Hyderabad Blues

"Our vision for Andhra Pradesh is that of a state where poverty is
totally eradicated; where every man, woman and child has access to not just the
basic minimum needs, but to all the opportunities to lead a happy and fulfilling
life; a knowledge and learning society built on the values of hard work,
honesty, discipline and a collective sense of purpose."

Thus speaks the TDP's impressive-looking and politically correct mission
statement. But after a roller-coaster ride as CM and CEO of AP, Naidu and TDP
are today at the crossroads. Rubbing shoulders with the captains of the Indian
IT industry did not help Naidu secure the mandate of the AP electorate in the
recent state elections. Despite talking the reformist talk, why did Naidu fail
to capture the imagination of the electorate? Does the augur well for the IT
industry? These are a few of the questions that have been doing the rounds in
the state's industry circles these last few months.

The Naidu Effect

When Chandrababu Naidu took on the mantle of AP chief minister, everyone
expected him to do the routine political act, but he refused to confirm to all
those popular stereotypes of a typical Indian politician - loud, rhetorical and
pompous. On the contrary, Naidu was polite and accessible. Right from day one,
he was unwavering about his agenda of empowering AP through information
technology. For AP, which was rooted in the mystical sway of
actor-turned-politician NT Rama Rao, who had ruled AP for years on end, the
policies of Naidu and his approach to governance signaled a new paradigm in the
AP political and economical landscape. During Naidu's regime, the big names in
the IT industry, such as Microsoft and Oracle, came the Hyderabad way and
launched development centers, as did product companies like Virtusa, Cordys, to
name but two, based their process sites out of Hyderabad.

Says Naidu, "I wanted to create a knowledge society, and what better
tool than IT to achieve that. At the same I aimed at making Hyderabad the
destination of choice for IT. I went to Redmond and met up with Bill Gates and
had a pretty good equation with him on our very first interaction, which lasted
for more than 30 minutes. Subsequently after my visit, Microsoft launched its
development center in Hyderabad, which actually marked the beginning of
Cyberabad, and set 

off the spate of investments that came in after."

Bringing Microsoft to Hyderabad is indeed a big feather in Naidu's cap.
Other biggies also based their operations out of Hyderabad. For instance Oracle
has a center here too, which is becoming a major hub for its India operations.
Quips Nasscom president Kiran Karnik, "The twin cities of Hyderabad and
Secunderabad have attracted significant global attention for the remarkable
transformation that they have gone through in terms of quality of living and
positioning as a preferred destination. This has been possible largely due to
strong promotion of IT by the government. We expect that the government will
continue to support IT."

What Lies Ahead?

Over the years, Naidu got entrenched in the AP political landscape and many
thought he had attained an invincible position. But things did go awry, and the
election that unseated him marked the rifts in the lute. Though the new chief
minister, Y S Rajasekhar Reddy has, in these few months of his tenure, tried to
brand himself an IT-friendly leader, YSR's election campaign was based on the
negation of this same "Naidu" USP. During the election campaign, he
had squarely blamed the Naidu regime for grossly ignoring the interests of the
farmers. (With numerous farmers committing suicide over the last one year, these
accusations gave Naidu much to worry about in his final days in power.) Reddy
had also promised a number of sops in his campaign, like free power to farmers
and interest rate cuts on loans. With AP on the verge of fiscal deficit, these
sops are going to be an enormous strain on the state's fiscal health. Hence,
the biggest challenge for the new government will be that of honoring the
electoral promises it made to woo the farmers.

Notwithstanding his populist approach, Reddy has assured the IT industry
heads that the government would actively pursue IT. For instance, shortly after
he took office, he had a meeting with CEOs from various IT companies and asked
them to come out with plans to take IT in AP to the next level of maturity. He
also urged the companies to diversify their operations to other emerging hubs
like Visakhapatnam, Vijaywada, Tirupathi, and other up-country locations.

Says Dr. JC Mohanty, secretary, IT and communications, AP government,
"The government right now is pursuing very aggressively various IT
initiatives aimed at attracting new investments. When we met the new CM three
days after his appointment, he told us to go full steam on all the ongoing IT
projects and not to put anything on hold. The government is also on a war
footing in its drive to improve the overall infrastructure of the city, and
several initiatives are aimed at decongesting the city."

Most of the IT Industry heads we spoke to exhibited cautious optimism on the
new government driving home the point that it is as IT-savvy as the previous
regime. Says Santanu Paul, general manger and head of product development,
Virtusa India, "I am bullish about Hyderabad's potential in IT and it
will continue to attract more investments. Also the new government has shown an
overall positive approach towards IT that augurs well for the industry's
growth".

Optimism apart, Hyderabad needs to ramp up on its infrastructure. It badly
needs more flyovers at various intersections, all of which now exemplify total
chaos during peak hour traffic. Ruminating on the state of affairs, a recent
Nasscom-KPMG study on Hyderabad says: "While the IT and ITES-BPO sector in
Andhra Pradesh is maturing, it is important that the government retains its
focus on this sector. Expansion of existing policies and continued marketing by
state government is the key to attracting more players to the state. The state
government needs to further improve the infrastructure, which includes
state-of-the-art IT parks, roads, airports, mass-transit systems and
uninterrupted power supply."

The government must thus adopt a multi-pronged approach in taking IT forward.
For instance, it can cash in on the fact that while it is precisely things like
infrastructure that have proved a dampener in locations like Bangalore, a
destination like Hyderabad, which provides low cost and competitive real estate
rates, has the same thing going in its favor. But much lies in the extent of the
support the government commits to provide. A major area of concern among some
leading IT companies is the growing degree of uneasiness among its clientele
regarding the regime change. Companies have had to dispel fears that the reforms
wouldn't withstand the change in political climate. That apart, the law and
order situation in the state has also come into scrutiny ever since the
assassination attempt on Chandrababu Naidu during the time of the election
campaign a few months ago. But, meanwhile, the new government has invited
extremist groups to the negotiating table to end the extremist menace: this is a
show of initiative on its part, and this is reassuring. The current government
has a full row of issues to hoe. It has to find solutions. The growth of IT in
this part of the world hangs in balance.

Shrikanth G in
Hyderabad