SuperValu, the $44 billion (last financial year) third-largest grocery retail chain in the US and a Fortune 50 company, is setting up operations in Bangalore to support the company's IT requirements by leveraging the talent pool in India - the first time it is venturing out of the US to meet its IT needs.The company plans to invest $50 million (around Rs 230 crore) over the next five years. To start with, SuperValu Services India (SSI) will employ 50 people, which will be supported by 1,800 associates working at three different locations in the US as part of its IT division. The company plans to grow SSI to a team of 300 IT professionals in the next 12-18 months."SSI will be a key part of SuperValu's IT organisation and will help in new applications development, technical operations and testing to support the overall corporate functions of the company including the retail and supply chain operations. We want to build a strong local team here with strong skills in Java and other leading edge development tools," said Paul Singer, chief information officer, SuperValu.Apart from having its in-house IT division, SuperValu also works with 800 contractors, of which 200 are based out of India. The company also works with many Indian IT companies including TCS, Wipro, Infosys and Cognizant for sourcing the applications and solutions required for its retail management.Tony Jolley, vice-president,Information Technology, SuperValu, who will be the overall head of SSI said the Bangalore team will work on end-to-end application developments, supporting the IT division round-the-clock.SuperValu's IT spending stands at $500 million per annum, which is meant primarily to innovate its IT division and to support the operations. The IT division within the company, which works on project-to-project basis, is presently working on 400 projects, said Jolley. While the initial focus will be to cater to the company's retail chain spread over all the 50 states in the US he said, "we may think of supplying to the local retail companies in the next couple of years."According to BV Naidu, director, STPI (Karnataka and Andhra Pradesh), 95 IT companies have set up operations in Karnataka (Bangalore) in the last six months, with a net addition of about 60,000 people to the existing IT workforce in the state. "We hope that SuperValu's decision of setting up operations in Bangalore will give a right message to the corporates in the US," he added.This is not for the first time that any retail chain is coming to Bangalore for its IT requirements. The $45-billion UK retail major Tesco has already set up its first captive unit outside the UK, in Bangalore. Tesco Hindustan Service Centre, the Tesco operations in India has a team of about 1000 people, of which, more than 60 per cent are focussed on IT development.Another US company Target, which is ranked 27th in the Fortune listings, has around 200 employees working at its Bangalore service centre. The company, with a turnover of $52 billion in 2005, has expansion plans also."Cost arbitrage is definitely one among the many factors for which the retail majors are looking at India for software application development and back-end support. Besides, availability of technical manpower in Bangalore is also another factor, which is enticing them to set up shops here," says B V Naidu. According to sources, the cost-saving in case of developing applications and solutions for retail requirement is almost 50 per cent cheaper in India, than in the US or UK.
