Smita Joshi, Mumbai, June 25, 2007
The Financial Express

With little hope that the government will extend tax holidays under the Software Technology Parks in India (STPI) Policy, several small and midsize ITeS companies have started scouting for space in special economic zones. The STPI Policy-specific tax holidays will expire in March 2009.

For the ITeS companies, being increasingly forced out of the metros, moving to SEZs will mean a hit on their ability to get high-quality manpower and huge investments, fear industry players.

Says Vineet Mittal, managing director of Stream BPO, “We have started looking for space in SEZs in Chennai, Kolkata, Pune, Mumbai and Indore. But we are not happy with this as there are a number of complications associated with moving into SEZst.” According to SEZ regulations, an IT/ITeS company with facilities in areas not in SEZs can move into an SEZ facility only by starting afresh and setting up new infrastructure, instead of merely transferring physical assets from its existing set-up. “This additional capital burden will make life more difficult for SMEs that are already hit by increasing manpower cost and rising attrition,” say industry analysts.

Cross Tab, a market research KPO, has also begun its search for space in SEZs. “Since all the SEZs are situated outside city limits, getting skilled manpower will be difficult for us,” says Ashwin Mittal, director, Cross Tab. “The government is promoting big players and property developers. There should be fair play. Either the government extend tax holidays under STPI or let there be no tax holidays in SEZs,” he adds.

Mumbai-based BPO Tricom India has also started scouting for space in SEZs in and around the city.
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