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Hyderabad lags behind Naidu's IT targets

George Iype in Hyderabad

Despite Andhra Pradesh Chief Minister Nara Chandrababu Naidu's pledge that he would make Hyderabad the most sought-after information technology destination in India, figures show that it is slipping behind targets.

The government had projected software exports to the tune of Rs 12 billion for 1999-2000. But this is likely to fall short. Exports at the end of the second quarter of this financial year stand at less than Rs 2.5 billion.

Software exports from Hyderabad have seen a phenomenal increase since 1995. During 1994-95, these were just Rs 220 million. It rose to Rs 5.73 billion in 1998-99.

The state expected a record turnover this year, thanks to the software boom across the country.

Officials insist that the second quarter results are not a true indication. Exports, they claim, will definitely touch the targets when many companies make their financial disclosure by March.

However, they concede that Hyderabad is finding it tough to maintain the tag of the most sought-after infotech destination. The reasons are many.

First, stiff competition from the neighbouring states of Karnataka and Tamil Nadu has ensured that the number of software export units registered with the Software Technology Park of Hyderabad this year has drastically come down.

While during 1988-99 180 units were registered with the Hyderabad Information Technology Engineering and Consultancy City (Hi-Tec City) at Madhapur on the outskirts of Hyderabad, this year the number of new entrants has been less than 90.

Sources said the occupancy at Hi-Tec City has not been on the expected lines. There has been a general fall in the demand for commercial space there. Thus, more than a year after the Rs 800 million Cyber Towers was inaugurated, the occupancy level is just 54 per cent.

Major IT companies like IBM, Microsoft, Oracle, Metamor, Apple Technologies and CISCO have set up shops in the Cyber Towers. However, banks and other commercial establishments occupy a good portion of the 525,000 square feet complex.

Andhra Pradesh was one of the first states in the country to offer attractive IT packages. For instance, the Hi-Tec City receives full support from the state government, which has waived stamp duty and registration charges for companies setting up offices there.

"One of the reasons for the sluggish demand for commercial space is that both Tamil Nadu and Karnataka have come out with a similar attractive packages for IT companies," a source in the chief minister's office admitted.

Moreover, he said, there is easy availability of cheap commercial office facilities in the heart of Hyderabad, forcing many companies like Wipro, Menton Graphics and Integraph skip setting up units in the Cyber Towers.

However, the official said, the growth of infotech companies in Hyderabad in relation to other locations in the country has been the highest. For instance, he said companies registered at Hyderabad during 1998-99 have increased 71 per cent as compared to 25 per cent in Bangalore, 36 per cent in Noida and 51 per cent in Madras.

Though the state will not meet the software targets this year, Naidu is going ahead with further initiatives to increase the IT infrastructure in Hyderabad. The IT Committee constituted by him will meet soon to formalise strategies to boost the software trade from the state.

The committee members include Azim Premji of Wipro, B Ramalinga Raju of Satyam Computers and Professor Raj Reddy of the US-based Carnegie-Mellon University.

The government is also going ahead with plans to execute the second phase of the Hi-Tech City. The Rs 15 billion phase, construction of which has been jointly taken up by Larson & Tourbo and the Andhra Pradesh Industrial Development Corporation, will begin shortly.

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