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Strategy #3: Change Locations

The high prices and resource crunch in top-tier Indian cities such as Bangalore and Mumbai have led many companies to execute alternative location strategies. Many vendors are sending work to tier-two cities (Hyderabad or Chennai) or even tier-three cities (Noida or Chandigarh), where labor and real estate costs as well as attrition may be cut in half. Such benefits come at a price: The infrastructure quality lags that of more advanced cities, and the search to find qualified people may take longer.

Another option to combat the rising attrition rates in India is to locate in other countries. Sykes Enterprises, for example, disclosed that it is relocating the customer contact management work at its Bangalore, India, facility because the center delivered an inadequate return and a limited competitive advantage. The Tampa-based company thinks the work is better suited for the other Asia-Pacific offshore centers in its portfolio, such as China. Sykes expected to incur total charges of approximately $0.8–$1.5 million for its plan to relocate work.

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