The Cyberabad lure

By T Radhakrishna | 22 Jan 2003

Hyderabad: Andhra Pradesh is launching a drive to lure US industry players, who are facing cost-runs due to a sectoral slowdown, into relocating their operations to its capital Hyderabad.

After some months agonising over spending cutbacks and layoffs in the US, which sent ripples of worries down the tech community, Hyderabad’s bureaucrats have begun smelling an opportunity in troubled waters — the process that has been promptly imitated by Karnataka and Tamil Nadu.

They gleefully point to more than 30,000-strong army of software engineers, and the low cost of labour and real estate as a crowd-puller to Cyberabad, which already has some 700-odd software firms, including the who’s who of global markets. Adding another value to the city, the state has unveiled a friendly policy, ICT- 2002, which offers several incentives for those who set up operations here.

Cost-effective centreThe city has become a favourite destination for many multinational corporations (MNCs), including Oracle, GE, American Express and Motorola. It is all because of a businesslike, long-term approach to the public policy and the long-term vision of Andhra Pradesh Chief Minister N Chandrababu Naidu, who has become a darling of sort for Western governments and corporations. Naidu has emerged in their eyes as one of the most promising local leaders not just in India but also in the developing world.

The state says that programmers can be hired in Hyderabad for as low as $200 a month and quality office space can be leased at $0.20 to $1 per sq ft per month. In the US, entry-level costs would be at least 10 times that amount.

Software czar Bill Gates’ recent pledge to invest $100 million in its Indian Development Centre, Hyderabad, is a good sign for the southern Indian state. Its expansion plans have further encouraged the state’s efforts to draw more MNCs and private Indian companies. Microsoft IDC currently plans to double the size of its centre, adding some 300 employees. It has already invested $50 million for its centre last year.

Positive resultsHyderabad’s bureaucrats have every reason to feel happy about the developments taking place in the state. First, it was the increasing investments by IT firms. Second, it was the overwhelming response to the recently concluded Confederation of Indian Industry’s ninth Partnership Summit-2002, which saw 800 participants from 23 nations, followed by the 32nd National Games-2002. The growing awareness of Hyderabad as a city as a cost-effective centre is the other milestone.

The state is now focusing on its ongoing event, Gitex-2003, which is being held here in collaboration with the Dubai World Trade Centre (from 22 to 24 January 2003). Several IT companies from across the world are attending the meet, apart from local players.

And the government is very optimistic about the event and IT growth. STPI Hyderabad centre director M Vijay Kumar says it is getting more enquiries from foreign technology companies for setting up their operations in Hyderabad.

While using cost as a big draw, Hyderabad’s officials are keen to show that the city is no longer an “intellectual sweatshop,” and its “quality of work” matches the best in the world. For instance, .Net developed at Microsoft IDC has received excellent response internationally. The entire credit goes to Srini Koppulu, managing director, Microsoft IDC, and his team.

Cyberabad has chip-designing, hardware manufacturing, networking product, semiconductor, ERP solution provider and software development centres, says J Satyanarayana, IT secretary, adding that the city also was home to several companies in the world that qualified for Level 5, the highest of the SEI-CMM model, which studies software process. The Software Engineering Institute-Capability Maturity Model (SEI-CMM) is a US-based framework similar to Europe’s ISO norms, and is used to rate firms on a scale of one to five.

Vijay Kumar says IT investments are on the rise in Hyderabad. According to him, up to March 1999, Hyderabad received Rs 421 crore; Rs 1436 crore (up to March 2000); Rs 2324 crore (up to March 2001); Rs 2637 crore (up to March 2002).

Naidu’s success has made him a hit for the last six years at World Economic Forum meetings in Davos, Switzerland, and elsewhere, where he has moderated panels and been praised as an example for other leaders of poor regions.

The state has so far conducted roadshows in the US, Singapore and Dubai to promote Andhra Pradesh as an IT destination. Wait and watch this space.



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