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The cost factor in investment flow
- Trendsetter sounds a warning

India might be one of the most attractive destinations for information, communication and technology companies, but it is fast losing the cost advantage that once triggered funds flow from multinational corporations to the country.

The reminder is from none other than Hatim Tyabji, who brought a multinational corporation’s development centre to India much before it became fashionable.

“It was 1989, two years before India treaded the path of liberalisation. When I suggested Bangalore to my board and asked $ 5 million, everyone was surprised. But that’s not the case any longer,” said Tyabji, who popularised electronic terminals that authorise credit card transactions across the world.

As the president and CEO of VeriFone, which championed transaction automation, Tyabji brought the company’s development centre to Bangalore and kicked off a trend. The $ 600 million company that inspired case studies at Harvard Business School was later merged with Hewlett Packard.

“But India’s cost advantage is fast waning. Besides, loyalty factor is low and also the wages are going up. So when everyone in the company was discussing China or India as possible destinations, I preferred south Greece to set up a development centre. Though we are paying salaries in Euro, the cost is half of what we would have incurred in India,” said Tyabji, who sits on the board of seven companies.

The list includes Bytemobile, Datacard Group, eFunds, Best Buy and venture fund Benchmark Capital. Two of these companies — eFunds and Datacard Group — have their operations in India, but none has base in Bangalore.

While spiralling costs in Indian cities is a concern for Tyabji, he is convinced about opportunities in Calcutta. “The cost arbitrage now favours Calcutta… Besides, there is a huge repository of talent,” explained Tyabji, in town for a personal engagement. He, however, declined to comment on whether his companies are looking at the city.

He has professional interests in this part of the globe as he is pursuing the central government to adopt Datacard’s technology. “I have had meetings with the home ministry officials in connection with citizen’s identity card project. We can offer to produce and distribute these cards with embedded chips containing personal information,” said the man who revolutionised the rules of the banking industry.

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