Event

Tamil Nadu projects Chennai as IT hub at Connect 2003

G Sankaranarayanan / Chennai

The objective of the the Tamil Nadu government is to make Chennai a global capital for business process outsourcing (BPO) and propel Tamil Nadu to the number one position in IT exports. This was stated by Tamil Nadu IT minister D Jayakumar in his inaugural address at the third edition of the information and communication technologies (ICT) event, Connect 2003 at Chennai. The four-day exhibition-cum-seminar kicked off on September 18 and was organised by the Tamil Nadu state government in association with the Confederation of Indian Industry (CII). Express Computer was the media partner for the event. The event showcased business opportunities in the state across the entire ICT spectrum with a special emphasis on IT-enabled Services (ITeS) / business process outsourcing (BPO). The seminar, spread over three days, had around 60 speakers participating in various thematic sessions, including ITeS/BPO in healthcare and engineering and Chennai as an investment destination, among others.

Noting that Tamil Nadu was the first state to bring out an IT policy statement, the minister announced that a new ITeS policy will be adopted in a couple of months. Jayakumar highlighted the achievements of the state’s digital connectivity project, the Rural Access Service to Internet (RASI) that benefits the rural populace in IT education and that of Tamil Nilam, the land records computerisation project that will go live in October 2003.

Quoting from a recent study jointly conducted by the Indian government and the World Bank on the e-readiness of Indian states to implement e-governance, the state IT secretary, Vivek Harinarain pointed out that Tamil Nadu is one among four ‘e-ready’ states. The others being Karnataka, Andhra Pradesh and Maharashtra. The fact that the World Bank and the high profile Society for Electronic Transactions and Security (SETS) have set up their Indian headquarters in Chennai stands testimony to its potential, he said.

To focus on developing innovation clusters throughout the state in a phased manner, Harinarain said the government decided to shift its positioning strategy to market the capital city, Chennai first, instead of the entire state, as a global investment destination for ITeS sector.

He said BPO is the big ticket to growth for Chennai’s IT industry and the state is well positioned to take a substantial share in India’s BPO industry market. The Indian BPO market is expected to touch $21 billion by 2008.

Since Tamil Nadu is a pioneer in IT and software services, and has a 100 percent digital exchange network, and is the landing point for two submarine cables, it has the potential to garner a major chunk of ITeS business.

Listing out the advantages of the state, Harinarain said: "The connectivity cost in Chennai is less than 10 percent of what is prevailing in South East Asian countries. The non-virtual connectivity—namely power, roads and general infrastructure—is among the best in India. Power supply is uninterrupted with the lowest interruption rate of 3 in 1,000 days. In terms of the law and order situation, the state stands at second place and is among the top three in the human development index."

Chennai has 12 large call centres that cumulatively employ 30,000 people. During the first quarter of the current financial year alone, about 47 IT and ITeS companies have set up operations in Tamil Nadu of which six are multinational corporations. Exports from the IT and ITeS sectors from the state are expected to grow by 30 percent during the current financial year—from Rs 7,000 crore in 2002-03 to more than Rs 9,000 crore.

Acknowledging the fact that the state "is not blipping in the investment radar prominently," Harinarain attributed Tamil Nadu’s low profile to its culture. "It is all in the culture of this place. We are not that aggressive as we are progressive. Here work is worship. And when you worship you tend not to make noises."

S Mahalingam, chief financial officer (CFO), Tata Consultancy Services (TCS) in his address said the state
government is promoting Knowledge Industry Township (KIT), its next big infrastructure project after Tidel Park. "KIT is designed as a high-quality integrated township facility with high-class civic amenities, entertainment, and facilities for institute-industry partnerships. The township will have the IT industry as its anchor tenants and would house biotech, pharmaceutical and R&D units," he said.

Expressing confidence in the state’s potential to register rapid growth, he pointed out that the share of software exports of Tamil Nadu has grown from 4 percent in 2001 to 17 percent in 2003. Software exports in the last two years alone have jumped from $0.67 billion to over $1.5 billion. "The state is targeting such growth rates in the BPO segment too."

Bharat Chadda, senior vice president & country manager—India, Sutherland Technologies, which has set up an ITeS unit in Chennai last year said that with 65 direct flights to 15 countries per week, Chennai is well connected.

He said despite the fact that Tamil Nadu is one among the top three states in terms of attracting foreign direct investment, aggressive marketing of Chennai in the US and UK is important.

Though virtual and non-virtual connectivity is comparatively well developed, the city lacks in entertainment and lifestyle avenues. "For the first time an industry is attracting employees in the 20-25 years age group. They have disposable incomes, the work culture is different and the local culture is alien to these developments. We need to create more social events and cultural infrastructure to tap the aspirations of the ITeS employees," he said.

Echoing this view, Akshaya Kumar, chief executive officer, Colliers International (India) Property Services said that unless a suitable social infrastructure is not created the state will lose out to competition. "Though Chennai and Bangalore have 35 BPO units each (Delhi (NCR), Mumbai and Hyderabad have 53, 45 and 24 units respectively), and as far as scale is concerned units in Bangalore are way ahead. A typical Bangalore BPO unit has 30,000 square feet, which is three times more than an average Chennai BPO unit. "Karnataka’s ITeS industry had shown a 227 percent growth in value terms last year, whereas Tamil Nadu’s growth was just 38 percent, while in Andhra Pradesh it was110 percent," he said.

He said that Chennai does not have readymade space and real estate stock following the complete sell-out of space at Tidel Park, an infotech initiative dedicated to software services. "Even the floor plate available in Chennai is around 13,000 sq ft, which is way below Delhi’s average floor plate of 25,000 sq ft, and Mumbai’s 30,000 sq ft.

However, the entire panel agreed that the state has excellent educational infrastructure. S Sadagopan, director, Indian Institute of Information Technology, Bangalore said Tamil Nadu has exceptionally good polytechnics. He said with an early training in ITeS for technical students, the state can ensure steady stream of human resource supply to technology-support related ITeS industry that earns a higher billing.

He said the strengths of the hardware capital of India, Pondicherry, should be leveraged to offer end-to-end solutions to the ITeS industry of the world. "We could offer a competitive edge to the ITeS players if the state leverages its strengths in these two segments: hardware and HR-intensive (training) software," he said.

Tamil Nadu IT minister D Jayakumar releasing the Connect 2003 catalogue. Also seen are S Mahalingam, CFO TCS; Vivek Harinarain, IT secretary, Tamil Nadu

Tamil Nadu snapshot Third largest economy in India Contributes 11 percent of India’s GDP 17 percent share of India’s software exports 15 percent of total exports Second knowledge park (KIT) coming up