Great North Eastern Railway’s automatic answering machine reassures the caller that GNER “is proud to be answering your call from Newcastle upon Tyne”. Is that rather than being proud to be answering it from Mumbai or Bangalore?
It could be a case of Geordie nationalism, but it is more likely to be a sign of the times. British people are increasingly reluctant to talk to Indian call centres a message companies that eagerly located there over the past three years are being obliged to listen to.
Customer criticism cost them more than the savings they made. PowerGen, which closed its operations in the subcontinent in June, is just one of several companies to have recently pulled out of India. And they are doing so not just for PR reasons, but because they realise they can open in places such as Newcastle and still save money.
It would be wrong to say that India’s call-centre market has died. But where growth is really happening is in the IT and back-office sectors. Indian expertise has meant that 185 of Fortune 500 companies now outsource IT services there.
Jeremy Kelly, national director of Jones Lang LaSalle’s World Winning Cities team, says this continuing interest led to a take-up of 20m m2 of office space in the country last year.
Software development
“The biggest trend is India’s growth and dynamism in software development and IT sectors, and this is moving India very quickly up the value chain,” says Kelly. He adds that interest from western companies is boosting Indian IT companies, such as TATA, Wipro, InfoSys and Satyam.
Figures from Cushman & Wakefield describe India’s economic performance in 2005 as “impressive”. It says that, as a result, “the Indian real estate sector witnessed higher-than-expected demand and surpassed established benchmarks in 2005 in terms of both rental and capital values across real estate segments”.
The report goes on to say that its markets “have recorded an overall rise in values ranging from 35% to 100% in certain real estate segments over the past two years”.
A more open regulatory system is helping to mature the market. “Transparency is helping with the ease of doing business, and is changing rapidly,” says Kelly. “International occupiers are helping to change the pace and terms of improvements.”
Another shift has been the growth in what Jones Lang LaSalle’s World Winning Cities report calls tier 111 cities. These are the 40-plus cities with more than 1m people, such as Ahmedabad, Indore and Kolkata. They are attracting interest from both local and international IT firms because they are cheaper locations.
Tier 1 cities expensive, prime pitch include Mumbai and Delhi, while Pune and Chennai are tier 11 cities, still prime pitch but less expensive.
India is seeing the knock-on effect of its newfound wealth in its burgeoning retail and residential markets. Figures vary, but the number of malls for the country of 1.3bn people has risen from three four years ago to 35 today, with an estimated 600 in planning.
The demand is benefiting UK companies. John Hewitt, director at Stubbs Rich, says his company is part of “the beginnings of a shift as India embarks on a massive building programme, and is now outsourcing huge amounts of business to the west”.
Working with Indian architects, Stubbs Rich is involved in three major projects: the Thane Masterplan, a massive three-phase brownfield scheme in Mumbai; a 37,160m2 mixed-use development at Pune airport, 163km south-west of Mumbai; and the Vimannagar housing scheme close to Pune airport.
With all sectors of the Indian property market expanding, more involvement from UK companies is expected to help build the next Indian empire, which, instead of call centres, will rely on the country’s growing IT industry.
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Under pressure from western companies and governments, the Indian government last year relaxed some of its foreign direct investment regulations, such as those covering the amount of stock in which foreigners can invest. Restrictions remain on inward investment, however. For example, foreigners are not allowed to invest for speculative purposes. Jeremy Kelly, national director with Jones Lang LaSalle’s World Winning Cities team, warns: “The Indian market is for those who want to take a longer-term perspective. We wouldn’t advise going to India to make a quick buck. You have to have a long-term strategy to expand with the market, rather than arrive at Delhi airport and find a building, buy it and then sell it on three years later.” |
