IT industry, going through phases of uncertainty due to high-voltage agitation for separate state of Telangana, has bounced back strongly

Not long ago, Andhra Pradesh Chief Minister N Chandrababu Naidu’s name was synonymous with the development of Hyderabad as the hub of Information Technology. Having earned the sobriquet of “hi-tech CM,” Naidu had completely revolutionised the administration in his earlier stint as the Chief Minister of erstwhile united Andhra Pradesh between 1995 and 2004. He had created a third city – Cyberabad along with the twin cities of Hyderabad and Secunderabad, seeking to develop it as a Silicon Valley of Andhra Pradesh.

Twelve years down the line, the scenario has completely changed. Naidu’s hi-tech glory is passé. Now, Telangana Chief Minister K Chandrasekhar Rao and his son KT Rama Rao have emerged as new icons of the Information Technology in Hyderabad. The software industry, which was going through phases of uncertainty due to high-voltage agitation for separate state of Telangana between 2009 and 2014, has bounced back strongly in the last two years, thanks to the bold initiatives taken by the Telangana government.

At the time of Telangana State formation, there were apprehensions that Hyderabad might lose its position on the global map as the IT destination, as there would be flight of capital and many software giants might shift their offices lock, stock and barrel to either Bangalore or Chennai, because the new government might have to focus on rebuilding its economy and IT sector might not be its priority. There was also another major apprehension: KCR is not tech-savvy and he does not have the kind of vision and passion that Naidu had towards IT sector.

But KCR, says industry, has proved otherwise. Chairman of Nasscom (National Association of Software and Services Companies) BVR Mohan Reddy said KCR was able to outsmart Naidu in terms of giving impetus to IT sector because of the advantages he already has in Hyderabad. “He has the vision not only to sustain the momentum in software exports, but also to take it to the rural areas,” he told Firstpost.

At the same time, Reddy said Chandrababu Naidu was also a visionary and had great ideas to develop the IT sector in Andhra Pradesh. “But, he has a long way to go develop IT industry in his state, which depends on various factors such as availability of infrastructure, connectivity and availability of talent. It is a slow process. In my view, it is better to focus on cities like Visakhapatnam, Kakinada and to some extent, Tirupati, which have locational advantages, rather than the new capital of Amaravati near Vijayawada and Guntur,” he said.

He had entrusted the IT portfolio to his young son KTR, who took the IT sector to the next level. He has now emerged a rallying point for the global software industry when it comes to Hyderabad, thereby successfully erasing the legacy of Naidu. The IT policy unveiled by the KCR government last week has heralded its vision on the IT sector in the next two decades.

That the software industry in Hyderabad has grown by leaps and bounds, instead of collapsing on the account of bifurcation of the state was evident from the way it recorded 16 per cent growth in IT exports in 2014-15, the first year of Telangana formation, which is three per cent higher than the national average growth. During this period, the total value of software and IT products exports accounted for Rs 68,232 crore.

Despite political uncertainty in the state before bifurcation and high-voltage agitation for separate Telangana state between 2010 and 2014, the software exports continued to register a healthy growth. According to the figures available with the state IT department, the IT/ITES exports from Andhra Pradesh (mostly Hyderabad and partly from Visakhapatnam, Kakinada, Vijayawada and Tirupati) were: Rs 40,646 crore in 2011-12, Rs 49,831 crore in 2012-13 and Rs 57,000 crore in 2013-14. After the formation of Telangana State in June 2014, the IT exports in Telangana alone went up to Rs 68,000 crore. According to industry sources, this is a remarkable growth, in the wake of apprehensions created during the Telangana agitation that there would be flight of capital from Hyderabad and the big companies would shift their base to other cities, if Telangana State was carved out. “A national financial daily has reported immediately after the Telangana State formation that a large number of IT companies would be winding up their businesses in Hyderabad and move to other cities. But not a single company has left Hyderabad in the last one year,” a business analyst observed.

Instead, global IT majors and e-commerce biggies made a beeline to the Telangana government to expand their business activities. Microsoft, which already has its only overseas R&D Centre in Hyderabad, is actively considering its second facility in the city, though Bangalore is also lobbying for the same. The Telangana government signed an agreement with Google to set up its largest campus outside the US in Hyderabad. E-commerce giant Amazon, too, has started work to set up its 25 lakh-square-feet area facility in Hyderabad at a cost of Rs 1800 crore, which which will be its biggest campus outside the USA. In the last few months, big names like Satya Nadella (Microsoft), Sundar Pichai (Google), Shantanu Narayan (Adobe), Ajay Banga (MasterCard), and Prem Watsa (Fairfax Holdings) came to Hyderabad to do business.

The biggest achievement made by the Telangana government in the IT sector is the setting up of T-Hub, the largest incubator in the country to promote start-ups. The response was so tremendous that the government is now contemplating a much-bigger incubator that provides state-of-the-art facilities for the start-ups with wide range of incentives.

In the latest IT policy, the KCR government has envisioned transformation of Telangana into the most preferred destination for any IT company which is planning a new facility and enable it to make it a global hub for technology entrepreneurship and innovation in the country. It contemplates doubling the job opportunities in IT sector to 8 lakh in the next five years. And under the electronics policy, Telangana seeks to attract $3 billion investment and create about 1.6 lakh jobs.

“Hyderabad as the Telangana’s crown jewel is already a magnet which attracts the best in the world. And our government intends to embellish its even further to standout as the most preferred destination for IT companies,” KCR said, while announcing the policy.

Nasscom chairman BVR Mohan Reddy hoped that at the current rate of growth, it is expected to touch exports of Rs one lakh crore in the next two years. And Infosys founder M Narayana Murthy wished that Hyderabad would be a benchmark against the best in the world like Silicon Valley, Cambridge Science Park, Beijing and Tokyo.

KCR turns techie

It’s not just in restoring and glorifying the brand image of Hyderabad as a global IT destination, KCR has proved that he is no way inferior to Naidu in using computers for administration.

When Naidu was in power in the united Andhra Pradesh, he was known to be a tech-savvy chief minister. He was one of the few Chief Ministers of his period who used Apple Macintosh laptops at every official or corporate meeting. He used to present the official data at the click of the mouse, thanks to his Secretary Randeep Sudan, a techie bureaucrat. And his close association with Satyam founder Ramalinga Raju also helped him gain knowledge in technical presentations.

KCR surprised many, though, with his three-hour marathon power point presentation on the irrigation projects in the state Assembly on the last day of the budget session on March 31. He made use of state-of-the-art 3-D technology, supplemented with satellite imagery and Google maps to explain how the neighbouring Maharashtra and Karnataka states had constructed 480 barrages, big and small, across the Godavari and Krishna rivers and their tributaries, resulting in poor inflows into the Telangana State. Unlike Naidu in the past, KCR did not take the help of any official in the presentation and he moved from one slide to the other, at times zooming on the project sites, to show how the water is being siphoned off from the river through unauthorised lift irrigation schemes by the neighbouring states. He sought to defend his plan to redesign the existing irrigation projects on Godavari so as to make optimum utilisation of water to irrigate over one crore acres in the coming years.

The members, who watched the presentation on the three giant LCD screens in the Assembly hall, were surprised at the technical knowledge of the chief minister. Though the Congress and the TDP members boycotted the presentation, they admitted in private that it was an excellent effort by KCR. In fact, a Congress member Komatireddy Venkat Reddy said he was floored by KCR’s presentation. “We should not have boycotted it; if at all, we had any objection, we should have raised the same after the presentation,” he said.

The Opposition is unimpressed though. Telugu Desam Legislature Party leader in the State Assembly A Revanth Reddy was sceptical about KCR’s power point presentation in the Assembly on irrigation projects, saying it was just an attempt to hoodwink the people of the state with a bunch of “beautiful lies.” He said there was no use to just present swanky slides using technology; as it was doubtful whether he had resources to implement the same. “Instead of plain talk, he used a power-point presentation to convey lies in more convincing way,” he said.

Naidu back to square one?

While KCR is basking in the glory of Naidu’s all good work in the development of IT sector in Hyderabad, the Andhra Pradesh Chief Minister is struggling to regain his image as the pioneer of IT in his residuary state formed after the bifurcation.

The man, who had virtually started from scratch in bringing software industry to Hyderabad which now houses over 1200 IT companies and who had attracted global leaders like Bill Gates to the capital city, is facing a tricky situation in Andhra Pradesh. The new capital of AP – Amaravati –will take another 10 years to shape up.

In the meantime, Naidu government is focussing on developing Visakhapatnam as the major IT hub in the coming four years, along with similar IT hubs in Vijayawada, Kakinada, Tirupati and Anantapur. The government has come out with a blue print – “Reimaging Andhra Pradesh” – defining its IT policy, electronics policy and innovation policy for 2020, offering a number of incentives for the IT companies to set up their units.

“It is just taking shape. Some companies like Wipro, Tech Mahindra and Cyient Technologies have evinced interest in expanding their business to Visakhapatnam and Kakinada. At present, the software and IT export from Andhra Pradesh are very negligible, compared to Telangana. It is not that there is no dearth of talent pool in the coastal Andhra, but the companies would look into various other factors like availability of land and other infrastructure facilities. So, it will take a lot of time to get all that,” an industrialist associated with software development observed.

Had the erstwhile governments of united AP focussed on promoting IT sector in other cities like Visakhapatnam, Kakinada and Vijayawada, instead of only on Hyderabad, the situation would not have been so pathetic. “We need to start from scratch now. And Naidu has to struggle a lot,” he observed.