With the tax holiday window that Wipro has so far enjoyed at its Electronic City unit coming to a close soon, the company is reportedly planning to shift to a new place in Bengaluru soon. The move makes sense because without the tax rebates, operational costs would shoot up.
According to The Economic Times, Wipro has planned a new 50-acre campus at Kodathi on Sarjapur Road, and the entire workforce from its Electronic City unit as well as the hired facilities spread across the city will be shifted here in the next two years. The company calls its proposed 2-million sq ft facility, with a capacity for over 30,000 workers, an "agile workspace aimed at the digital worker" and it will be located around 6km away from its present headquarters. The new campus incidentally, is aimed at digital workers, too, and will have an initial capacity to accommodate 4,000 employees.
"We will start moving people from this calendar year-end. The new campus is a special economic zone [SEZ]," Saurabh Govil, chief human resource officer, Wipro, told the daily. To remind you, businesses operating from the Special Economic Zones (SEZs) - including software services exporters - get 100 per cent Income Tax exemption on export income for five years and 50 per cent deduction for the next five years.
Given that the company in its latest annual report claimed that the tax holiday resulted in a decrease in its tax expense by Rs 1,159.8 crore and Rs 1,192.7 crore for the year ended March 31, 2018 and 2017, respectively, it's not surprising that the new campus is also an SEZ. "The tax holiday period being currently available to the Company expires in various years through fiscal 2030-31," Wipro added in its annual report.
According to experts, the growing focus on digital and increasing automation is putting pressure on margins, while the sector continues to battle growing protectionism and, as a result, companies are trying to squeeze costs where they can. And consolidating real estate assets is one way to do so.
Gearing up for the upcoming shift, Wipro's chairman even met Karnataka Chief Minister HD Kumaraswamy last week. The agenda reportedly was to solicit help in upgrading the Sarjapur Road so that traffic congestion is reduced.
The meeting is already bearing fruit. The city corporation Bruhat Bengaluru Mahanagara Palike (BBMP) told the daily that it will widen the 5km stretch from Iblur junction to Carmelaram junction, near the new campus. "We are in the process of widening it into a six-lane road. It will not take much time as the land on either side of the road belongs to us. We are hoping to finish the work in 4-6 months," said Manjunath Prasad, Commissioner, BBMP.
Of course, there's no dearth of critics pointing out that large companies also need to step up and take responsibility for local infrastructure, instead of leaving it all to the government. "IT services companies should have done more to make sure that their host city's infrastructure is looked after. I do not understand the IT services companies that have chosen to make Bengaluru their home and not played a larger role in improving the infrastructure." technology consultant Siddharth Pai told the daily, adding, "If they say they are paying income tax that is not enough."
Edited By Sushmita Choudhury Agarwal