India as a country has never been about homogeneity. And the ubiquitous rule also applies to the concept of growth and development across cities in India. At the one of the spectrum, there are those truly blessed Metros or “Tier 1″ cities that enjoy maximum attention from the industry – both internal and external – and the government. Of course with all the migration they are also bursting at the seams when it comes to infrastructure availability, rocketing living costs, and increasing consumption. On the other hand, the Tier 2 and Tier 3 cities are crying hoarse about the lack of basic facilities, as they are increasing feeling the need to reap the benefits of growth that other parts of the country have hitherto enjoyed.

NASSCOM, one of the more proactive organizations in the country recently released a report “Locational Road man for IT-BPO growth: Assessment of 50 leading cities” which outlines a need to have more consistent and homogeneous growth across the country. It has categorized 50 cities across India under four major categories (a la Magic Quadrant) – Leaders, Challengers, Followers, and Aspirants – based on six key parameters including.

• Knowledge pool availability
• Skill-set assessment
• Infrastructure
• Social & Living environment

What they have essentially done is to inform those interested in setting up shop in India or planning to expand a key message – Think hard before you decide where to go next. As call centers have started to look beyond the tier 1 (Leaders/Challengers) cities owing to the spiraling salaries, real estate and infrastructure costs, increasing attrition rates, among many others. Employees often demand high packages, and have short employment cycles, as a career in BPO is not considered a mainstream one, and is often a stepping stone to the corporate world (or just a temporary way to make some quick bucks). These costs can be contained by as much as 30% in the tier 2 (or followers/aspirant) cities. Also, some cities have been identified to have better vertical, specialized skills than the generic ones. One such case is the deep knowledge base of financial industry in the Gujarati cities of Ahmedabad and Vadodara.

However, tier 2 cities come with their own share of problems. For starters, the quality of skills (especially vertical specific ones) is a deterrent, especially for international call centers. The quality of education imparted in these cities is often inferior to the kind in tier 1 cities (and prohibitive for Outsourcers who are looking at complex problem-solving skills along with good communications). The key question in these cases is NOT the number of graduates, but the number of employable graduates. According to Everest, the number of employable graduates is as low as 5-6% (in Jaipur) to as high as 18% (in Chandigarh’s) of total graduates (which are in the range of 20,000 to 30000 approximately).

Other smaller, but important issues relate to accents, and management overheads for a relatively less skilled labor pool. Senior management executives are often hesitant to relocate to such cities and often demand higher packages, which affects the cost edge that smaller cities enjoy. Health benefits, better pay packages, availability of electricity, technology and training facilities is also identified as major concerns in these cities.

Committees such as NASSCOM are proactively looking at ways to reduce the gap to make the growth more consistent and make the country more appealing to the Outsourcers who are now looking at other emerging countries such as the Philippines, Egypt, Romania, and Vietnam. One such prerogative is the increased collaboration in the BPO fraternity in order to increase “employability” of graduates from tier 2 and tier 3 cities so that they can catch up with their brothers and sisters in the metros. This can be done by imparting relevant skills via training institutes, and outsourcing events. Moreover, establishment of BPO hubs will also boost the possibilities of more specialized processes pouring in such cities.