Consider this:

• Chennai and Hyderabad to outdo Mumbai and Bangalore as IT hotspots by 2010.
• Mumbai ranks lowest in 'cost of living' and 'quality of life.'
• Pune tops the list with the highest ratings in skills availability.
• Expatriate attractiveness of the location will be an emerging 'swing' factor by 2006.

This is what a report -- IT outsourcing to India - Analysis of cities -- released by Gartner Inc on Monday says.

It predicts that by 2010, Hyderabad and Chennai will replace Bangalore and Mumbai as the favoured Indian destinations for IT outsourcing.

The study has categorised and evaluated the cities into four tiers based on various factors including infrastructure, skills availability, skills retention, access, cost of living, political support and quality of life.

The report also stated that certain drivers enable these cities as favorable destinations for outsourcing. These include improving infrastructure, overall skills availability, good quality educational institutions and active political support.

The improving infrastructure in Hyderabad has enabled the city to top the ratings in the infrastructure category.

However, other factors that are inhibiting this growing favourability and need to be addressed are increased attrition, inadequate infrastructure, escalating costs and lack of good quality real estate.

Pune which ranked lowest in infrastructure support will need significant investment to be at par with cities like Mumbai and Bangalore or even cities like Chennai and Hyderabad in the future.

Commenting on the report, Partha Iyengar, vice president, Gartner, said: "Bangalore and Mumbai will soon cease to be the default centers for offshoring. Ready availability of skilled labor force with lower attrition rates in cities like Chennai, Hyderabad and Pune will lead to companies setting up centers there instead."

"In the long run, other factors including global footprints of service providers, service line capabilities and expatriate index will also play a greater role for global MNCs or IT service providers setting up or expanding in these cities," Iyengar said.

According to the study, the Tier 1-1 cities like Hyderabad, Chennai and Pune are at a vantage point. These cities have most, if not all, of the capabilities of the Tier 1s, but, for various reasons, have not achieved the same level of mind-share and visibility.

These cities are the most likely to take on the mantle of Tier 1 in the near future, either in addition to or replacement of the current Tier 1s.

Hyderabad rates almost at par with Mumbai in all factors evaluated, but has scored much higher on 'cost of life' and 'quality of living' where Mumbai has received the lowest ratings.

On recommendations to companies planning to set up centers in India Partha Iyengar said: "When choosing the destination for offshoring, companies should look beyond Mumbai and Bangalore. They will need to assess the strengths and weaknesses of various cities, as what they plan to outsource or in-source could very well determine the location."

"They should also factor the expatriate attractiveness of the location which could be an emerging 'swing' factor. Further, if an Indian is involved in the selection, care should be taken to overcome the parochial biases and preferences of the individual, in making the selection," Iyengar said.

Gartner is the leading provider of research and analysis on the global information technology industry and serves more than 10,000 clients.