Protecting the Interests of

IT industry in Hyderabad

Post millennium, when Mr. Bill Gates visited Hyderabadand announced its first and only ODC outside Seattle, USAentire world flashed their attention on this historical city.

The development of HITEC city, a township pepped withstate of the art technologies, infrastructure and facilities,prompted several IT and ITES companies to set-up theirlarge scale operations in the city.

In a very short of span of time Hyderabad has became amajor transit HUB between the USA, Europeand Asia.

It has become a major destination for many ITbiggies and FDIs to invest in the city. Companiesqueued up and Employment galloped

The city has become a home to many of theAmerican IT giants such as CSC, Microsoft, IBM, DELL,Deloitte, ORACLE, HP, GE, Facebook, Google,JPMC, UHG and so on so forth.

With adequate supply of talent, good weather for9/12 months, decent infra, health care facilities,cost of living is reasonable and quality educationsystem, Hyderabad has become a choice ofdestination for many.

Brand Hyderabad

Status of Hyderabad in 2013

State/Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

AP 8,270 12,521 18,582 26,122 32,509 33,482 35,023 40,600 50,000

TAMILNADU 35,300 42,300 41,000 44,384 52,600 65,000

MAHARASHTRA 38,295 39,000 49,700 58,791 67,500 79,350

KARNATAKA 11,533 42,180 56,478 69,517 82,153 90,734 1,05,350 1,35,000 1,50,000

Competitive Analysis – AP vs.others

8,27012,521

18,58226,122

32,509 33,482 35,023

52,600

40,600

65,000

50,00038,295

35,300

39,00042,300

49,700

41,000

58,791

44,384

67,500

79,350

11,533

42,180

56,478

69,517

82,153

90,734

1,05,350

1,35,000

1,50,000

-

20,000

60,000

40,000

80,000

1,00,000

1,40,000

1,20,000

1,60,000

2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13

AP

TAMILNADU

MAHARASHTRA

KARNATAKA

Competitive analysis – AP Vs Others

“Unless the state bifurcation settles down and the status of Hyderabad is clear, the current ambiguity will continue to remain as a major concern for the IT industry & that the issue may be prolonged till 2014 elections” says 81% of senior managementrespondents to a survey conducted by ASSOCHEM. IT Employees Association

• Lack of objectivity while assessing the bifurcation of the state is being perceived as the reason for the growing sense of insecurity, uncertainty and anxiety among people.

• Hyderabad IT industry has suffered collateral damage in the long drawn separate Telangana struggle and now the ongoing Samaikhyandhra agitation.

• Frequent Bandhs and processions , Road blocks and public meetings causing major disruption for IT companies and Employees. Fresh investment may not flow in as multi-national companies are receiving negativepublicity about the disruptions and Bandhs in the state.

• The latest bifurcation impasse & Status-quo on Hyderabad . The triggering public emotions over state bifurcation is turning into a major law and order problem.

• As many as 67% of the CEOs and Senior Management personnel of the corporates felt that the biggest casualty of the impasse on Telangana is investment in Hyderabad, particularly in the IT sector – ASSOCHEM SURVEY

1. State Bifurcation Impasse and status-quo on Hyderabad

• The fundamental problem still remains unclear & the uncertainty continues.

• The timing of the announcement further complicates.• Hyd was already the sole centre of economic and political power, contributing 45% of state’s

revenues, which has dried up and killed other towns in the state.

• The reason why rest of AP hasn’t developed is purely due lack of Visionary Leadership in the last few years

• Already, few politicians are talking about “son of soil”. Can a knowledgebased industry like IT take that?

Setting up of Information Technology InvestmentRegion (ITIR) near Hyderabad subject to fulfillingcertain conditions.

The total investment for the ITIR will be aboutRs. 2.19 lakh croreExtension of the Metro Rail from Falaknuma toShamshabad International airport at total cost ofRs 3,275 croreIT Employees Association

2. IT Investment Region

• The current state of affairs will have an adverse impact on AP Inc. Revenue is bleeding.

• "It was the political leadership in the early 2000s which pitched in for successfully making Hyderabad the modern city of India, and successfully attracted a lot of global companies and investment with a liberal and friendly stategovernment," ASSOCHAM said.

• Due to lack of confidence in Govt., companies are showing their thumbs and scouting to other regions.

• "Whenever a company's decision about fresh investment in AP goes to its board, the deliberations among the directors are bound to focus on the political situation and Telangana. Chances are that investors might prefer borderingstates like Karnataka and Maharashtra," the ASSOCHAM survey noted.

• While not many new companies have NOT come forward invest, Existing Companies have not shown interest in expansion while few companies have shifted their key projects to other destinations.

• We are on path of self destruction thus giving a perfect opportunity to other competing states to grab our investments and employment. Besides, “investors all over the world do not prefer a place which has rallies, bandhs and uncertainty of political structure“, Its also apprehended that the situation is likely to become murkier in the run-up to the 2014 elections, with investment being a casualty”

Business is like water, it will flow and find its way. What Hyderabad needs is Business Leadership, ie cross sectoral Leadership.

3. Flight of Capital

• Remember, the race for talent is no longer between companies. It is between cities and what they offer the skilled talent to stay in them.

• Cities have to look at themselvescarefully and do what it takes to renewand stay relevant to their residents. If you don’t have the right people, and if they don’t chose to come and stay, you will never have the business that need them.

• Over the years, especially in IT, employees want to hangout in the most happening place. Will Hyderabad regain that “happening Place” ?

• "The flight of capital from the stock market is being accompanied by the flight of human capital. HYDERABAD is no longer the magnet for attracting global talent it once was,“

• Kolkata lost it many years back, even Mumbai lost it and now Hyderabad is losing its competitiveness, even while Bangalore is gaining its & so are Pune and Chennai.

3.Race for Talent – HR & Recruitment issue

• Hyderabad has traditionally been known for its low cost base, reasonable good infrastructure and cosmopolitan population, which have historically made it a good place

• Hyderabad is the eighth best Indian city to live in. It has a score of 8 on quality of life and 5 on quality of city systems while Bangalore ranks No.1 amongst Indian cities in overall global quality of living index, according to a Mercer 2012 Quality of Living Survey.

• Now, added to this, the state faces power shortage and has seen steep hike in power tariffs by about 250% in three years. “With huge power cuts last year, the industry had to fall back on captive power generation through diesel generators. This has pushed up the cost of operations by 60-80%. Power crisis threatened to wear down of brand Hyderabad as the most favored IT/ITES destination”-ITsAP

• The terror attacks and sleeper cells have added to the city’s woes, come as huge set back for the city which is already getting off the radar for business leaders. Law and order has become a notable issue for the business environment.

4. Infrastructure Woes

Year No.ofcolleges

No.ofseats

VacantSeats

1994–1995 32 9335 0

1995–1996 37 10155 0

1996–1997 37 10455 0

1997–1998 57 14155 0

1998–1999 89 19773 0

1999–2000 102 25064 0

2000–2001 107 30896 0

2001–2002 174 46090 0

2002–2003 217 62710 0

2003–2004 225 65960 0

2004–2005 238 82225 0

2005–2006 262 92600 0

2006–2007 282 98793 0

2007–2008 337 118993 0

2008–2009 530 174742 17577

2009–2010 656 226000 48795

2010–2011 705 252000 74972

2011-2012 721 340000 120000

2012-2013 721(approx)

340000(approx)

200000(approx

5. Unemployment – a growing concern• Every Year 2-3 Lacs of Engineering students pass-out and the rate

of unemployment is a cause of concern.

• Given the current shape of the IT industry, it is not even

in a position to create 10,000 jobs, raising serious concerns

over dwindling employment opportunities .

• Many students cannot find jobs either because they

become overqualified for lower skilled jobs or lack the

personality traits for their requisite jobs.

• Urban unemployment in Karnataka stood at 3.1 per cent, while in Tamil Nadu it was lesser at 2.3 per cent and in Kerala it stood at 3.3 per cent while it is higher by far with 4.7% in AP.

• “There is no government in place to offer us an assurance,”

fumes an angry youth who is frustrated on the impasse.

• In the current scenario, youth is unsure of their future. Immediate steps should be taken to restore confidence

among the youth as the lack of jobs will trigger social conflict and disorder in society.

Highlights

• Tamil Nadu, Andhra Pradesh lag behind in average quality of talent

• States focusing on numbers and not quality, reveals the report

• In metros, Delhi again has the best engineers followedby Kolkata and Bangalore

• It is observed that employability in IT services companies is highest in North, followed by East, then West and then South.

• Delhi and Bihar-Jharkhand emerge as states with the largest percent employability.

• Delhi with its select colleges has emerged as an education hub with high standards of education and attracting the best minds from across the country.

• The employability falls logarithmically with the increase of number of colleges in the state.

• Adding more engineering colleges led to a logarithmic fall in the percent of employable engineers.

• AP produces close to 2 Lac Engineers out of nearly 7

Lac PAN India and stands second from bottom on Employability.

6. Employability – Churning degrees without value

What should we do?

• Bring back the leader who made this Brand Hyderabad happen with his visionary views

• Support the government which could provide sustainability.

• VOTE FOR TDP, BRING BABU BACK. • Spread the loss we might face if this does not

happen• SHARE IT WITH YOUR FRIENDS & FAMILY