HSBC Group, one of the world's largest banking and financial services organisations, has signed a memorandum of understanding with the Andhra Pradesh government for setting up an information technology enabled services centre at the port city of Visakhapatnam.

J C Mohanty, principal secretary (IT), AP government, and HSBC chief operating officer Malcolm Wagget signed the MoU on Friday in the presence of Chief Minister N Chandrababu Naidu, according to an official release.

Malcolm Wagget said HSBC Group would invest Rs 50 crore (Rs 500 million) in the Visakhapatnam project and provide employment to 800 people by 2004.

The ITES centre would be constructed in two phases in three years' time with a built up space of 175, 000 lakh square feet spread over a 40-acre site.

A joint venture company of state-owned AP Industrial Infrastructure Corporation, Visakhapatnam Urban Development Authority and Larsen & Toubro would take up the construction work of the state-of-the-art facility. The first phase would be completed by January 2004. The HSBC centre would offer banking, data processing and other financial services to the customers.

"The decision by HSBC to locate its new project in Visakhapatnam is seen as a strong endorsement of the industry-friendly policies of the AP government intended to give a boost to ITES.

"It is expected to give a fillip to IT and ITES infrastructure development and related activity in Visakhapatnam. The setting up of the HSBC facility is likely to have spin off effect, in that other global players may also consider the port city for their ITES operations. Visakhapatnam will now emerge as the next major centre for IT and ITES," the statement added.

"Visakhapatnam was successful in attracting HSBC, even though it was up against a number of other Indian cities and other countries around the world. But the state government's commitment to assist in setting up the new facility in Visakhapatnam is seen as the major factor, which swung the project in favour of the state," it pointed out.