What Makes an Area an ICT City

By Dr. T.H. CHOWDARYDirector: Center for Telecom Management and Studies

Chairman: Pragna Bharati (intellect India )Former: Chairman & Managing Director

Videsh Sanchar Nigam Limited &Information Technology Advisor,

Government of Andhra PradeshT: +91(40) 5567-1191/ 2784-6137(O) 2784-3121®

F: +91 (40) 5567-1111, 2789-6103hanuman.chowdary@tcs.com

thc@satyam.comTalk @ Andhra Chamber of Commerce,

Vijayawada: 14 Oct 2006

THC_CTMS S319_Oct 2006 2

World’s Attention to India

• The Economist (UK), June, 2006• “Can India Fly” – 14 page supplement• “…India is producing far more world class

companies than China…”• Time (USA) June 26, 2006• Cover page…”…trying to find out why the

world’s biggest democracy is the next great economic power and what it means for America”

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World’s Attention to India

• Foreign Affairs (USA) (July-Aug 2006)• “India is now the fourth largest economy and soon

it will surpass Japan to become the third largest…rather than rising with the help of the state, India is in many ways rising despite the state…”

• Of the Fortune companies 125 now have Research & Development bases in India, a testament to its human capital.”

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Agri Industry Service

Developed <5% 25 70

Developing 30 to 40 20 to 25 35 to 50

India 21 24 55

Content of GDP (Figs. in %)

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Software Export Industry

734 1,0851,750

2,6503,900

5,5006,800

8,000

10,000

12,500

16,560

1995-96

1996-97

1997-98

1998-99

1999-2000

2000-'01

2001-02

2002-03

2003-04

2004-05

2005-06

India as ICT Power: (1)

THC_CTMS S319_Oct 2006 6

Employment in Indian IT sector*,’000

0200400600800

10001200140016001800

2000 '01 '02 '03+ '04+

Call-centers (ITES) Software Multinational operations

(* Years ending March; + Estimate@ break-up: NA)

2 mln@

‘06

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A.P’s Software and ITES Companies

• In 2004-2005 Exports surged by 64.5%

Year 1996 2004 2005 2006 2007

Volume (in Rs. Cr. ) 65 5,025 8,270 12,521 17,000 of Exports

Hyderabad : about 1200 companiesVisakhapatnam : Units 37; Exports Rs. 70crVijayawada : Units 13; Exports Rs. 24 Cr• Number of direct employees 1,60,000 adding 30,000 to 40,000 per

year

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PROSPECT- I T ENABLED / CREATED SERVICES & EMPLOYMENT (INDIA)

GROSS WORLD PRODUCT IN THE YEAR 2010 US $ 40 TCONTRIBUTION FROM SERVICES (60%) OF GWP US $ 24 TINDIA'S SHARE @ 10% US $ 2.4 TEMOLUMENTS COMPONENT (15% TO 50%) US $ 360 TO US $ 1200 bEMOLUMENTS/EMPLOYEE/YEAR US $ 5000NO OF JOBS (360/1200) b = 72 to 240 million 5 K

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Characteristics of (Trade in) Services

• Created in one place/country• Consumed anywhere else• Delivered over telecom high-ways• Information/knowledge-intensive• Storage, Processing & Exchange• Knowledge workers• Exemplary Service economies

– Singapore– Ireland– Hong Kong

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India’s Tragedy

1951 2006

Contribution of Agriculture to GDP

67% <20%

Rural Population 85% 72%

Labour dependent upon agriculture

70% 65%

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In Rural India

• Literacy (62%) & Education ( About 15%)

• Per capita income

All India Urban Rural

Rs. 30,000Rs. 56,000 Rs. 8000

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Unemployment

• Unemployed Graduates : 52 lakhs• Unemployed persons : 420 lakhs• Population growing/yr : @180 lakhs• Max. jobs created/yr : 100 lakhs• Rural & Illiterates: unskilled, unemployable in

industries, increasingly becoming automated/mechanized

• Diploma/Tradesmen to Engineers ratio Developed India 5.0 1.0

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India is Graduating Every Year

• All varieties : 30 lakhs (3.5l in AP)

• Engineers : 4,50,000 (80 to 100,000)

• MBAs : 80,000 (15,000)

• MCAs : 80,000 (12,000)

• Employability in Tier #1 companies : 2% to 10%• Fig. In ( ) relate to AP

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Characteristics of Indian IT Companies

• Born mostly in mid 1990s and so escaped socialism i.e nationalisation

• Born and thriving without government help and inspite of obstruction by government ( DOT)

• NRI inspiration – Silicon Valley Success

• Indigenous entrepreneurship by foreign-educated, nationalist young men – Infosys, Satyam, Wipro, Infotech …

• Foreign Markets – Indian talent who built confidence and trust-levels

• Pioneers- Texas Investments: Bangalore “Security” bogey

• Satyam: BPO for John Deere. “Little India” Moline (Illinois) USA

• First Satellite Link for Indian BPO for Satyam

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How Does a City Qualify

Hard Infrastructure• Broad-band telecom links to world’s I.T markets

(USA, EU,Japan, Australia, Brazil)• Quality electrical power• Modern intelligent buildings; centrally a/conditioned, UPS; preferably in a cluster

(IT Park like Cyberabad in Hyderabad)• Served by International Airlines• Copious water supply• Broad, unclogged roadways to City Center

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Soft Infrastructure (1/2)

Culture is more important than infrastructure -Nicholas Negroponte

Digital & Internet Guru; MIIT Media Lab

• Engineering colleges, Polytechnics in profusion• University & Research Institutes• Good and Modern Housing Estates; Hostels for working men/women• Star-Hotels for global Business Executives• International Standard Schools ( LKG to High Secondary)• Hospitals with all specialties • Entertainment & tourism facilities• Banks ( ATMs, Internet Banking….) • Taxi Services/ Group Transport

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Soft Infrastructure (2/2)

• Financial Services (Investment, Stocks & Shares)• Chartered Accountants ( GAP qualified)• Legal Services• Marriage Bureaux / Counselling• Shopping Malls with all sorts of goods from all

over the world• Real estate Services ( Investment, Sale/resale…)

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Vijayawada STP

• Operational since Y2001 in the ITI premises with a VSAT & 64 KBPS

• Has now 4MBPS on fiber optic cable can go to 8 MBPS at 2 Hr notice

• Government ear-marked 50 acres near airport• RFP for equity to develop land and building (Kakinada; moved forward; Collectorate bldg.

12,000 ft2; 2 companies from Chennai wish to move)

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Most Importantly(1/2)

• A government which is “evangelist” about education, talent, entrepreneurship; out-reaching; facilitative; friendly seductive

• A local body ( Municipal Corporation) which is caring, responsive and not greedy; providing civic services promptly

• Friendly, service-oriented utilities : telephone, electricity,water-supply,cooking gas, local transport

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Most Importantly (2/2)

• Absence of Inspector-raj– Health inspector, factory inspector, Excise &

Sales-tax and income tax inspectors, property tax inspector

– Labour ( women working at night) Inspector; Welfare Inspector

– Revenue Inspector

(Agri-land for “industrial” use)

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Dhanyawad:Thank You