Gujarat

Can Gujarat bounce back on the IT scene?

Gujarat, the cradle of entrepreneurship, is sadly lagging behind when it comes to development of information technology. Stanley Glancy reports

‘Business state of India’ proudly proclaims the official Web portal of the government of Gujarat. The Gujarati community has time and again proved the veracity of this by demonstrating uncanny acumen for turning any traditional business into a money-spinning venture. Gujarat boasts of being a leader in the engineering, heavy goods, pharmaceuticals and chemicals space. The state has also been successful in attracting huge sums in terms of foreign investment, thanks to the large Gujarati diaspora in countries like the US and Canada. But though the entrepreneurial skills of Gujaratis are well renowned, the state has not been able to replicate similar success in emerging sectors like information technology (IT) and IT-enabled services.

According to Jagdeep Kochar, real estate prices are really low in cities like Ahmedabad, making it an ideal destination for ITES companies

While Southern states like Karnataka, Andhra Pradesh and Tamil Nadu have surged ahead, Gujarat, despite all its advantages, has lagged behind in this area. Says Jagdeep Kochar, chief of IT for Gujarat Narmada Valley Fertilisers Company (GNFC), “While its true that Gujarat is one of India’s leading business states, it was left behind as far as mainstream IT is concerned. The main reason for this was that knowledge workers from the state preferred to migrate abroad or to other IT savvy states like Maharashtra or Karnataka. Another reason was the global economic slowdown, which came when Gujarat was just gearing up to exploit the growing IT industry. So the critical mass was never developed in the state.” But despite the slow start Kochar believes that the natural advantages that the state offers, combined with an environment conducive to the development of business will enable the state to do a fast catch-up.

Vantages

In less than 43 years since its formation as a separate state Gujarat has emerged as the second most industrialised state in the country. Says Kochar, “In general, Gujarat has excellent infrastructure. Enterprises don’t have to worry about issues like telecom, bandwidth and power.” GNFC has developed 1,50,000 square feet of space specifically for development of IT. For instance, the Ahmedabad-based centre, christened GNFC Infotower, provides enterprises with VSAT infrastructure and services, ISP services, dial-up, ISDN, leased lines, and a cable network. The company has set up a telephone exchange within the centre to cater to the needs of companies setting up offices in the complex. Additionally, there is also an international gateway within the complex, which provides bulk bandwidth to IT companies. GNFC has also set up two generators to ensure uninterrupted power supply to the offices within Infotower. Other than private initiatives like those taken up by GNFC, even the Gujarat government has established software technology parks in Gandhinagar and other cities in the state. The government also offers subsidised power supply to IT companies setting up office in the STPs.

The telecom infrastructure in the state is also comparable to the best in the country. The Gujarat telecom circle has achieved a teledensity of 5.22, which is one of the highest in the country. BSNL recently set up a fully computerised managed leased line network (MLLN) together with a network management centre and three new base stations to provide fault-free telecom services. The centre is also expected to increase the network coverage for WiLL services. All BSNL Internet accounts working through VSNL servers (radius billing and mail server) have been transferred to the national Internet backbone servers.

Wired Gujarat

The state government has also been promoting e-governance in a big way. The IT department has created an information corridor connecting the state capital with the district headquarters and taluka headquarters. Currently, the government is in the process of computerising land records, which will then be made available at the district collectorate headquarters in the hope that this initiative will bring about greater transparency. The move is also expected to benefit IT companies desirous of setting up their own infrastructure in the state.

Apart from these advantages the state also enjoys some non-tangible advantages compared to other states. The Gujarati populace in the US and other countries provides Gujarat with a direct connection to the business community there. According to Sudhir Naik, VP-marketing and sales for chip design verification company eInfochips, if the state government makes serious efforts to tap this potential then Gujarat could gain a huge advantage over other states in attracting international business, especially from countries like the US.

Gujarat also offers tremendous cost benefits to the cost-conscious Indian entrepreneur. Says Kochar, “Real estate prices are really low in cities like Ahmedabad. This makes it an ideal destination for ITES companies as low real estate cost is a major issue for this sector.” To encourage IT companies, GNFC offers IT companies facilities for as low as Rs 23 per square feet. The price includes the cost of property, telecom facilities, power, bandwidth and even operational cost. A staff of 25 also provides round-the-clock maintenance, ensuring that companies that have set up operations here don’t have to worry about day-to-day operational details.

Problems galore too

Despite the advantages, IT companies today are shying away from Gujarat, thanks to both natural as well as man-made calamities. 2001 saw the state rocked by one of the worst earthquakes the country has ever witnessed. Even before the state had recovered from the effects of the earthquake, it was again shaken by calamities. This time around it was the communal riots in 2002, followed by terrorist attacks, which were a big blow to the state’s reputation as a peace-loving state. Says Naik, “Thanks to the riots we lost out on some business opportunities. International clients stopped visiting the state, affecting business in a big way.” Kochar too agrees that the riots tarnished Gujarat’s reputation of being a politically stable state but he believes that with time the memories are bound to fade away. According to him Gujarat is in the limelight because every routine law and order problem is being considered in the backdrop of the riots. He cites the case of Mumbai, which faced a similar situation a decade back but has managed to recover its image as a cosmopolitan city.

Talented people prefer to migrate to states they consider to be more progressive, says sudhir naik

Another major issue according to Naik is the availability of trained manpower. Says he, “Attracting good talent is a major problem that we have been facing in the state. The number of engineers available here is limited. Talented people prefer to migrate to states they consider to be more progressive.” But he is quick to add that there is no dearth of freshers. The problem arises when it comes to availability of experienced talent. But both Naik and Kochar agree that the attrition rate is very low. Says Kochar, “The Gujarati community is deeply attached to its roots. Hence, they are comfortable even if they are offered a salary that is 25 percent lower than what is available in the rest of the country. Their only premise is that they be allowed to stay close to their families. This proves beneficial to companies setting up operations here as it provides them with further cost benefits.”

Bandwidth, according to Naik, was a problem till a year back, but he adds that the situation has improved over the past one year. Today, there are more than 30 ISPs in the state providing IT companies with multiple choice of service providers. But he feels that when it comes to offering facilities like video conferencing, Gujarat is way behind other states.

Though the government has been setting up electronic parks in the state most of them have focussed on the development of hardware. Most companies in Gujarat complain that the state government has not taken any serious measures to promote the software industry. Says Kochar, “Most of the efforts in this direction have been made by individuals. The state government has promised a lot but we still haven’t seen any of these plans attaining fruition.” Though the government has been promoting the ITES sector, high-tech companies have not received any support from the government. This is one reason why the state, despite offering comparable infrastructure and low cost facilities has not been able to attract companies doing R&D work.

Naik, also feels that the government should train officials in the intricacies of the IT industry. Says he, “Though the officials are not trying to harass us their lack of awareness about the needs of the industry sometimes create a problem for us.” According to him, the government should also take active measures to ensure that more international flights come into the city.

But both Kochar and Naik feels that people’s mindset is one of the biggest hindrances to the development of IT in the state. Most enterprises in Gujarat consider IT more as an expense than as a decision-making tool. Most companies only think in terms of leveraging IT for routine functions like payroll and accounting. The decisions are usually based on the premise that buying an entry-level computer will be cheaper than hiring an accountant. This could prove fatal in the long run, as the industry might not be able to face the onslaught of global competition.

Conclusion

But despite these hurdles, both Naik and Kochar are optimistic about the prospects for IT in the state. According to Naik, the fact that established players like TCS and Patni along with players like Applitech Solutions, DDE ORG, Third Wave and Source Pro have set up centres here prove that the state can make a mark if the government takes initiative. Says he, “Today, we don’t exist on the IT map of the country. We still have a long way to go before we reach a respectable level. But if we get support from the government then we can do a much better job.”

Gujarat has to shift gears and make tremendous efforts to promote IT if it wants to maintain its status of a highly industrialised state. Government officials will have to wake up to the fact that IT will be the major driving force for every aspect of human activity.