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A file photo of IT hub in Kolkata.

Manish Basu

While the financial crisis and global economic meltdown areexpected to have a cascading effect on Indian information technology sector – the eastern and north-eastern regions – the rather late entrant in the country’s IT map – may have reasons to feel it is an opportunity to catch up with the others.

The crisis, some industry experts in the region feel, may also be a “blessing in disguise” as outsourced contracts may continue to flow to “cheaper” eastern Indian markets, as companies in the US and the UK would increase focus on cost-cutting measures. Others, however, feel the eastern region cannot remain immune to the turmoil as new business would shrink and hiring would be curtailed significantly next year.

Out of a national export of $50 billion from the Software Technology Parks of India (STPI), the eastern region currently exports a little over $1 billion, a share of a mere two per cent. While contribution of the region to the country’s total revenue from IT is limited, good quality human resource at reasonable prices has drawn the best of India’s IT companies to West Bengal.

While there are 180-190 STPI-registered IT and IT-enabled services (ITES) companies in the region, nearly 80 per cent of the $1 billion export of the region comes from the five big names in the State – Tata Consultancy Services, Cognizant Technology Solutions, IBM, Tech Mahindra and HSBC Electronic Data Processing, an industry insider told Business Line. While Wipro has achieved special economic zone (SEZ) status in the State, Satyam Computer Services is currently in dialogue with the State Government for more land to qualify as an SEZ. The State is also expected to provide land and other incentives to Infosys soon for opening its first campus here.

While availability and high cost of land are issues in Kolkata and surrounding regions, Orissa has capitalised on cheap and mostly uncultivated land in and around Bhubaneswar to attract most IT companies to the State. The IT sector in the North-East, however, is limited to some voice-based BPOs in Guwahati with good English speaking community and the presence of Manipal University providing technology courses to students.

One of the most important events inthe IT sector in the region this year was the formation of a regional council of the National Association of Software and Services Companies (Nasscom) in the eastern region, the first in the country. The council was formed in July to address issues unique to the region and facilitate the IT community by providing an interactive platform, said Mr Suparno Moitra, Regional Manager, Nasscom.

One such platform was provided at the Nasscom CEOs summit held in Kolkata recently. “The main intention of the summit was to cheer up the community from the overall gloom in the investment climate that was perceived of the region recently and rebuild investors’ confidence in the State,” Mr Moitra said. Mr Ramalinga Raju, Chairman of Satyam Computers, said at the summit, “Kolkata appears to be not only vibrant but also receptive to whatever opportunity the IT-BPO industry presents.” The IT industry mainly depends on good human resource, which is available in plenty in the State, he added. Mr V.V.R. Babu, Senior Vice-President, ITC Infotech, said alternative destinations such as Siliguri, Kalyani, Bantala and Durgapur would gain importance in the IT map of West Bengal in the days to come.

“The government has also been proactive and supportive in our venture here and the temporary setback (in investment climate) is not to be taken seriously,” Mr Raju said. On the issue of Obama-led US government affecting outsourcing business in the region, he said the regime is expected to be more competitive rather than protectionist.

Among the different services, the importance of analytics and knowledge process outsourcing (KPO) business would increase even during days of crisis, he pointed out. The industry will be net recruiters and attrition would decline, though the offer packages may be lower, he added.

Mr Som Mittal, Nasscom President, said chip and software designing would grow as all electronic appliances such as mobile phones would continue to require them. It is time for the IT industry to concentrate more on the domestic market which contributes only 20 per cent to the national business, he said adding increased Government spending in e-governance could also boost the sector.

Dr Debesh Das, West Bengal IT Minister, said the IT industry in the State was growing at 45 per cent against a national average of 29 per cent. The growth rate would however, further increase if the sector could get funding from venture capital firms.

The State has recently initiated a plug and play infrastructure arrangement in Taratala (350 seats) and Durgapur (150 seats) where small and medium-sized companies can start operation within 24 hours of application, while the State will facilitate in getting registration etc. Two IT parks would also be built in Rajarhat and Jagdispur on 600 acres and 332 acres soon, he added.

“West Bengal joined the IT bandwagon relatively late in 2000-2001. This, however, does not leave any room for complacency as we need to pick up at faster rate to catch up with Hyderabad, Chennai, Pune and Bangalore,” Mr Suparno Moitra said.

Nasscom’s eastern regional council will also work very closely with different educational institutes to prepare students with job-oriented training. The Nasscom Assessment of Competence (Tech) test to be launched in the East soon will help students identify inadequacies and bridge gaps, he added. The eastern region also needs to create a niche for itself by specialising in areas such as animation, export of engineering services, legal process outsourcing, chip designing, non-voice BPO and analytics, he said. In animation, nearly 60-70 per cent of workforce in the country is from West Bengal, he said adding activity in the State can also be expected to pick up with companies such as DQ Entertainment setting up office here.

Mr Bikram Dasgupta, Chairman and Chief Executive Officer, Globsyn, said eastern India lack mid-size companies, present largely in Hyderabad and Bangalore. “These companies help in human resource development by creating and breeding talent,” he said adding most big IT companies are now forced to hire experienced workforce from outside the State. The region also lacked software product development and was dependant mostly on processing services, he observed. He also said the hiring will be less as little workforce will be kept on reserve bench. The increments this year will be not more than 8-9 per cent on an average as against 15 per cent last year, said Mr Kalyan Kar, Managing Director of Acclaris Business Solutions. The global crisis may, however, bring opportunities to the eastern outsourcing market as the US companies are expected to adopt more cost-cutting measures, he said adding the crisis may also provide head-room for the east to catch up with other established regions.

More Stories on : Outsourcing | Other States

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