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Follow UsIt may be a while before Tamil Nadu catches up with the software export
revenues of Big Brother Karnataka. However, with a growth rate that’s double
that of Karnataka, and boasting all the right ingredients for entrepreneurial
success, Chennai is emerging as the IT destination of the future
You could call it a case of reverse stereotyping. Prior to the days of
political correctness, Indians from any region North of the Vindhyas would often
refer to the entire Southern populace as Madrasis. This would no doubt, be much
to the chagrin of the Kannadigas, Andhraiites and Keralites out there, but then,
Madras (now Chennai) simply was the most famous city in the South of India. The
IT boom saw Bangalore attaining the status of India’s IT capital and Hyderabad
being re-christened as Cyberabad. Amidst tales of the prowess of Indian IT
professionals emerging primarily from Karnataka and Andhra Pradesh, the IT story
in Chennai was lost somewhere.
But Chennai might just have begun its upward climb. A stable political setup,
a highly skilled work force and state of the art infrastructure might just see
Chennai make its mark in the IT arena. The World Bank recently shifted its back
office accounting operations to Chennai. UK-based software major Xansa has
started building an 8.5 lakh square feet development center near Chennai. The
world’s biggest OFC (Optic Fiber Cable) project—the i2i network, a joint
venture between Bharti Enterprises and Singapore Telecom connecting Chennai and
Singapore is nearing completion. Software exports from Tamil Nadu garnered Rs
5,223 crore for fiscal 2001-2002; a growth of 67.8%, and with this the state
zoomed to the second position in the South as the biggest software exporter
after Karnataka. What do these developments signify? Chennai is fast emerging as
IT’s favorite hotspot.
The state came into sharp focus when the World Bank zeroed in on Chennai to
launch its back office accounting center. Government sources claim that the
World Bank will slowly move its entire back office functions to Chennai
including IT in a phased manner. World Bank’s decision is significant given
that it selected Chennai based on a Noble & Hewitt study commissioned for
the purpose. The study covered six countries and within India, eight cities were
surveyed. Chennai emerged strong on factors like the availability of a trained
work force, connectivity, and infrastructure.
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So why has Chennai been figuring high on the investors’ agenda off late?
"Human resources and infrastructure" is the prompt reply from the MNCs.
While Bangalore has emerged as the leader in information technology, it has been
facing severe competition form Chennai. A series of independent studies
conducted by companies prior to shortlisting a city for their initiatives, has
seen Chennai emerging strong in certain core sectors. For instance, way back in
1998, Nasscom rated Indian cities on certain key parameters like availability of
IT manpower, connectivity, cost of living etc, Chennai got the combined average
score of 3.20 in a 0 to 4 point scale. The study concluded that Chennai is the
most preferred city for IT investments. Since then, Chennai has leapfrogged in
many sectors.
Comments Nasscom president Kiran Karnik, "Chennai is one of the fastest
growing IT destinations in India, with a growth rate exceeding 50% per annum.
One of the factors that has contributed to this is the abundant availability of
skilled IT workers. The state accounts for 51% of the total number of students
in the country graduating in disciplines like electronics and computer science.
Some of the other aspects that have contributed to the growth of IT industry in
Chennai are factors like state of the art data communications, training
facilities, easy availability of housing and low cost of living." Karnik
points out that these factors act as a catalyst and reduce the overall cost of
setting up software units.
The knowledge edge
According to a senior official at the Electronic Corporation of Tamil Nadu (ELCOT),
the state has chalked out ambitious plans to nurture its human capital. There
are around 222 engineering colleges, 157 polytechnics and 526 industrial
training institutes in Tamil Nadu. The engineering institutes alone churn out
close to 60,000 professional graduates per year, of which nearly 40% are from
the computers and related disciplines. In an attempt to better this talent pool,
the government has created an IT council that will devise strategies relating to
human resource utilization in information technology. The council will also act
as a front-end in promoting IT and e-governance in the state.
Says Tamil Nadu state IT secretary Vivek Harinarain, "Knowledge is
probably the single most factor that woos companies to launch their operations
in Tamil Nadu. With the ready availability of a skilled workforce, Chennai has a
distinct advantage. Today, manpower management has become a priority concern for
multinationals in the field of information technology due to the increase in
offshore work."
Meanwhile, the Tamil Nadu state government has identified five colleges in
the state under the Technology Information Forecasting Assessment Council (TIFAC).
The government will set up the Center of Relevance and Excellence (CORE) in
these five colleges in areas like advanced computing, networking and industrial
design.
| The Market Needs a Makeover’ |
/dq/media/post_attachments/dbb87408be36edccef316949709c827af8750407eccff33f88eee25a4625bf06.jpg) Asoften happens with the best of breed in India, Tamil Nadu, despite some inherent advantages, has suffered from poor packaging. Compared to its neighbors, the state has not marketed its image to the national and the global community. But state IT secretary Vivek Harinarian is determined to establish TN as the ‘IT Hub of the South’. In an interview to DQ, he outlines his plans How would you describe the IT scenario What makes Chennai the most favored IT
The state government has set up Can you throw some light on the new IT
Besides, action will be taken to Which are key areas within IT that you |
Another major initiative aimed at promoting the knowledge capital relates to
ELCOT’s Memorandum of Understanding (MoU) with Massachusetts Institute of
Technology (MIT). The MoU enables the MIT faculty to train the teaching staff of
engineering colleges spread across the state.
Way to go
With such a firm knowledge foundation, Tamil Nadu is uniquely positioned to
address the various challenges in the realm of IT. The rapid growth in software
export revenues is another clear pointer towards Chennai emerging as a favored
destination for new software initiatives. For instance, the World Bank
accounting back office is the first of its kind outside its Washington head
quarters. The Chennai facility will handle a range of accounting related back
office operations relating to 150 global firms. As Tamil Nadu chief minister J
Jayalalitha had said while launching the facility, "The Tamil Nadu
government and the World Bank have had fruitful relations over the years and the
state has forged many synergies benefiting the socio-economic fabric of the
state."
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Says Gary Perlin, senior vice president and CFO, World Bank, "After
consolidating our operations here, we will seriously consider moving all our IT
related operations to Chennai. At present, we have taken up a 27,000-sq ft
center that will house about 100 employees. The facility will handle a range of
financial functions like payroll processing, accounts payable and receivable,
travel accounting, country office accounting, trust fund accounting and help
desk support."
Close on the heels of World Bank, a company of global repute that has headed
towards Chennai is UK based Xansa, a software major with operations in 11
countries. The company has signed an MoU with the Tamil Nadu government for
setting up a Rs 235 crore software development facility in Chennai. The project
assumes significance, because it was cleared by the government in the single
window scheme, which sanctions IT projects in the shortest possible time. Xansa
has taken up around 23 acres of land at the Siruseri Park near Chennai. The
company will be building an 8.5 lakh sq ft development center. The facility will
accommodate around 6,000 staffers and on completion in mid 2003, will be one of
the biggest of its kind in India.
The recent spate of investments into the state is largely the result of the
‘hard sell’ approach taken by nodal bodies like Electronics Corporation of
Tamil Nadu (ELCOT) and Tamil Nadu Industrial Development Corporation (TIDCO).
Says M Velmurugan, additional director— guidance, TIDCO, "We are
promoting the state in every possible manner. We coordinate with various
specialized agencies and keep track of the potential business proposals that
come to India."
Agrees N Lakshmi Narayanan, president and COO, Cognizant Technology
Solutions, "The encouragement and support from the Tamil Nadu government
agencies to the IT companies has been terrific. Cognizant over the years, has
emerged as the largest software company in Chennai. We owe our success to the
top class infrastructure the state has put in place for the IT business
community."
Cognizant’s tryst with Chennai began in 1994, when the Dunn &
Bradstreet Corporation (the then parent company of Cognizant Technology) wanted
to establish its first development center in India. "The choice was between
Chennai and another city. But in the end several factors swung in favor of
Chennai.
Cognizant has vigorously expanded its operations in Chennai, where it is
headquartered. Starting with 50 employees, the company today has over 2100
employees at Chennai alone. The company is currently involved in setting up its
own techno complex in Chennai, spread over 400, 000 sq ft, that can accommodate
4000 software professionals. A study conducted by the Center for
International Development, Harvard University sometime back predicted that
Chennai is all set to emerge as the most favored IT destination in India. The
report says: "The IT industry in Tamil Nadu is booming and compared to the
rest of India, the state is well positioned in terms of energy, transportation
and educational infrastructure."
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Cashing in on infrastructure
Apart from human resources, a major factor that gives Tamil Nadu an edge is
its communication infrastructure. For instance, Chennai is the landing point for
the Dishnet and Bharti Enterprises’ submarine cable projects. The resultant
bandwidth from these two ventures is around 13 Tbps. Bharti’s project is in
its final phase and Dishnet’s will be completed soon. In addition, Tamil Nadu
Telephones has done away with analog exchanges and the state’s telephone
exchanges have now been digitized completely. Hence, bandwidth is no longer a
constraint. Moreover, the OFC backbone players like Reliance, Dishnet DSL, BPL
Broadband among others have thoroughly wired the state. According to the
recently released Center for Monitoring Indian Economy (CMIE) index, Tamil Nadu
was ranked third with an infrastructure index score of 145.62. The biggest draw
in terms of infrastructure for entrepreneurs, is uninterrupted power supply and
the relatively low cost of living. Tamil Nadu is probably the only state in the
South to have a ‘NIL power cut’ policy.
The real estate market on the other hand has been growing consistently. The
cost of real estate in the Central Business District (CBD) in Chennai is around
Rs 3,000-4,000 per sq ft. The demand for commercial space has sharply increased
in the past year. Buoyed by the economical rates, financial institutions like
Standard Chartered and ABN Amro have shifted their back office operations to
Chennai. The technology park revolution in Tamil Nadu, which began with the
launch of Tidel Park in 1999 in Chennai, has spread across the state. Today the
state boasts of 18 technology parks. With Tidel Park commanding 100% occupancy,
the government is hard-selling other IT and industrial parks like Siruseri and
Mahindra.
TCS’ Sholinganallur software development center near Chennai is one of the
finest and biggest facilities of its kind in India. The center launched by Tata
Group chairman, Ratan Tata in 1999 has become a benchmark for the software
industry. The center has also become one of the most powerful computing
facilities in the ASEAN region with the commissioning of IBM’s zSeries eServer
costing around Rs 30 crore.
Ever since MNCs made their presence felt, life in Chennai has undergone a sea
change. Comments a sociology professor at the University of Madras, "
Chennai today is slowly shrugging of its conservative outlook, a proof to that
end is the mushrooming growth of up-market restaurants, theme parks, golf
courses and hi tech shopping malls that have redefined the social fabric of the
city." The city on the other hand, has retained its conservative flavor.
Quips Lakshmi Narayanan of Cognizant, "Chennai has the right mix of the
cosmopolitan and the conventional setup. The cosmopolitan culture is something
that Chennai acquired in the mid nineties when the major multinational banks and
software companies established their base here, and perfectly co-exits with time
bound traditions."
Notwithstanding the impressive growth of IT, the state has not been pushy in
the past in building a brand image for Chennai. The steady inflow of
multinational companies and their success stories are the only yardstick in
measuring the state’s achievement. According to government sources, the newly
constituted IT council will work on promoting the state’s image. With the
increasing synergy between the government and the corporate community, Tamil
Nadu has the potential to emerge a destination of choice. As Raghuraman
Balakrishnan, assistant vice president — corporate communications, Polaris
Software Lab puts it, "The industrialization of Chennai has begun in the
truest sense of the word. The benefits of operating out of Chennai are manifold-
starting from international airports to good roads to a superb knowledge driven
culture. All these combined make Chennai a hot IT destination."
G Shrikanth in Chennai