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Story URL: http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39129878,00.htm

HSBC and Lloyds TSB head offshore to Calcutta
Are traditional offshore locations getting too expensive?

By Andy McCue

Published: Wednesday 27 April 2005

HSBC and Lloyds TSB are set to open offshore back-office and contact centre operations in Calcutta (now known as Kolkata) in the Indian state of West Bengal.

The new operations represent a move away from the traditional Indian locations such as Bangalore, Delhi, Hyderabad and Mumbai.

Competition between Indian cities for the offshore outsourcing business of multinational corporations is fierce and as land and labour costs rise, firms are starting to look outside the traditional offshoring centres in order to maintain a cost advantage.

HSBC is moving some back-office operations to Kolkata from September while Lloyds TSB is in talks with Indian BPO vendor ICICI OneSource about opening a facility in the city, according to the Minister of IT for the communist government of West Bengal.

Both HSBC and Lloyds TSB have gone public about their plans to offshore thousands of jobs to cheaper overseas locations such as India.

Speaking to silicon.com at the Offshore Customer Management conference in New Delhi, Manabendra Mukherjee, Minister of IT, environment and government for West Bengal, said Kolkata has overcome its legacy of poverty and now has both the modern infrastructure and government support to attract western companies.

"Perception has been a big problem for Kolkatta but it has the lowest cost of operation and lowest staff attrition," he said.

Mukherjee claimed Kolkata-based operations are 12 to 13 per cent cheaper than Delhi and Mumbai and 11 per cent cheaper than Bangalore and Hyderabad.

Kolkata is the capital of the state of West Bengal, and accounts for around five per cent of the Indian IT and BPO market. It produces almost 200,000 graduates a year who can earn between 66,000 Rupees (£795) and 84,000 Rupees (£1,011) a year working in the call centres there.