Ahmedabad: The mega IT fair, Communication and
Information Technology (CIT 2002), organised jointly by
the Confederation of Indian Industry (CII), Gujarat Informatics
Ltd and Nasscom, has just concluded and a number of issues
have come to light.
There are problems,
there are opportunities and there are lessons to be learnt
And the bright side to the story is that IT centres other
than Bangalore, Hyderabad and Pune are to flourish.
of the major requirements, as pointed out by CII director-general
Tarun Das, is that in order to become a strong player
in the IT sector, states like Gujarat that have the inclination
to step into the IT arena need to focus on human resources,
integrate the expertise of institutions like IIM, EDI
and NID with business, and create a feel-good factor for
investors from outside the state, national as well as
There is a large
potential for tapping the software requirements of the
domestic, small and medium enterprises as well as overseas
companies. Listen to Das: Over the next decade,
there is going to be a major shift of IT and IT-enabled
services (ITES) from high-cost countries like the US to
cheaper destinations like India. India will become the
global hub for IT services in the future. But exports
will not be smooth as there will be opposition from within
the US, Europe and Japan due to the slowdown in their
already has several advantages as far as attracting investment
is concerned. These were summed up by Bharat Desai, chairman
and CEO of the $172-million Syntel Inc of USA, who said
Gujarat should focus on its unique strengths like business
acumen and ability to overcome odds.
Commenting on the
business models of todays IT companies, Chirag Mehta,
chairman of CIT and also managing director of Icenet,
one of the states largest ISPs, said businesses
today are driven by knowledge and not by wealth and inheritance.
Gujarat has four cell operators, three basic telephony
operators, 25 operational ISPs, three call centres and
a number of software companies. But a major problem faced
by IT companies today is funding as banks are reluctant
to fund and venture capitalists have become overcautious
after the dotcom debacle.
to Mehta, if funding could be taken care of, not only
would the IT sector grow but the growth in this sector
would fuel growth in other sectors as well since just
1 per cent increase in tele-density leads to as much as
a 3-per cent growth in the GDP. Funding has remained a
major problem because banks do not want to expose themselves
to the high risks involved in IT ventures.
have always had an aversion to lending for projects that
are not asset-based. In such a scenario, the saving grace
has been Gujarat Venture Finance Ltd (GVFL), which has
a special Rs 19-crore fund for IT companies, called the
Gujarat IT Fund.
Also, the Gujarat
government has promised more funds for GVFL itself to
enable more IT and ITES companies to come up in Gujarat.
In fact, recognising the support of GVFL to IT companies,
its managing director, Vishnu Varshney, was felicitated
by the CII during the event for his contribution to the
Indian IT industry through venture capital funding.
from funding, a few other problems were pointed out by
visiting dignitaries. These include lack of trained personnel
and a dearth of English-speaking people, among others.
Says Desai of Syntel: Gujarat must work on creating
a pool of trained IT manpower by putting in place a proper
educational infrastructure and focus on English language
education to emerge as a major IT and ITES hub.
In fact, lack of
English-speaking personnel was one of the main reasons
why the Nasdaq-listed Syntel did not even consider Gujarat
while putting up its tech-development park in India a
couple of years ago. What might have rightfully come to
Gujarat instead went to Maharashtra (Pune) simply because
there are not enough English-speaking people in the state.
Syntel is now investing
$100 million over the next four years to put in place
a 9,000-seat tech park at Talawde near Pune. This investment
could easily have come to Gujarat and the loss of this
foreign direct investment (FDI) should be an eye-opener
for those who oppose the use of English in the state.
The two-day event
also threw up some questions. Rajesh Kishore, secretary,
IT, government of Gujarat, made a significant comment
when he said: We are still hunting for answers as
to why Gujarat has not become a hot destination for IT
investment despite the top quality infrastructure, relatively
economical real estate and big market potential.