Karnataka

IT companies demand better infrastructure

IT in Karnataka used to be all about Bangalore, India’s Silicon Valley. Of late, STPI has been working to change that by setting up technology parks in places like Mangalore and Mysore. Karnataka offers a striking contrast—India’s finest base of engineering talent also suffers from bad roads and inadequate power, says Akhtar Pasha

STPI’s International Private Leased Circuit (IPLC) service can support 100 Mbps for data services in addition to 60 Mbps of Internet capacity, says mahesh b

The state leads India in software exports and boasts of India’s largest pool of IT manpower. However, infrastructure is Karnataka’s Achilles heel. Power cuts (particularly in summer) are a fact of life. Public transportation is another problem area and Bangalore’s roads are in poor shape. Though the Karnataka government has made rapid strides in the last three years with ring roads, inner and outer, coming to relieve the pressure on Bangalore—flyover construction and laying of fibre using open trenching leave much to be desired. The last mile used to be a problem in telecommunications, that has now caught up with the road sector. While the ring roads are wide, they connect to narrow roads leading to traffic bottlenecks.

STPI’s role

But all this doesn’t change one fact: Bangalore tops the chart in India’s software exports. And thanks to STPI Bangalore, the numbers keep on growing. STPI is optimistic of getting Rs 12,000 crore of software exports in 2002-03—that’s 25 percent of the Nasscom estimate for India’s total software exports in that period.

STPI Bangalore has 948 operational companies; of these 60 percent are into software exports and 50 percent use STPI’s International Private Leased Circuit (IPLC) service. Mahesh B, STPI Bangalore’s co-director says, “IPLC can support 100 Mbps for data services in addition to 60 Mbps of Internet capacity. The services are offered on satellite and fibre. Presently STPI is utilising the services of Intelsat, New Skies satellite and APSTAR to cover North America, Europe and APAC regions.”

STPI recently acquired a DS3 link (45 Mbps) running from Cochin to San Jose, USA. Presently STPI Bangalore is offering approximately 40 Mbps of IPLC bandwidth to companies such as Dell, Infosys, Wipro, Sun Microsystems, Phillips, Celstream, Nortel, Siemens and GE.

STPI extends IT to rest of Karnataka

While Bangalore still accounts for most of the state’s software exports, STPI has taken care that there is more to Karnataka’s IT scene than Bangalore. The organisation has been building Karnataka’s secondary cities to relieve the pressure on the state capital.

This endeavour kicked off with STPI Mysore that was set up in 1998 as an extension of STPI Bangalore to tap Mysore’s engineering talent by supplementing its then inadequate telecom infrastructure. STPI’s gateway provides Internet connectivity through an E1 link (2 Mbps) and IPLC directly connected to the US. Infosys and BFL Software are two of the 24 software development companies operating in Mysore. Software exports from the city are in the region of Rs 60-70 crore. The key development areas being looked at in Mysore include software testing, software maintenance, IT-enabled services such as medical transcription, and ISPE. Many educational institutions are also using STPI services for meeting internal communication requirements. A 40-metre microwave tower system delivers access to all parts of the city.

Manipal came next in 1999. The city is known for its REC (Regional Engineering College) Suratkal and top-notch VLSI engineers. Synopsys has opened a design centre in Manipal. STPI Manipal offers 2 Mbps connectivity. It also has an incubation facility catering to small companies and entrepreneurs. 14 institutions use STPI Manipal’s Internet services for practising telemedicine. In 2000-2001 the Karnataka government identified Manipal and Mangalore as an IT corridor for ITES and BPO companies. 14 companies operate in Mangalore, including Infosys that employs 1,000 people and has a 1.5 Mbps IPLC and Robosoft, a partner of Apple Computer offering customer support. STPI Mangalore offers 4 Mbps connectivity. Software exports from Manipal and Mangalore put together come to Rs 300 crore.

STPI Hubli has 1,20,000 square feet of area. The city’s IT and telecom infrastructure and HR base are good. Its power distribution is separated and closely associated with Maharastra’s grid. “Despite all these facilities the IT park in Hubli has not taken off as expected,” says Mahesh. STPI is attempting to position Hubli, a commercial centre located between Bangalore and Mumbai, as a Disaster Recovery (DR) hub. It hopes that the city will become a focal point for DR services for the state government’s e-governance projects like Bhoomi, Khajane and VAT as well as for private players like Reliance.

Karnataka’s biggest IT park, Electronics City, is also the oldest one. There are several others, most notably ITPL in Bangalore. The government of Karnataka is offering special incentives and concessions to spur the development of IT Parks.

• Exemption from payment of entry tax on machines, equipment, capital goods and construction material procured for implementation of infrastructure projects, for a period of three years or till the date of completion of the project, subject to the condition that each invoice should be for not less than Rs 25 lakhs (Rs 1 lakh for construction materials).
• Exemption from sales tax/works contract tax arising in the construction of the infrastructure facility for a period of three years or till the date of completion of the project, whichever is earlier.
• 50 percent exemption from payment of stamp duty and registration charges on the first sales of land in the case of IT Parks.

All these incentives and concessions will be administered through a single window agency headed by the principal secretary of the Department of Commerce and Industries. Udyog Mitra will support this agency in scrutinising these proposals. In addition, Karnataka Information Technology Services will be set up to support these IT projects to get quick clearances.

Going forward

The Karnataka government has kicked off an ambitious IT Corridor project. If this is implemented on time, it could prove to be a much-needed shot in the arm for the state. The international airport project has been delayed far too many times. The state government needs to push it through if it wants global business to keep coming its way.

In fact, Bangalore’s problems have largely been due to slow pace of project execution. Often projects get stalled for months or years. The international airport is a case in point. Martin Prince, Joint Director at SAP Labs India says, “Road access to ITPL from the city was in a pathetic state because of the construction of the railway bridge. But that problem is slowly being taken care of, though it has taken almost a year and half to do so.”

Ravee Nerur, chief of Business Services at Texas Instruments (India) says, “Bangalore’s public transport is still inadequate. Unlimited issuing of licences to run autorickshaws has increased accidents and pollution. The belated introduction of radio taxis and the lack of political will to deal with trucks entering the city, in dealing with highly unionised public transport workers and reining in auto rickshaw drivers are major problems for commuters in IT or otherwise. ELRTS or some form of metro rail system is a must if Bangalore should be a favoured destination for investors, domestic or international.”

Nerur adds that after the private telecommunication service providers entered the market the situation has improved with regard to metropolitan area network (MAN) and wide area network (WAN) connectivity. That said, cities like Chennai, Cochin and Mumbai are termination points for submarine cables. This gives them the edge in terms of cheaper connectivity with lower latency. Inland locations like Bangalore depend largely on satellites for overseas links.

Power is another area that needs to be addressed on a war footing. STPI’s efforts have resulted in development of secondary cities such as Mangalore and Mysore but it will be a while before these centres can rival Bangalore, which presently has only its climate and manpower to boast of. Unless the power, transportation and bandwidth issues are sorted out—Karnataka will lose out to other states.

At one glance

Strengths

• The largest base of IT talent.
• India’s top software exporter.

Weaknesses

• Transportation is in a mess.
• Power and water are a perennial problem.

Opportunities

• If it plays its cards right, Karnataka could emerge as the leading player in ITES.
• Embedded software is another hot area that Karnataka is well poised to tap into.

Threats

• Crucial projects such as the Bangalore International Airport have dragged on for too long. Unless Karnataka gets its act together it could be overtaken by other states.