Infosys, India's second largest IT company, which opened its first development centre in the region at the software park in Mohali, near Chandigarh, less than a year ago and had talked of setting up its major development centre inside the park, last week inked a deal for locating the Rs 618 crore, 100-acre facility in Karnataka instead. Infosys already has 19 smaller software development centres all over India, including the Rs 11 crore Mohali centre.

The move is certain to impact on the region's infotech thrust and, in particular, on Punjab, as it had been aggressive in projecting Infosys as a key entrant at its Mohali software park.

A senior Punjab official, when contacted on the phone, said Infosys had been very keen on locating its development hub, with a projected employment potential of around 7,000 professionals in the first phase, at Mohali. When asked why Infosys had changed its mind, he said perhaps the fact that Infosys already had an existent 48-acre facility at Bangalore had influenced its decision. He said Infosys had built a strong relationship and expressed confidence that it would continue to invest in the state.

But the Infosys decision has already had its impact in Chandigarh with reports that the Punjab chief minister, Prakash Singh Badal, had decided to intervene directly with Infosys to ensure that the company retained its original plans for Mohali.

The Infosys project is not the first that the Mohali software park has lost to other, more competitive states. A few months ago a US-based non-resident Indian (NRI) changed his original plans to relocate his Institute of Advanced Research at Mohali, allegedly due to protracted delays in clearances. In his case Punjab's loss was Gujarat's gain as within days he had signed a memorandum of understanding (MoU) with the Gujarat government for a site at Gandhinagar. The Gujarat government even pitched in with free land as a sweetener.

Several other companies are also reported to have pulled out of the Mohali software park, allegedly due to red tape and infrastructure problems.While Punjab's disappointment is understandable Infosys decision was not entirely unexpected. In fact the company had already begun to show signs of restlessness by initiating preliminary talks with Haryana for housing a software facility at Panchkula, just across the border from Mohali.

Senior Haryana officials confirmed that talks had been held with the software major. The state had reportedly offered up to 100 acre of prime land near Sukhna Lake to Infosys at around a third the Mohali price of Rs 35 lakh an acre. Interestingly, Panchkula has neither an existent software park nor even an earth station against Mohali's two earth stations with a combined bandwidth of 42 MB per second.

Infotech majors have long complained that Punjab does not have a clear IT policy and uses a one-size-fits-all approach in its investment criteria. Thus an Infosys or Wipro gets the same run around as a new entrant. While this may or may not have been the reason behind Infosys' decision to locate its hub in Karnataka, it is certain to cast a shadow on the regions plans to emerge from the shadow of southern firms as a major infotech hub.

This is all the more ironic given the shortage of software professionals, that has forced even non-English speaking European software firms to explore offshore development and Indian IT majors to cast their net towards new areas. A situation which would logically place Mohali, with Chandigarh's talent pool, bandwidth and cost advantages and comparable quality of life, on a relatively firm footing vis-a-vis older centres.

But the Infosys decision has shown that unless it markets itself better it may remain a hidden Eldorado, its potential untapped. When contacted on the phone, the Infosys office at Mohali claimed ignorance of the company's larger plans while senior Infosys officials could not be contacted at Bangalore as they were reportedly busy with the Prime Minister's visit.