

mid '80s I was working for Digital in India, when three of their US executives

came to India scouting for locations to set up operations. Three cities were

short-listed: Gandhinagar, Pune and Bangalore, but their vote went to Bangalore.

Once Digital set up in Bangalore, MNCs like Motorola and Texas Instruments

flocked there, and finally the meteoric rise of Infosys sealed Bangalore's

destiny as the top IT city." If only Digital had chosen Pune then, today

Dataquest might have been doing a special focus story on Bangalore, examining

how it could emulate Pune's success as a preferred IT destination.

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While history cannot be changed, one can ensure Pune capitalizes on its

advantages so as not to miss the bus again. First, it is in some ways

reassuringly similar to Bangalore: first, fairly pleasant cool weather all year

round, and, second, a plethora of quality engineering colleges that ensure a

fairly variegated talent pool. These educational institutions in both cities

attract students from all over the country, creating a vibrant student community

in both cities. With most of these students entering the IT industry later, this

cosmopolitanism rubs off onto the job scene too.

Neighbor's Envy, Owner's Pride



However, Pune has features unique to itself too, most important being its

location near India's financial power center Mumbai: proximity to Mumbai's

financial czars and VCs has helped in fostering entrepreneurship in Pune. Even

the lack of an international airport is compensated by the fact that the Mumbai

International Airport is only a three-hour drive from Pune along the Mumbai-Pune

Expressway.

On the other hand, Pune is still relatively untainted by some Mumbai woes.

Real estate prices have soared but they are nowhere in the Mumbai league yet.

These might shoot up, as happened in Bangalore, once the IT habitat gets finds

its feet, but it's gala time until then, Cost of living is still relatively

low, ensuring that attrition levels will not go out of control, though this too

might change once the influx strengthens. And one factor generally ignored by

most is that the son-of-the-soil feeling is very strong amongst Puneites, a

feeling sorely lacking amongst people who leave Kolkata or Mumbai. Even US-based

NRIs come back to the city and become entrepreneurs, like in the instance of eQ

Technologic, Kenati Technologies and Cybage Software.

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Historically, Pune has fostered entrepreneurship, especially in IT. This can

be attributed to the fact that in any location where there are fewer

opportunities of job creation in IT, many tend to move towards a sort of default

"forced" entrepreneurship. This probably answers why Pune has so many

first-generation product companies (typically entrepreneur-driven), while

Bangalore has second-generation entrepreneurial ventures. Additionally, Pune's

long tryst with engineering (it housed some of the doyens of Indian industry

like Kirloskar Brothers and Bharat Forge) and automotive industry (Tata Motors,

Bajaj Auto, Kinetic Engineering — the list goes on) resulted in the extensive

involvement of IT companies in these domains. Some like Tata Technologies,

Synise Technologies or KPIT Cummins were directly spawned by engineering

concerns, while others like Neilsoft and eQ Technologic are IT companies largely

specializing in engineering.

The

Headcounts Say It All

Companies 2004 2005*
WNS 3,000 5,000
MsourcE 2,100 3,000
HSBC 500 1,000
Progeon 400 800
Oceans

Connect
300 600
Zensar 120 300
*Projected

None of this has been properly publicized heretofore: not Pune's very

creative entrepreneurs, not their innovative companies. Some feel that it is the

Maharashtra govern—ment's lack of IT focus, a consequence of the high degree

of industrialization of the state, that has led to this situation. Explains

Mahajan, "For states like Karnataka, with limited industrialization,

succeeding in IT was a do-or-die situation. Not so here. Add to this the fact

that, unlike a Krishna or Naidu, most politicians in this state have backgrounds

in the sugar co-operatives industry, and therefore aren't exactly equipped

with visionary IT acumen."

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The Billion Dollar Question



Whatever be its pluses or minuses, that Pune has come of IT age became

evident a few months ago when it was widely reported that the city crossed the

billion dollar mark in software exports. However, later some in the industry

hotly denied this, claiming to have fallen short by $200,000, leading to the

resignation of the proactive director of STPI. What everyone seemed to lose

sight of in this melee was that the billion dollar mark was hardly the most

important signpost in Pune's journey as an IT venue of choice. After all, when

you set out to climb the 29,000-ft high Mount Everest, you do let your

expedition stall over whether base camp should be at 50 ft or at 80 ft.

Rites of Passage



But it was this very billion-dollar fiasco that prompted Dataquest to take a

closer look at Pune companies. We interacted with around 50 companies, including

BPOs, though it has not been possible to highlight them all. Our study excludes

all those biggies who have development centers in Pune but are headquartered

elsewhere. Only Pune-based software services players like Zensar, KPIT Cummins,

Tata Technologies or Cybage Software came into our purview. We, however,

included software MNCs whose only or major ODCs in the country are located in

Pune: thus Kanbay India, BMC Software, Selectica and eGain made it into the

list, while Persistent makes it by virtue of its unique model of developing

products only for other software companies.

Our choices were not motivated by sheer desire for economy so much as our

desire to recognize the efforts of a number of small but innovative product

companies: these include Compulink, ESOP Direct, Kalzoom, Seacom, and Synise all

of which chiefly targeted the domestic market. More surprises were in store for

us with companies that had gone for the international market: Pace Soft, Impact

Systems, Cashtech, Kenati, eQ Technologic for business warehousing tools.

Dataquest does not claim that this list is exhaustive, but all the same, it

is a salute to the real foot soldiers who are making Pune a vibrant IT city.

Rajneesh De

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