The Economic Times: July, 2012
Bangalore: Some of the world's biggest technology companies have booked acres of office space in Bangalore and Hyderabad, real estate agents said, indicating that investments are proceeding apace in the software sector despite a generally gloomy mood for businesses.
Facebook, Amazon, Xerox and chipmaker AMD are among the companies that have leased office space in India's technology capital Bangalore, or in Hyderabad, which is home to companies such as Google and Microsoft.
Including tax preparation software maker Intuit, these five companies have in recent weeks leased more than 6 lakh sq ft, a precursor to hiring thousands of professionals.
The general rule of thumb is to provide 75-80 sq ft of usable space for every employee. By this estimate, Facebook's Hyderabad office can accommodate approximately 500 staff and Amazon about 5,000.
Analysts said the plans are a testament to India's continued attractiveness as a source of technology talent for top international corporations, which have made a long-term commitment to India.
"For companies that believe in the long-term story of India, this is probably a very good time as you can get real estate and talent at relatively lower cost," said Sunil Chandiramani, national director for advisory services at audit and consultancy Ernst & Young. "The fact remains that India represents a large consumer base. Growth may be muted now, but it is still a growth story."
Facebook, which set up its first local office in Hyderabad in 2010, raised $16 billion in a share sale in May and has said it regards India as one of its most important markets.
Amazon, which entered India through Junglee.com earlier this year, has a development centre in Hyderabad.
The Amazon centre in Hyderabad creates solutions for the complex ecommerce operations of the world's largest online retailer.
The $100-billion Indian software and services sector has been coping with slower rates of growth but it is still hiring in large numbers. In the year to March alone, the top five IT services companies are expected to hire more than 1 lakh professionals. The sector employs about 3 million.
Almost all of the world's foremost technology companies have operations in India and have pressed ahead with their plans regardless of the widespread perception that the country is losing its sheen as an investment destination.
"We are hiring in Bangalore, Hyderabad and Chennai, and will continue to grow our business in India," Amazon said in a statement.
Amazon has committed to take on lease 1 lakh sq ft in Hyderabad's HITEC city, adding to 3 lakh sq ft it leased last year in Bangalore's World Trade Centre. For Facebook, which set up its first India office in Hyderabad in 2010, the expansion is expected to help add to its development force to cater to the fast-growing local market. Facebook, which boasts over 900 million users globally, declined to comment.
The social networking company has leased over 40,000 sq ft in Hyderabad's Raheja Mindspace IT Park over the past three months.
Typically, builders charge Rs 30-80 per sq ft in large IT parks. Amazon could be paying over Rs 2 crore as rent every month and Facebook nearly Rs 12 lakh.
"There are signs of slowdown in the market, but companies such as Amazon and Facebook are willing to invest in real estate for both expansion and consolidation. Most multinational firms are expanding and investing in cities such as Hyderabad and Bangalore where talent pool is high," said Ram Chandnani, deputy managing director at the Indian arm of CB Richard Ellis, the world's largest commercial real estate broker.
Chipmaker Advanced Micro Devices, which recently tied up with distribution firm TAG as part of its India expansion plan, has leased close to 1.2 lakh sq ft in Hyderabad.
Xerox, known for its printers and copiers, too is looking to lease some 2.5 lakh sq ft in Bangalore for its IT services arm ACS, and discussing how and where to set up the new centre.