In South India, Amazon Builds Its Largest Workplace But

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In South India, Amazon Builds Its Largest Office Yet

The austere building can hardly be distinguished in the landscape of the glass and concrete buildings of the Asian Silicon Valley, as Hyderabad, India, is well known. It is one of the latest developments from Amazon, the largest office building for the online retailer in the world.

With the aim of cementing its place as the focus of online retailing, Amazon has turned to India, the world's fastest growing market for internet users. And it has chosen Hyderabad, a city of nearly 10 million people in southern India, as its base of operations.

However, the project faces challenges, including setbacks from local businesses and politicians.

In just a few years, Hyderabad has developed into a technology and financial center and a beacon for young talent. The city, which saw the largest increase in tech office space last year, is already a base in India for other multinational tech companies like Facebook, Google, Microsoft, and Apple, which have spent $ 25 million developing their offices there to have.

"Hyderabad is a well-known software tech talent center and the government has made it possible for us to have a campus this size," said Minari Shah, an Amazon spokeswoman. "This is an important confirmation of the continued importance of India to Amazon."

For the past decade, the tech giant has woven itself into the fabric of Indian life. And now, four years after construction began, the Hyderabad office, Amazon's first wholly owned office outside of the US, 40 additional offices, 67 shipping centers, 1,400 delivery stations and more than 60,000 employees (plus 155,000 contractors) is closing on land.

The record size of the building – 1.8 million square meters – and the entire campus area correspond to almost 65 soccer fields. They symbolize a characteristic feature of the booming Indian technology industry: the unstoppable presence of international technology companies.

When Amazon founder Jeff Bezos visited India in January, he was faced with antitrust proceedings by Indian regulators investigating Amazon and the Indian e-commerce giant Flipkart, which is largely owned by Walmart.

India bans foreign direct investment in retail, a move away from politics in the US and UK. The law requires Amazon and other foreign-owned e-commerce companies to be neutral marketplaces that rely on independent sellers.

However, Praveen Khandelwal, founder and general secretary of the Confederation of All India Traders, which oversees 70 million traders and 40,000 trade associations, argues that the company is affecting domestic trade and has shut down thousands of local businesses across the country.

The new office of Amazon in Hyderabad is only a possibility "to force the control and dominance over the Indian retail trade in a more structured way". Mr. Khandelwal led protests against Amazon's trading practices earlier this year.

India's retail regulator is investigating Amazon over allegations that it uses deep discounts and preferred sellers, according to Satish Meena, a senior analyst at global technology research firm Forrester.

"There are loopholes that they exploit. Everyone knows that," said Mr Meena.

The challenges emerging in India are mirrored in the US, where American tech giants have put pressure on smaller rivals and business owners. Amazon is facing antitrust charges in the European Union, and Mr Bezos and other tech titans were harassed by US lawmakers in July for their anti-competitive practices.

Amazon's 15-story Hyderabad office opened last year. It has prayer rooms, a small synthetic cricket pitch, 49 elevators, a helipad, and a 24-hour cafeteria on a campus that the company claims is made of 2.5 times more steel than the Eiffel Tower. It employs 7,000 people out of an estimated 15,000 people, mostly composed of technology teams focused on leveraging machine learning and software development for innovative services – such as Amazon Pay's cash load service for digital transactions in a country of 190 Millions of citizens who don't use banks – as well as customer service representatives.

Amazon officials declined to comment on the cost of the development, but told Bloomberg that it had cost "hundreds of millions of dollars" to build. (The campus is Amazon's largest, but the company plans to open a second headquarters in Arlington, Virginia that could be up to eight million square feet.)

Amazon and Flipkart pay off as e-commerce marketplaces that match buyers with independent sellers. This has enabled Amazon to sell products from sellers like Cloudtail at lower prices than independent sellers.

The impact of Amazon's strategy was noted. For the past several years, Satinder Wadhwa has struggled to keep his business in the Kailash area of ​​South Delhi amid growing online retailing. His watch shop Time & Style used to be full of locals. Now Mr. Wadhwa estimates that he has half as many customers.

“People don't come to the market anymore. That means they shop online, ”said Wadhwa. "If they get better price and delivery at home, why come to us?"

Many entrepreneurs across India are asking themselves this question. "Amazon is strong financially, its reach is strong," said Wadhwa.

Since construction began on the Hyderabad office in 2016, Amazon has made a promising response to the locals, opening an Amazon Fresh grocery delivery store in Bangalore. It also started Prime Reading with books in Hindi and Tamil and launched an online pharmacy amid the pandemic.

The retail giant's desire to expand is easy to explain. India's e-commerce industry is still in its infancy, approaching 120 million online shoppers in 2018 out of a population of over a billion.

In 2018, Amazon was the second largest online retailer in India after Flipkart with a market share of 32 percent (compared to 41 percent in the US). Forrester analysts say that e-commerce sales in the country will reach nearly $ 86 billion by 2024.

As India's reliance on international tech companies grows, the latest antitrust investigation is only the latest in a series of events that led Prime Minister Narendra Modi's administration to curb foreign investment.

Mr Meena says there is a panic among local sellers who feel they are being ousted from the market because others are being favored and now the government only sees questions about the business practices of large tech companies after they have developed their own e- Commerce platforms.

To avoid the recent wave of unrest, Bezos announced during his visit in January a $ 1 billion investment to help small and medium-sized businesses grow their online growth. It follows Amazon's promise to invest $ 5 billion in the country in 2016 and another $ 500 million pledged into e-grocery retailing next year.

Since the pandemic, where e-commerce is the only channel for months of selling products, more and more small businesses are realizing the potential to partner with companies like Amazon and Flipkart, Meena added.

In the United States, the European Union, and now India, Amazon's rise as a retail giant has faced antitrust investigations and increased scrutiny of data and tax regulations. But the game is hardly a problem for Amazon, said Mr Meena.

"It's not just India; you will face regulatory challenges around the world," he said, adding that Amazon would likely serve as a blueprint for other international retailers.

"Ultimately, they think they have enough value and time to enter the Indian market," he said. "They hope so."

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