Kerala

From backwaters to back-office

‘God’s own country’, Kerala, is better known for its backwaters, beaches, ayurveda, rubber, cocoa and cashew nuts. Today the state is in the midst of an IT revolution thanks to the new IT policy. With Kerala Technopark, the state is on the road to competing with other states in the IT field, says Abhinav Singh

Following on the footsteps of its South Indian counterparts, Kerala’s state government is making an all-out effort to promote IT growth in the state. Though it is a late entrant in the IT sector compared to its neighbours—Karnataka, Andhra Pradesh and Tamil Nadu—the state has made significant strides of late in the IT field. The state has many advantages as an IT or ITES destination. It has one of the highest densities of science and technology personnel in India. There’s plenty of bandwidth to tap (two submarine cables land near Kochi). Kerala also has one of the highest telephone densities in the country (7 per 100), among the lowest operational costs, lower rentals and low power and water tariffs.

Kerala’s IT policy

The Kerala government’s IT policy was incorporated in 2001. It deemed the IT industry as a public service utility and provided for part-time working and teleworking to make the state more attractive for folks setting up ITES operations. The policy also declared software companies as establishments and permitted three-shift operations, let women in night shifts and allowed for flexible timings. An early bird incentive was offered to companies that were among the first to establish their operations in the state. Other schemes mentioned in the policy include the ‘Private Parks Scheme’ to encourage the construction of quality infrastructure for IT companies. HRD programmes are being conducted throughout the state to churn out trained manpower, especially for the ITES sector. These programmes include bridge programmes for engineering graduates, English communication skills, soft skills, accent neutralisation and ITES sub-domain level training.

Kerala Technopark

A prime initiative taken up by the Kerala government to encourage the growth of the IT sector in the state, Kerala Technopark in Trivandrum sprawls over 156 acres of land with about 1.5 million square feet built-up space hosting over 55 IT and ITES companies (including four CMM Level 5, two CMM Level 3 and several ISO 9001 certified companies) providing employment to over 5,000 people.

According to Jaydev Thampan of the Business Development department at Kerala Technopark, the current occupancy rate of the park is 65 percent of the available built up space and the park can accommodate another 20-25 companies. “In the present scenario most of the vacant space will be occupied very soon as more and more companies are showing keen interest in setting up base at the Technopark” adds Thampan. Export revenues from the park touched Rs 150 crore during the previous fiscal.

The park has six industrial module buildings named after major rivers in Kerala. Bhavani is the latest of these; it was inaugurated last year by the then information technology minister, Pramod Mahajan. The park presently has about 30 acres of leasehold land with developed plots. Start-up companies that lease these developed plots immediately obtain power and water connections from the park.

In order to expand its co-operation in the fields of technology, education and industrial entrepreneurship, Kerala Techn-opark recently entered into an MoU with Pudong Software Park of Shanghai, China.

Companies setting up their base at Kerala Technopark have multiple options for Internet connectivity. An optical fibre cable with redundancies at all levels is in the process of being laid at the park. Multiple earth stations are also installed at the park. STPI, VSNL and BSNL offer bandwidth to companies in the park.

The Technopark runs its own power distribution system. Diesel generator sets are also available on top of the buildings as a backup. Water requirements are met from sources developed within the campus. A water recycling plant has also been set up. An additional water line from the Kerala Water Authority will augment available resources. There are plans to double the infrastructure capacities at the park in the near future and expand existing telecom networks.

A Technopark business innovation centre provides plug-and-play facilities to start-up companies at the park. A software engineering competency centre set up by Rational Software creates awareness about software engineering tools. Technopark runs courses in telecom and IT. Talent Trac is a competency assessment program to tap workers for the IT & ITES sector.

Cochin (Kochi) Special Economic Zone

Kochi’s abundant supply of cheap bandwidth, international airport and seaport, affordable power and low operational costs have led to the creation of the Cochin Special Economic Zone. Located five kilometres from Kochi, the zone has 55 units operating in different sectors including IT. It is planning to set up a software park and is inviting bids by builders for the same. It has got an approval from the government for setting up a 15 MW captive power plant. Both moves are aimed at boosting the development of the IT industry in the zone and to woo more investors.

Where is IT growth headed in the state?

The recently concluded Global Investor Meet (GIM) at Kochi witnessed MoUs and investment announcements to the tune of Rs 26,000 crore. The state government is undertaking major efforts to upgrade existing infrastructure and has plans to develop many more IT parks as integrated townships through joint venture partnerships with the private sector. Plans are afoot to position Kochi as a disaster recovery hub for IT

companies. In a move to make the state 100% e-literate, the state government along with private players, has launched a massive eLiteracy campaign, ‘Akshaya’. The campaign has an ambitious goal of setting up 10,000 Akshaya centres across the state and to make at least one person each out of the 65 lakh families in the state IT literate. President Dr A P J Abdul Kalam inaugurated the programme during a visit to the state. Recently many IT companies have shown keen interest in investing in Kerala, which in turn is expected to give a further spurt to IT growth in the state.

SWOT: Kerala as an IT/ITES destination

Strengths

• The highest density of science and technology personnel in the country.
• Cochin has abundant and low-cost bandwidth compared to any other location barring Mumbai and Chennai.
• One of the lowest property rentals, low power and water tariffs.
• One of the highest telephone densities in the country (7 per 100) and all the 988 telephone exchanges in the state are digital.

Weaknesses

• Historically Kerala has been plagued by labour problems although this hasn’t affected the IT industry as of now.
• One of the highest unemployment rates in the country.
• Late entry into the IT space has deprived it of the first mover advantage.

Opportunities

• Kochi can emerge as the next ITES hub of the country due to its bandwidth advantage.
• The state government is aggressively marketing Kerala as an important IT destination.
• Kerala’s skilled workforce still migrates out of the state in droves searching for better prospects outside the state. If the government can create an attractive environment for professionals and retain these people, Kerala has a bright future in IT.

Threats

• Competition from established IT destinations—Karnataka, Andhra and Tamil Nadu..
• History of labour problems could come back to haunt the state as it woos potential IT investors.