BANGALORE: Gurgoan has been rated as the top offshore city, beating the likes of Bangalore, Pune, Hyderabad and Chennai, which have been rated in the respective ascending order. Offshoring consultants, neoIT as part of its study have done the rating in the "India: City Competitiveness."

Throughout 2004, neoIT conducted research on 27 cities in India. Four key competitiveness factors were evaluated, people, catalysts, infrastructure and financials. Multiple dimensions within these four key competitiveness areas were scored on a scale of 1 – 5. The total rating for each factor was determined by the sum of the individual ranking of each dimension. Weight was then assigned to each of the four factors to determine the ultimate competitiveness score for each city. The normalized score was calculated by assuming the highest score as 100. This normalized score indicated the Offshore City Competitiveness Index (OCC), for the city.

Through client interaction, neoIT has observed that location selection precedes supplier selection in services globalization initiatives (offshore outsourcing). Earlier, countries competed for the location, but now competition is often at a granular level between various cities. Lately, we are more likely to observe competition between Bangalore and Manila then between a generic India and the Philippines.

Current trends indicate top supplier companies in India, as well as global companies are looking at alternative cities to develop additional development centers, including outside of India. While the competition from Chinese and Filipino cities is strong, there is healthy competition among the internal Indian cities to entice suppliers and clients alike. This increasing trend is sure to accelerate the emergence of multiple delivery centers within India and rapid development overall.

There are many factors that influence a city's ability to mature, neoIT analyzed three generations of maturity.

Generation I

When the IT industry was in its infancy in India in the early 90's, the most attractive cities were those that clearly possessed manpower and other catalyst conditions (government support, political stability, strong city development) key to strong business growth. These cities were Mumbai, Bangalore, Delhi and Chennai.

Generation II

When the IT industry attracted attention and started its growth phase in the mid 90's, different cities began to compete with the leaders by building infrastructure relevant for development of the industry. The two cities that were able to significantly improve their competitiveness were Hyderabad and Chennai.

Generation III

From 2000 onwards infrastructure was in place in many cities across India, so new criteria came into place. The financial impact to companies for cost of living expenses and real estate prices were key factors to competitiveness. New cities began to emerge as strong alternatives in Gurgaon, Noida, Chandigarh, Kolkata, Thiruvananthapuram, Trichy, Mysore, Vizag and Coimbatore.

BPO action began in late 90s and at that time Generation 1 and 2 cities were attractive: Hyderabad, Pune, Mumbai, Delhi, Chennai and Bangalore. Recently, attractiveness has made a shift toward Generation 3 cities.

A look at STPI revenues in the OCC Index brings up interesting findings for the future of the cities in India. As a result, four distinct groups of cities emerge: leaders, challengers, unknowns and laggards.

Leaders

The Leader cities have a high OCC Index and equally high performance. They include Bangalore, Hyderabad, Gurgaon, Chennai, Pune, Noida and Mumbai. Their current attractiveness is high, but they need to continue to work through infrastructure constraints and adopt policies and measures that will keep them competitive.

Challengers

The Challenger cities have a high OCC Index but their performance has not been great. They have clear potential and are likely to challenge the leaders in the near future. They include Kolkata, Thiruvanathapuram, Chandigarh, Indore, Coimbataore, Mysore, Mangalore, Trichy, Vizag & Kochi. These cities have all right things in place to emerge as an attractive choice however they need to package and market them properly.

Unknowns

The Unknowns are cities with a low OCC Index but high performance. These cities are clearly in the declining stage and their future attractiveness is questionable. Delhi, while once attractive is now Unknown because of increasing infrastructure constraints and the rise of satellite towns like Gurgaon and Noida.

Laggards

The Laggards cities have a low OCC Index as well as a low performance rating. They clearly have lagged behind in the race and are unlikely to challenge the leaders in the near future. Jaipur, Shimla, Bhubaneshwar, Nagpur, Pondicherry, Guwahati, Goa and Ahmedabad make up the Laggard category. These cities need to critically evaluate their competitive factors and adopt concrete actionable plans to compete with other attractive cities in the short and medium term before they are permanently left behind.

So the key question that arises is, "What can a city do to become a leader"? Obtaining an answer to this question requires a very detailed evaluation of the existing state and mapping the problem areas to the path to improvement. By using the four areas of the OCC model, cities can gain tremendous insight and create a map for improvement.

The OCC Index, apart from serving as a framework for global companies looking offshore to assess city destinations, also seeks to help policy makers and city planners increase the competitiveness of cities.

neoIT observes that the overall competitiveness level in India is witnessing an upward growth and the gap between the top destination and others is narrowing. It is also pertinent to note that new destinations are emerging, challenging established offshore destinations.