New Wine, New Bottle



For once, government, industry bodies and top corporates seem to agree–Kolkata
is emerging as one of the hot spots for the setting up of IT-enabled services
companies. And if the joint Nasscom-McKinsey & Co report–which predicts
that the city will see a boom in top corporates setting up shop their in the
ITeS space–is not indicator enough, there are some clear policy moves from the
state government to help kickstart the ITeS run. Companies like IBM, Spectramind
(now owned by Wipro) and Reliance Infocomm have already submitted investment
proposals. While the level of services may be low on the ITeS ladder–call
centers are what everyone’s targeting at the moment–a clear beginning has
surely been made.

Chief minister Buddhadeb Bhattacharya has rolled out a shiny red carpet for
companies that make investments and set up shop in the state. At a recent press
briefing, the chief minister announced that preferential land allotment would be
made to mega-ITeS projects in West Bengal. He also unveiled a new state ‘ITeS
Policy’, while revealing that the state’s archaic IT Policy (charted out in
2000) would be radically updated.

Companies
already operating in the ITeS realm in the state have been conferred the status
of ‘public utility services’ within the definition of the Industrial
Disputes Act, 1947. "Since call centers and other ITeS players typically
need to run shop round the clock, seven days a week and throughout the year,
they have to be given the status of public-utility services. I have the support
of the state labor department and leading trade unions on this issue,"
Bhattacharya announced. With this announcements, ITeS companies will be exempt
from existing state labor laws specifying opening and closing hours for any
business–allowing them to operate round the clock.

In addition, IT-enabled services companies will also be free to operate on
national holidays. Furthermore, women will be allowed to work through the night,
provided that companies make appropriate arrangements for their accommodation
within office premises, transportation and security. And finally, the state
government has granted waiver of consumption tax and stamp duty to all ITeS
units.

And the announcements seem to be having the desired effect–a top IBM team
from Hong Kong will be visiting the state shortly to finalize its investment
plans in the state. Reports in some sections of the media also suggest that two
BK Birla Group companies–Jayshree Infotech and Manjushree Infotech–have
already joined the call center melee in the state. Jayshree Infotech is learnt
to have signed a memorandum of understanding with state-owned Webel to kick off
its services. Some companies that have been allotted land at the Salt Lake
Electronics Complex are BNK Solutions, US-based Nexgenix, Vishnu Solutions and
Vision Comptech Integrators.

The state’s policy is clearly aimed at facilitating the growth of the
sector in the state, with a stated objective of accounting for 15-20% of the
country’s IT revenues by 2010. The state government has also earmarked
attractive fiscal incentives for ITeS investments–a capital investment subsidy
of up to Rs 2.5 crore, exemption from consumption tax, quality-linked incentives
and remission of stamp duty and incentives, besides other recurring benefits.
Bhattacharya has also been stressing on the easy availability of skilled human
resources and quality telecom connectivity to push the ITeS. But in its endeavor
to draw more investments in from the IT sector, the state faces a tall order–West
Bengal has been a late starter in IT. And while it has recorded a compounded
annual growth rate of 115% over the last four years, it has been working on a
miniscule base–even today, actual investment numbers are not much to rave
about. At present, 27 companies are operating in the ITeS space in the state.

Rajeev Narayan in New Delhi

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