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Raja Simhan T.E.

Chennai has arrived on the IT circuit. But can the city's infrastructure keep pace with its growth in IT? It seems so, but it must know what it shouldn't do.

TILL a couple of months ago, Vivek Harinarain, Tamil Nadu's Information Technology Secretary, used to say, "Chennai is the only city in the country whose perception outside was lower than reality. The other cities rated high on perception but in reality ranked lower."

Harinarain's views, however, changed in December. "The perception of Chennai is fairly OK now. It is critical for us to sustain this momentum," he then said referring to the rapid growth of information technology (IT) in Chennai.

In the last few months, Chennai has become a hot destination for IT, IT-enabled services (ITeS) and business process outsourcing (BPO). Companies such as Accenture, Hewlett-Packard and 24/7 Customer have arrived in the city, and this list keeps growing every day.

Research firm Gartner Inc, in its recent report on IT Outsourcing to India — Analysis of Cities, said Chennai and Hyderabad would replace Bangalore and Mumbai as favoured Indian destinations for IT outsourcing by 2010. The study categorised and evaluated the cities into four tiers based on various factors, including infrastructure, skills availability, skills retention, access, cost of living, political support and quality of life.

Good for Chennai. But will the city, like Bangalore, bite off more than it can chew with regard to infrastructure?

Although not a problem yet, Chennai could go the Bangalore way if the city planners do not balance the IT growth with commensurate infrastructure development, sources in the IT industry said. This year, around 4 million sq ft of space is to be allotted in and around Chennai for IT, and another 5 million next year. According to a State Government source, about half-a-million sq ft will be ready for occupation shortly.

Vivek Harinarain believes the IT growth in Chennai will be really fast. A few months ago, he told eWorld that around one lakh IT jobs would be created in and around the city over the next three or four years.

According to R. Rajagopalan, Vice-President (Finance and Administration), Cognizant Technology Solutions, which employs around 7,000 people (totally over 14,000) in Chennai, the city has good infrastructure for radial growth, which is reflected in the rapid expansion of the IT corridor on Old Mahabalipuram Road (OMR), the Mahindra Industrial Park, and beyond Ambattur.

Having said that, Chennai can learn some lessons from Bangalore and ensure that its infrastructure scales up to meet the projected exponential business growth in IT and BPO.

The city planners need to calibrate how much infrastructure load Chennai can take, and beyond the threshold, development activity needs to be consciously re-directed to other urbanised cities such as Coimbatore, Hosur, Tiruchi and Salem, Rajagopalan said.

New companies setting up base in Tamil Nadu can be encouraged to look at these alternative cities by providing incentives. City planners could also develop a `New Chennai' to decongest `Old Chennai' — a programme that has been successful in many locations across the globe. These initiatives could help promote balanced growth across Tamil Nadu, he said.

An official at Satyam Computer recently said IT growth in Chennai has been growing rapidly, but quietly.

Following the Gartner report, there will be a scramble for IT space, according to Rajagopalan. "The State Government needs to act quickly and put in place the necessary infrastructure to take care of the city's growth for the next few years," he said.

Sudeep Jain, Managing Director, Electronics Corporation of Tamil Nadu (Elcot), which is the promotional agency designated by the Government to promote IT industries in the State, disagrees that Chennai would go the Bangalore way, with a lot of infrastructure-related problems. "We learnt lessons from Bangalore and have taken care that Chennai does not go the same way," he said.

"We are very clear in promoting IT in Chennai, and the growth will happen only in suburbs, including Old Mahabalipuram Road, Ambattur and the Mahindra Industrial Park. This growth will not affect the city's infrastructure," he added.

The law is also stringent, and one cannot construct a multi-storey building (MSB) everywhere. Permission for a MSB will be given only if the road width is good and there is enough parking space within the building, he said.

Further, some of the large IT parks such as Seruseri would include both office and housing to ease pressure on the city. The Knowledge Industry Township on the OMR is also planned in a similar way, he said.

According to Jain, "The number of business delegations that visited Chennai in the last three months was equal to the total number of visits in the last 18 months." Till a few months ago, foreign delegates on a feasibility study tour to outsource work from India would visit Bangalore, Hyderabad and Mumbai. However, today it has become mandatory for such delegates to include Chennai in their itinerary, he said.

Recently, Kiran Karnik, President, National Association for Software Companies (Nasscom), said Bangalore is overheated. The infrastructure there has not kept pace with the growth in the IT sector.

With better infrastructure and quality human talent, Chennai fares better than Bangalore in attracting new investments from BPO and software firms. The value proposition of Chennai is good, and the city is poised to become a major hub for BPO firms, Karnik added.But for that the city needs to take note of two areas.

More private realtors must come forward to build plug-and-play infrastructure, according to Cognizant's Rajagopalan. This is important to attract multinational firms, as they are reluctant to make any capital investment in the first few years of their operations and prefer to operate out of leased facilities.

In the last few months, this is happening, but a lot more is needed.

Chennai also needs to get active on the public relations front to ensure that its perception fast catches up with its enviable reality and intrinsic equity.

Picture by S. Siva Saravanan

raja@thehindu.co.in

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