TCS, Infy shift to Tier-II, III cities to save cost

In a slowing economy, IT companies are trying to save every penny. After experimenting with their HR strategies, next on the list are office rentals and real estate costs. CNBC-TV18’s Sunanda Jayaseelan finds out how TCS and Infosys are managing their operating costs.

With growth forecasts for the IT sector looking bleak for the next few quarters, companies are trying hard to keep sales, general and administrative costs under control. TCS, which has over 10 centres in the country, has reportedly decided to concentrate its expansion in Tier II and Tier III cities.

S Ramadorai, MD and CEO at TCS , Bangalore, said, “We have presence in Gandhinagar and Coimbatore, for example, we will increase that. These are the kind of cities where we will look at scaling up.”

So while TCS will focus on centres like Pune and Trivandrum, Infosys is looking to build either a development centre or hostel facilities on its land near the new international airport outside Bangalore.

V Balakrishnan, CFO, Infosys , said, “It takes three hours from the airport, so it is beneficial for employees. We don't have a timeline as to when it will be complete but we are working on completing it.”

While infrastructure in Tier II and III cities remains a worry, both TCS and Infosys say that with rising office space costs, it is only a matter of time before other players follow them there.