Watch out, Bangalore! Investors are flocking to Calcutta--a city better known for urban squalor than tech savvy--as it seeks to become India's surprise new hi-tech hub
FOR YEARS, this teeming city on India's eastern coast watched as other places in the country grabbed investment and headlines. With its boxy yellow taxis and crumbling colonial-era buildings, Calcutta seemed frozen in an older, slower era.
Now, the rapid changes taking place here show how outsourcing is helping to transform unexpected corners of India. Long neglected by investors, Calcutta is attracting technology companies ranging from IBM to India's Wipro thanks to its intellectual talent and low costs. Software engineers who sought opportunity far from their home towns are returning. And the communist state government has called in consultancy McKinsey & Co. to help lure tech firms.
"When I left Calcutta, I was a pessimist," says Shirsendu Halder, 36, who spent five years in the United States with drug giant Aventis. "I didn't think the situation here would change so fast and so radically." He recently returned to his home town to work at a software company that's 50% owned by United Airlines.
Calcutta's resurgence is part of a larger dynamic that's playing out in other Indian cities as the flow of outsourcing-related investment seeps into different parts of the country. General Electric is doing call-centre work in Jaipur, the capital of the desert state of Rajasthan. Infosys Technologies has set up a software-development centre in Trivandrum, a city in the southern state of Kerala. And tech companies of all types have flocked to Pune, a university town three hours' drive from Mumbai.
But the changes are especially dramatic in Calcutta, until recently considered a city in terminal decline. Once the capital of British India, Calcutta experienced a long and painful deterioration in the decades since India's independence. When a communist-led government took power in the surrounding state of West Bengal in 1977 after a decade of political instability, businesses fled the city and strikes became a regular occurrence. To the outside world, Calcutta--now officially known as Kolkata--was synonymous with the charity of Mother Theresa and the worst kind of urban squalor.
Of course, the blight of poverty remains as a constant reminder of how far the city--and India--still have to go. But things are changing noticeably around the edges. The government is racing to build a huge new software park to complement an existing one that's almost full. IBM plans to double its staff in the city to 4,000 by the end of the year, making Calcutta the company's second-largest centre in India after Bangalore. An unprecedented building boom is producing large housing developments with names like "Silver Spring" and "South City." And locals are flocking to several brand-new malls complete with multiplex cinemas and cafes.
"Calcutta has really suffered from perception," says Rahul Saraf, the developer of a bustling new downtown mall with two more under construction. "The generation that saw the city gradually lose its glory went into a shell . . . The next generation wants to emulate exactly what's happening elsewhere in the world."
Underpinning the progress is a significant change in approach by the state government in West Bengal: It's still communist, but no longer hostile to business. The pragmatism is born of necessity. In the most-recent nationwide job survey conducted in 1999 and 2000, unemployment in West Bengal was 15%.
To bring in new investment and jobs, government ministers have publicly discouraged the city's infamous strikes and met with businessmen in India and abroad to promote the state. One of those politicians is Nirupam Sen, a card-carrying communist activist since his student days and now the state's industry minister. He describes with enthusiasm efforts to bring in investors like PepsiCo and Mitsubishi Chemicals.
Sitting beneath a portrait of Vladimir Lenin in his office, Sen laughs when asked how the man on his wall would view such talk. "He said all theories come from ground realities, therefore first of all you have to be practical," he says. "I have to look for private investment otherwise there will be no investment."
The way the government tackled the problem of how to build the city's information-technology industry is a case in point. Not only was it getting off to a late start compared to elsewhere in the country, but Calcutta also suffered from a hugely negative reputation, particularly with respect to labour, say McKinsey consultants who helped advise the state government.
So it stressed the positive. Contrary to perception, the city's power supply is reliable, unlike in many parts of India. Costs are even lower than in Bangalore or Mumbai. And there's a huge supply of talent from nearby engineering schools, including the prestigious Indian Institute of Technology in Kharagpur
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By Joanna Slater/CALCUTTA
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