local techies woo government officials

Wednesday 12 October, 2011

The Confederation of Indian Industry & Vizag Information Technology Association hosted an event entitled IT Industry in tier II cities:  Prospects & Challenges, which featured many of the local resident politicians who have a say over what local resources can be dedicated to entrepreneurship, technology etc. The purpose of the event was ultimately to lobby for their support.
Information technologies industries have grown 20%/year for the last 10 years in India. As a major port city, Vizag is a logistics hub.
B. Chandra, Secretary, ITsAP & CenterHead-CA Hyderabad,  explained how growth comes about as a result of collaboration. Intergraph was the 1st IT company in Hyderabad, the biggest city in the state of Andre Pradhesh, in 1985-86. Vizag is approaching Hydrabad’s tipping point. $45B of India’s $60B IT market is exported. Each job in IT employment creates 4 more jobs. There is a multiplier for 3X for each rupee invested in IT. In Hydrabad, there is no poaching of employees because Team Hydrabad talks about it. The challenge of a tier II city like Vizag is attracting talent.
Kona Sasidhar, of the Vizag Development Authority promised to provide infrastructure & is opening an investment room.
Ahmed Nadeem noted that power & electricity affect the power of organizations, so they are doubling the substation in Rushikonda, (which is where my school GITAM is located) & also the Rushikonda tech park. They want growth in non-migratory jobs.
Dr. C. Sreedar, Executive Director of APIIC, Ltd. endorsed building IT City, but encourages an innovation center in the center of town.
Shiv Kumar provided the industry view of improving IT in Vizag:

  • The city needs to support existing companies, & not just attract new ones.
  • Part of the way to do this is by improving HR, training, & hiring incentives by creating a common training facility which offers industrial training incentives of 25-50K rupees ($500-$1K) to hired employees to complement the local Job Knowledge Center.
  • A bandwidth subsidy would enable more cloud computing & kickstart WIFI city.
  • A licensing subsidy with toned-down enforcement would provide an alternative to the cloud.
  • A tax holiday for non-Special Economic Zone companies would level the playing field.
  • Power cost reductions would help all companies.
  • Marketing support programs which provide financial assistance towards travel & hotels for overseas trade fairs would help.
  • An innovation & incubation center that mirrors Kakinda would be welcomed.
  • Abolishing the VAT & service taxes on software would cut costs.
  • Vizag needs a promotional video.
  • To attract new companies, the city must:
  • Provide better infrastructure
  • Create a better lifestyle

Lav Agarwal, the Vizag Collector & district Magistrate, a powerful position in local government, observed that Vizag is on the threshold of where Hyderabad was 10 years ago. The government’s challenge is implementation. To create a full ecosystem, IT needs connectivity (which is available), power (which is supposedly the best in the country), infrastructure, & human resources. 3k ft2 are available for an incubation center. The video is under development. This isn’t just about land deals-it requires sound business ideas. Vizag has supply issues with drinkable water. The government is partnering with employers to provide housing. More bus frequency is coming. Make a proposal & they’ll consider it.
Peter Schneeburger, CEO of VITA, gave a quick history of IT in Vizag. 1st , big investments by MNC’s need to be championed by government. IT exports are rising 20%/year. In 2000, there were 50 SME IT companies, but the internet bubble burst them. in 2002, miracle software was the 1st to locate outside of the city. VITA was established in 2003, the same year HSBC came to town. Wipro came in 2005 supposedly to do world-class software development. Kanaxa & Symbiosis won product awards in 2008. By 2010, we noticed that there is a brain drain to Hydrabad & Bangalore & there is not world-class infrastructure in Vizag yet.
The Vision 2015 plan envisions employing 10K people in IT directly & 15K indirectly. Anchors would be HSBC, Kenexa, IBM, Satyam, Sutherland. SWOT analysis reveals that strengths in Vizag are it’s location, lifestyle, infrastructure, & skill level. All this requires vision & a common goal. It needs to be positioned in high-tech R&D & low-cost BPO. The goal is to create a $1B industry, create 1-1.5K jobs/year, 40-50 new patents/year, & 1 product company with $20M in revenues.
Sanjay JaJu, Secretary, IT&C Dept., Govt of Andhra Pradesh, admitted that Vizag is his 2nd home. His job is to bring stakeholders together to grow. Andrah Pradhesh is #4 in IT in India. Issues were raised about infrastructure, but the real issue is human resources, which are required for new business models. Space is not a problem. An investment center would be helpful. Special Economic Zones attract investment. IT is being declared essential services. Vizag is an industrial town, where there is a huge domestic spend too. Companies move because of cost arbitrage, which is why companies are moving to the Philippines & VietNam. Vizag needs to exploit these opportunities.


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