Uttarakhand Lacks IT Vision

Due to lack of connectivity, IT penetration in Uttarakhand has been limited. The geographical terrain and low population density are the constraints because of which problems of connectivity are encountered in the hilly regions. Despite all these factors, the digitization process in most of the government departments are gradually picking up.

For IT industry the high literacy rate and availability of English speaking young resources in large numbers (because of major cities of the state being traditional educational hubs), the state is a good destination for IT/ITeS/BPO/KPO industry. In addition, the state has a year round serene climate, low cost of living, good quality of life, and industrial peace. Land is available in IT Park at a fraction of the cost as compared to metros. Setting up enterprise in Uttarakhand therefore becomes a very viable alternative.

While it is difficult to chart the exact spending pattern, the budget allocation for major IT projects easily makes government the largest user of IT in the coming years. At the center of the government’s technology agenda is the National e-Governance Plan (NeGP), for which an estimated `40,000 crore has been earmarked in both central and state government budgets. Many of these projects are expected to be rolled out during 2009. By conservative estimates, 80% of the allocated budget will be used by 2014.

Apart from the allocated budget for the NeGP, the state budget for implementing IT solutions hover between `100 crore to `200 crore for large states such as Maharashtra and Tamil Nadu, and between `50 crore and `100 crore for smaller states like Uttarakhand.

An estimated `1,300 crore is expected to be spent over the next 3 years on 34 state-wide data centers and close to 200 support data centers of major government organizations.

In Uttarakhand, the booming education vertical and a strong government sector in the capital of Dehradun is becoming a fast growing PC market in the country.

However, the health of IT industry in the state has been growing steadily, spurred by an increasing focus of the government on IT and increasing awareness among home and enterprise consumers. With state and central government offices being located here, there is a large demand from the government side as well, constituting about one-third of Dehradun’s PC consumption. ONGC, which has its head office in Dehradun, and Survey of India is a major buyer. Apart from the government, offices of many of the top IT companies are here, which also are routine buyers.

There has been a significant transformation in recent times. “Six to seven years ago, the IT sector was quite low here. Today, nearly all IT distributors have their reach in this place, resulting in regular supply of IT goods. However, latest technologies like VoIP and Wi-Max are not available and will still take some time to reach here,” observes Nitin Jain of Dreamz Craft Infosolutions, Dehradun.

Vikas Dewan, CEO, strategic marketing, a company to reckon with in terms of projects for IT and OA infrastructure in various government, PSUs, educational institutions, industry and retail, is also a major supplier to the government. He recalls, “The IT wave in the state came post the formation of Uttarakhand state, in the year, 2000. Our company’s success was complimented by the political changes and economic growth. Dehradun became the epicenter for the businesses in newly formed state of Uttaranchal. To cope with the growth spurt we took financial aid from commercial institution in 2002. In the same year, the state government formed IT friendly policies and initiated IT enabled projects.”

Govt-Channel Partner Cooperation

In Uttarakhand, several state driven IT projects either have reached to the state of completion or some new projects are expected to be rolled out soon, as in the last quarter of JFM 2013, which is government buying period just getting over and delivery of the new projects commencing soon. As government is the biggest buyer of IT products followed by corporates and SMBs, the role of local system integrators/solution providers becomes significant as it offers immense opportunities to the partners.

In the Uttarakhand state, government follows a well defined transparent procurement policy (Uttarakhand Procurement Rules). In addition, guidelines if any issued by DeitY, Governement of India for any project funded by DeitY are also followed. Under certain conditions procurement on DGS&D rate contract is also done.

According to Sanjay Mathur, task manager, IT development agency, (ITDA), IT department, Government of Uttarakhand, “The state works closely with the local channel partners, generally all major IT OEMs interact both directly and through their partners. Post-sales support is a major area where local IT channel partners play a significant role.”

In the words of Dewan, “In the state, Dehradun is a hub for government projects. Being the capital, most of the projects get allocated and sectioned in the capital. Moreover, the local fulfillment of the supply of any hardware and software are routed through the partners. The state IT rate contract made us the leading player in IT and OA business in the state. Having said that in the current state of affairs, despite being Uttaranchal’s capital, the state Government’s role in sprucing up the IT sector has been close to zilch. Like in other states, the government could have generated IT awareness among the public. There has been no interaction of the government with neither the leaders of technology sector, nor with us.”

On a sarcastic note, the channel partners rate the previous government as better than the present one. “The previous government used to promise a lot of things, but did nothing. This one doesn’t even say anything,” Dewan says.

Digitization at Government Departments

Talking about the IT digitization in government departments, Mathur informs, “In Uttarakhand, the entire treasury functions are online, today all employee and pensioner data are online. SMS service informs you of your salary and pension disbursements. For grievance handling ‘Samadhan’ portal offers you an online service. E-tendering has been started in the state.”

Showing dissatisfaction on the e-tending process, Jain highlighted, “Starting out the e-tending process was a good move shown by the government, but the irony is pre-qualification criteria set by the government, which seizes the opportunities for the local partners. The government has set unrealistic criteria which does not allow smaller partners to participate in these opportunities.”

New Projects in the Pipeline

The state government plans to connect all the government offices to the UKSWAN. A massive capacity building exercise is being drawn out for the government employees. G2C services are to be offered through the CSCs in the rural areas.

Back-end computerization for bringing services online will be taken up on a massive scale. The Government has already signed an MoU with Bharat Broad Band Network Limited for OFC connectivity to all the gram panchayats. People of Uttarakhand will get a smart ration card in February next year and enjoy the facilities of a computerized public distribution system. Off late, the government has announced computerization of foor and civil supplies department. In the next phase the entire supply chain will go online and issue of smart ration cards to beneficiaries will be taken up after a proper verification process in the state.

Growing Red Tapism

Fear of payment delays, unwillingness to give bribes, and red tapism are the biggest reasons why many partners are reluctant to pursue government business.
Although there are quite a lot of projects which are in the pipeline, but growing red-tapism is a major bottleneck before the IT vendors as well as for the partners.

As per Jain, “Due to the laxity of the state government, many center government funded projects are yet to see the light of the day. Unlike our neighboring states like Uttar Pradesh and Haryana, where the ICT in education project has reached the 4th stage but in Uttarakhand we are still crawling in the first stage. Such laid-back attitude of government is disappointing the overall IT industry and hence we are seeing the stage of slump in the market.”

Agreeing to Jain, Dewan said, “As far as state funded project goes, we have been seeing IT refreshment in many government departments, wherein most of the center funded projects have been stuck with the state governments for last many years. Projects like ICT in education, roll out of SWAN to the end customers, transport and police modernization are in doll drums, which are in tune of `500-700 crore. The state government lacks long term IT vision and will power to make Uttarakhand a fastest growing state of India.”

But many small partners who do not have a good track record of doing business with the government are reluctant to dive into the water again. “Our personal experience has been bad. Payments were held up for many months, and we had to shell out more than 50% of our margins as kick-backs to release the payments,” complains Deepak Singh Rathore of Himcom Systems from Haldwani.

“Certain government rules have also been a bit of a challenge for partners. “When we deal with the government, we have to either give a bank guarantee for 10% of the bill value or collect the same value after the warranty period. It is very rare for a re-seller to have double-digit margins and meet such prerequisite,” concluded Jain. n