Getting Its Act Together

DQI Bureau
New Update

Information technology offers great opportunities for economic and social

development in Tamil Nadu; but in order to realize the full promise of these

powerful new technologies, the government must leverage its initial successes in

business environment and education while broadening the scope of IT benefits

throughout society, observed a study conducted by Harvard University in a

research paper titled "Readiness for the networked world-A quiet IT

revolution in Tamil Nadu". It seems the government has taken the lead and

has fostered IT in this part of the world. While much needs to be done still,

the momentum has kicked in and IT promotion nodal agencies like the Electronics

Corporation of Tamil Nadu (ELCOT) are going ahead full steam with various IT

initiatives. Says Vivek Harinarain, IT secretary, government of Tamil Nadu,

"In the last couple of years, Chennai has seen massive investments by both

Indian MNCs as well as companies from abroad. Testimony to this is the fact that

Infosys, TCS, and WIPRO have all established very large world-class development

centers in Chennai."


Parks Perking Up

The government of Tamil Nadu was one of the very first states in India to

announce a comprehensive IT policy way back in 1997. The 2002-revised IT policy

has the major intent of transforming Tamil Nadu as a destination of choice for

IT investments. Since then government has taken certain concrete steps in that

direction and major infrastructure expansion projects like the 1,000 acres

industrial park developed by SIPCOT near Siruseri in Chennai is sold out 100%.

IT major Xansa alone has 27-acre campus style facility that employs around 6,000

professionals. For Xansa this is one of the biggest facilities outside of United

Kingdom. The Siruseri Park, which was developed by the State Industries

Promotion Corporation (SIPCOT) has also been occupied by other names in the IT

industry like Hexaware Technologies and Syntel. Recently, Patni as part of its

initiative to expand operations in Chennai has planned to set up a center across

20 acres of acquired land in the Siruseri IT Park. Says PJ Kutar, resident

director, Patni, "This will be our second largest modern software

development center in India. Upon completion, we plan to accommodate 10,000

professionals with all support services."

Chennai has become an alluring destination for IT majors: BPO leader Xansa's 27-acre campus-like Chennai facility

Demand Drivers

To meet the growing demand, the government is developing an additional 500

acres adjacent to the Siruseri Park. The Knowledge Industry Township (KIT), in

Sholinganallur, Chennai, has also generated good interest. The aim of KIT is to

create a high quality integrated township with facilities for business, living

and leisure activities spread over 3,000 acres of land. The KIT can accommodate

two lakh professionals. IT giant Wipro plans to develop a new campus in KIT

spread over 85 acres, expected to generate 15,000 jobs in the next five years.

Emerging pockets like Coimbatore are also getting due attention. ELCOT has

identified 27 acres of land in Coimbatore, and it would be interesting to note

that companies like Wipro and HSBC have shown keen interest in expanding out of



Quips R Rajalakshmi, director, STPI Chennai, "Chennai has a lot of

hidden strengths and in recent times, this inherent potential has become

evident. From April till now we have approved about 52 units of which 13 are

wholly owned subsidiaries. Apart from this, the existing top companies have

expanded their operations. Many companies from Bangalore and Hyderabad are

making serious enquiries about expanding out of Chennai. For instance, we get on

an average 25 queries everyday for business spaces. I feel that Chennai has

great days ahead if other infrastructure like roads, airports, hotel, water

position and city upkeep improves further."

The government seems to have woken up to the reality of the civic

infrastructure woes that is acting as a dampener. Says IT secretary Vivek

Harinarain, "The government has already initiated action for six-laning of

the IT corridor at the Old Mahabalipuram stretch, besides also announcing plans

for infrastructure development aimed at improving Chennai."


Software Industry

No of

Exports (Rs

1993-94 10 2
1994-95 23 12
1995-96 34 37
1996-97 69 161
1997-98 108 393
1998-99 166 1,246
1999-00 596 1,914
2000-01 766 3,116
2001-02 866 5,223
2002-03 936 6,316

While the actual fruits of various infrastructure improvements is yet to be

seen, in the last one year, the condition of the roads in Chennai has improved

and the government is taking serious efforts to improve the overall image of the

state and this is being reaffirmed by the number of new entrants the Chennai IT

landscape is drawing in.

Reality Bites

On the real estate front, the government has made some reforms. Says Ramesh

Nair, associate director, corporate solutions, Jones Lang LaSalle India,

"The state government on its part has contributed significantly to improve

the quality office real estate supply in Chennai.  The stamp duty for

purchase and lease of property has also been reduced considerably. The

government has also set up a core committee, which includes leading developers,

architects, and consultants to look into the various issues facing IT real

estate in Chennai".

Moreover, the relaxation of the floor space index (FSI) to the extent of 50%

for IT park projects subject to conditions is a significant development. Also

the 50% exemption of stamp duty and registration fees has also been given at the

time of purchasing of land or building for IT industries. However, experts feel

that the government should also take steps in improving the infrastructure in

the industrial estates to attract IT companies and also promote other

infrastructure like roads promoting alternate IT corridors. Also, on a macro

level, the government needs to find a permanent solution for the water issues in



The evolution of Chennai into an IT hotspot has many contributing factors. In

the past, the Government did go slow on IT while other southern states hogged

the limelight. But since 2002, the Government has woken up to the reality and is

working in a direction that fosters good industry-government interactions. Many

in the industry believe that this momentum will ensure IT in Tamil Nadu has a

safe passage into the next logical step.

Shrikanth G in


Proactive Government Policy


What are the IT-promoting incentives in Tamil Nadu?

In the last couple of years, Chennai has seen massive investments by both

Indian MNCs as well as companies from abroad. Testimony to this is the fact that

Infosys, TCS, and WIPRO have all established very large world-class development

centers in Chennai. Coupled with that, several international MNCs have also made

Chennai their destination of choice. 

Tamil Nadu IT secretary 

Vivek Harinarain
speaks on the status of infotech in the state


Besides the IT policy, which was a historical milestone, the latest

initiatives like 50% concession in stamp duty, single window in ELCOT, super

fast clearances of building projects and relaxation of the floor space index are

some of the reforms.

What is the ITeS/BPO scene?

The ITeS policy placed on the Internet received hundreds of suggestions from

across the world and after incorporating the views of experts from the industry

and academia, the ITeS policy will be released shortly. Tamil Nadu has a very

strong presence of ITeS/BPO companies like Scope international, World Bank,

Sutherland Global Services. Ford Information Systems have the biggest captive

call center operations at Chennai. Perot Systems, KG Information Systems in the

medical field also have very large presence in Tamil Nadu. Office Tiger, Alden

Publishing have grown in Chennai by leaps and bounds in last 4 years. Thus there

are a variety of ITeS BPO companies operating at Chennai.

ELCOT-Empowering IT


Electronics Corporation of Tamil Nadu Ltd (ELCOT) is the promotional agency

designated by the government of Tamil Nadu for promoting IT industries in the

state. ELCOT provides hand holding to IT entrepreneurs, promotes joint ventures

in electronics, communication, and IT. It also develops infrastructure like IT

parks and communication backbone. The agency is also involved in various

e-governance and computer education initiatives. Says Sudeep Jain, managing

director, ELCOT, "Continuity, and stability of policies which generally run

for a five-year period, a system driven organizational methodology to react to

the needs of the industry and a investor friendly approach are some of the key

strengths of Tamil Nadu, and Elcot has been in the forefront all these years

promoting the strengths of the state for investors."

On the BPO front, Tamil Nadu has perceptions like- "not suitable for

voice etc". To counter that Elcot has launched a certificate course in ITeS.

Says KS Lakshminarayanan, chief technical adviser and general manager (ITP and

D), Elcot, "Already five universities in the state have shown keen interest

to run our certificate course to the final year students. It would rather come

as a surprise to many that attrition rate in ITeS/BPO industries in Tamil Nadu

is one of the lowest generally in the single digit. Meanwhile we are promoting

tier 2 cities like Coimbatore and Trichy as the value added destination for BPO."

However, the reality is that the state has to necessarily create a brand

recall among the investors. The government over the last three years has made

consistent efforts to position Chennai as a favorable destination for IT

investments in international conferences like CeBit Hanover, Gitex Dubai, Hong

Kong, and Korea. With these initiatives, the overall brand recall of the state

has improved and credit must go to agencies like Elcot.

Going Great Guns

With more than 930 companies employing more than 40,000 professionals, the

growth of the software industry in Tamil Nadu has been stellar

  • Hardware exports from Tamil Nadu during 2001-2002  have been Rs 482

  • Studies by Harvard University have predicted that Tamil Nadu is well

    poised to emerge as the top IT State in India as well as a gateway to SE

  • The "Watts Humphrey Software Quality Institute" established at

    Chennai is the only one of its kind in India
  • The Chennai Chapter of The IndUS Entrepreneurs (TiE) has been

    established and is active
  • Media Lab Asia, a collaborative effort of the Ministry of Communications

    and Information Technology,  government of India and

    Massachusetts Institute of Technology, has set up a regional research

    laboratory at Chennai