Compared with Bangalore's software exports of Rs 12,350 crore (Rs 123.5 billion) last year, Hyderabad's Rs 3,668 crore (Rs 36.68 billion) look minuscule. But a measure of just how hard, and fast, the state is trying to catch up is the number of units registered in the software technology parks in both cities.
While Bangalore's Software Technology Park Initiative has 1,154 units, Hyderabad's has 1,165. Granted, a third of the Hyderabad units are yet to really get going and the scale of operations of firms like Microsoft and Oracle in Hyderabad is way behind their Bangalore operations, but at 25 per cent, Bangalore's export growth was a tad behind Hyderabad's 26 in the last financial year. Not bad for a state not even considered in the running a few years ago.
Andhra Pradesh, its babus tell you, ironically, was one of the first states to actually formulate an information technology policy, way back in 1999, as well as an infotech enabled services policy in 2002.
The move to attract IT firms included allotment of land with a rebate of Rs 20,000 per job created, a 25 per cent rebate in power tariff, reimbursement of a fifth of costs for firms while seeking an SEI CMM Level 2 and above certification (maximum subsidy Rs 400,000), 10 per cent additional weight for firms registered in Andhra Pradesh during the technical evaluation of e-governance projects, and so on.
While the state has pursued IT with a single-minded passion, Chief Minister N Chandrababu Naidu's role is perhaps the most important reason behind Andhra's success, and this is best brought out by the story top industrialists tell of how he scored one of his biggest coups -- getting the Indian School of Business to locate in Hyderabad.
The team of industrialists that had to decide where the school would be located first called on Bal Thackeray. He asked what kind of a quota would be there for Maharashtrians. That disqualified Mumbai. In Bangalore, Chief Minister J H Patel made the industrialists wait for 45 minutes and appeared fairly indifferent.
In Tamil Nadu, the chief secretary had arranged for the industrialists to be able to individually garland Chief Minister M Karunanidhi. In Hyderabad, Naidu made a power point presentation to the industrialists and during lunch himself handed out plates to them!
The state government undertook marketing Hyderabad aggressively after it took up the L&T Hitec city project in 1998-99. It focused on four key elements -- developing the right infrastructure, human resources, e-governance and providing incentives to industry.
Cheaper real estate prices in Hyderabad compared to other cities has been a major feature in attracting IT companies -- prices are a third cheaper than Bangalore. The state has so far attracted a cumulative investment of about Rs 2,800 crore (Rs 28 billion) from different IT companies of which Rs 542 crore (Rs 5.42 billion) has come in the last fiscal.
This year the government expects new investments to cross Rs 700 crore (Rs 7 billion) with many new projects, including TCS' Rs 150 crore (Rs 1.5 billion) Deccan Park and L&T Infocity's Rs 120 crore (Rs 1.2 billion) Cyber Pearl, getting commercialised. But all this has to be put in perspective.
Bangalore remains by far the number one IT centre in the country and Hyderabad takes up the fourth place. While STPI Hyderabad's exports were Rs 3,668 crore (Rs 36.68 billion) last fiscal, and Bangalore's Rs 12,350 crore, Noida came second with Rs 7,450 crore (Rs 74.5 billion) and Chennai third with Rs 6,315 crore (Rs 63.15 billion).
Bangalore scores on many issues but a key one is scale of operations. About the same number of units are registered at STPI Hyderabad (1165) and STPI Karnataka (1154).
But a third of them are new units in Andhra, which are yet to properly get going -- the state also delisted 350 companies recently as they remained non-functional. Large global players like Microsoft, GE, HSBC and Oracle have all set up development or contact centres in Hyderabad.
But their scale of operation or ramp-up, as in the case of Microsoft and Oracle, remains way behind that of their Bangalore operations. In the south, Chennai has a long history of IT work. It is where TCS set up their first major offshore development centre with an IT link.
In more recent times Cognizant has emerged as an upcoming highflier, but take away these two and you don't have much of IT left in Chennai. Just as if you take away Satyam, you don't have much by way of Indian software vendors left operating out of Hyderabad.
The Hyderabad development centre of Cognizant is a recent addition through the acquisition of the American Express account from Silverline Technologies and about 200 of their professionals.
Cognizant is keen on expanding its Hyderabad development centre for several reasons -- the quality of talent available in engineering colleges and in the lateral marketplace, the availability of infrastructure, especially ready-to-use, high quality office space, and the work ethic of the people.
Bangalore, on the other hand, scores today because it has become a prime IT cluster and an unequalled magnet for IT skills through its cosmopolitan culture.
