As IT moves out of the metros to Tier-II cities, Kerala emerges as the most attractive destination for the knowledge industry.
MOVE over spice merchants, Gulf emigrants, tourists from around the world: Kerala is shedding its traditional image and gearing up for a grand makeover. Its epithetic slogan, Gods Own Country, is pass and may soon give way to another, symbolising the distinction man-made, no doubt of its coming into being as a knowledge hub.
The State has quietly established an efficient IT [information technology] infrastructure and has become one of the most sought after IT destinations in India, Kris Gopalakrishnan, CEO of Infosys, said recently at a Kerala IT.Com 2008 valedictory event in Thiruvananthapuram. He should know. Infosys, a world leader in consulting and IT services that employs over 17,000 people in 30 centres worldwide, has been operating in a leased facility at Technopark in Thiruvananthapuram since 2004. A 30-acre (1 acre is 0.4 hectare), Rs.306-crore, state-of-the-art Infosys campus is under construction nearby and is set to start functioning very soon.
Keralas IT Secretary Ajay Kumar told Frontline: Thiruvananthapuram and Kochi have been ranked as the most attractive IT and ITES [IT-enabled services] destinations in India. CIO.com [United States] recently captioned in an editorial relating to outsourcing from the U.S., Bangalore out, Kochi in, highlighting the movement of IT outsourcing industry from the metros to Tier-II and Tier-III cities in which both Kochi and Thiruvananthapuram stand out. Many nationally and internationally renowned companies have already come forward with requests for built-up space and land. We are also developing hub-and-spoke model [IT] parks in all districts of Kerala the hubs in the three major cities, Thiruvananthapuram, Kochi and Kozhikode, and the spokes in the remaining districts so that there would be even growth throughout the State.
No doubt Kerala has earned every bit of its new-found popularity with IT and ITES companies. In December 2007, when UST Global, a leading provider of IT services and business process outsourcing (BPO) solutions for Global 2000 companies, announced that it was opening a new office in Kochi, in addition to Thiruvananthapuram, it listed four reasons on its choice for expansion of its services.
It said, almost echoing the State IT Departments everyday mantra: Kerala is the only State in India that has a 100 per cent literacy rate; Kerala is home to a significant number of IT professionals in South India. There are more than 15 top institutions in Kerala offering quality education and specialised IT degrees that make this an ideal region in which to base offshore development centres. In terms of climate and lifestyle, Kerala offers one of the best environments in India. The State is ranked as one of the top 50 places to visit in the world by National Geographic. The standard of living in Kerala is among the finest in the country and its civic, health and social services are highly rated, which makes it an attractive destination not only to work in, but also to live in.
The company website quotes its chief operating officer Sajan Pillai as saying: For IT service providers such as UST Global that are in a growth mode, there are a multitude of cities in India in which to choose from. Yet with so many cities plagued by limited bandwidth, we consciously avoid those areas and instead choose cities that will support our, and our clients, best interests. Kochi is one of three cities in India that are hubs for the undersea cable, which gives UST Global better connectivity and less competition for that bandwidth. This location aligns well with our client-centric Global Engagement Model by helping us expand our services in an economically viable way for our clients.
UST Globals new office is located at a 24,000 sq ft development centre at Infopark, a 100-acre, rapidly growing IT park established by the State government in Kochi in 2003. Already 39 companies, including several IT majors, have started operations at Infopark, employing 5,000 people.
No doubt Kerala was blessed with the most critical factors required for knowledge-based industries quality manpower and social infrastructure. As any IT professional would vouchsafe, it has efficiently built on them, brick by brick, a state-of-the-art IT infrastructure and physical and digital connectivity.
It is today one of the best networked States in the country. The States tele-density is double the national average and all the 988 telephone exchanges are digital and connected to the National Internet Backbone (NIB). All the 1,468 village panchayats in the State are within 3 km of a digital exchange and connected to the NIB. Videsh Sanchar Nigam Limiteds (VSNL) International Communications Gateway, with two high-speed submarine cable landings (SEA-ME-WE-3 and SAFE) offering 15 Gbps bandwidth support, is in Kochi, currently handling more than two-thirds of Indias data traffic. Optical fibre connectivity up to the village level makes high-quality, reliable bandwidth available in all parts of the State.
But perhaps the biggest advantage Kerala provides to IT companies is the cost factor. According to the State government, the start-up and operational costs are less than 50 per cent and the rentals/real estate costs are less than 60 per cent of those in other major IT parks in India. Business space is available at Technopark and Infopark at rates that are nearly half of those in cities such as Chennai and Bangalore. Power and water tariffs are among the lowest in the country. Kerala sells itself today by arguing: A low cost of living means lower cost to company per employee. Employee attrition is very low in the State.
Nothing better illustrates Keralas success story today than the glint in the eyes of the top executives of the States home-grown IT companies, which have hugely benefited from these unique advantages and the State governments policies. S. Sasi Kumar, president of NeST, perhaps the first software company in Technopark, which was established as a modest initiative providing network solutions to the government, told Frontline: When we started in 1995, indeed, we had a locational disadvantage. Nobody had heard of Thiruvananthapuram as a product development destination. R&D outsourcing was then not considered a popular or profitable venture. But with our roots in Kerala, we have now spread globally as a total solutions provider across the IT spectrum, designing, manufacturing and building systems and support, especially in four key areas, health care, industrial automation, embedded communications and automobile technology. Today we employ over 3,000 people in Kerala alone; we have high-tech manufacturing units in the Cochin Export Processing Zone, Bangalore and Mysore; our worldwide revenue has exceeded $200 million. We are contract manufacturers for some of the worlds leading companies such as GE, Hitachi, HP, Brooks Automation, Toshiba, Fujitsu, Areva, Roboticsware, and so on, and it has been so for the past 10 years. We have several customers that are in the Fortune 500 list.
In 2001, we also acquired a U.S. company, AM Communications, a provider of high-technology system level products for the broadband communications industry, and have moved the product development activities of that company, too, to Technopark. Our disadvantages have become our advantages. Our competencies are all home-grown. We became the first CMM Level 5 company in Technopark and the 18th in the world to have the Level Five rating.
There are several such exciting success stories in Technopark, the first such electronic park in the world established with 100 per cent government equity, home today to 140 IT and ITES companies, together employing 17,000 IT professionals. Over 30 per cent of the companies are U.S.-based, 40 per cent are from Europe, 5 per cent are from West Asia, 20 per cent are based in Kerala and 5 per cent in other States. From small beginnings on a 50-acre campus, Technopark, too, has grown along with the companies to a bustling, beautiful campus spread over 228 acres, with more than 3.2 million sq ft of built-up space.
But the real Kerala IT story is in the demand it has created. The State government is, therefore, preparing a master plan to develop an IT infrastructure to match the growing demand for space and has established the Kerala State Information Technology Infrastructure (KSITI) Company. It is a private-public partnership company and is expected to mobilise Rs.2,000 crore on IT investments in the next five years. It would have 49 per cent private participation and 51 per cent participation from the government, IT Secretary Ajay Kumar said.
One of the first commissions of the new company would be to build the governments prestigious Technocity, a global IT/ITES/Knowledge township project proposed to be developed as several SEZs on nearly 507 acres, close to the Technopark campus. This is in addition to Technoparks own expansion plans on about 100 acres adjacent to the existing campus.
In addition to the government initiatives, several private sector electronics parks are also being built. On March 16, Chief Minister V.S. Achuthanandan inaugurated the latest of the private ventures, Phase One of the L&T Tech Park on leased land inside Infopark. Construction will begin soon in Kochi for one of Indias largest business parks, the 246-acre Smart City, a joint venture between the Kerala government and the Technology, Electronic Commerce and Media Free Zone Authority (TECOM), Dubai.
The government expects the Rs.17,000-crore project to make Kerala the leading IT destination in the country and Kochi, particularly, a member of the global network of knowledge-based industry townships that its Dubai-based developers seek to create.
The governments target is to create over two lakh new job opportunities by 2012. For every direct employment opportunity created in the IT/ITES sector, it believes, three indirect employment opportunities will also be generated. That will be the way out for Kerala from the jinx of low investments, low growth, and low levels of employment opportunities, which have forced Malayalees to leave their beautiful State in large numbers even as tourists from all over flock in.