Getting Its Act Together

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."

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
Coimbatore.

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."

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
Chennai.

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
Chennai

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. 

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
  crore
• 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
  Asia
• 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

Source: www.tn.gov.in