The emerging IT landscape of Hyderabad

Hyderabad has several congenial factors to further fuel growth in IT sector. It has earned global reputation as a cosmopolitan city known for its assimilative cultural ethos. Firm foundation, futuristic policy, strategic advantages associated with the city etc., would significantly contribute to the enhancement and enrichment of the IT landscape of Hyderabad

The information and communication technology (ICT) has transformed the image of Hyderabad from a manufacturing and research hub to that of a global services destination. The city could attract many Indian and foreign IT majors thus integrating itself firmly with Silicon Valley . The National Association of Software and Services Companies (NASSCOM) estimates that for every one direct employment, this sector provides indirect employment to four people.

The consumption patterns of middle class youth employed in this sector opens up new avenues of economic opportunities in the city. The brand image this sector brings to the city outweighs the low level of employment elasticity in this knowledge economy, when compared to the bricks and mortar economy. However, it is wrong to assume that IT and IT-Enabled Sectors (ITES) sectors provide employment to elite only. Though the urban and English educated have an edge over others, many lower middle calss families coming from small towns of Telangana did find their lives significantly impacted by the employment in this sector.

As the Chief Minister, K.Chandrashekar Rao, said while unveiling the new ICT policy, IT has the potential to usher in rapid progress. Hyderabad is already a magnet which attracts the best in the world. The new ICT policy intends to embellish it even further to make it stand out as the most preferred destination for the IT companies.

The IT sector did have a significant impact on the Indian economy in the last two decades. There has been a phenomenal growth in the IT and the ITES sectors. Revenues earned through them contribute close to 9.5 per cent of India’s GDP of which over 65 per cent is earned through foreign exchange. The sector also provides employment to more than 35 lakh professionals directly and one crore people indirectly, making it one of the largest and most attractive private sector employers.

The IT-BPM sector has demonstrated flexibility and as per the Economic Survey 2015-16, it is expected to touch an estimated share of 9.5% of GDP and more than 45% in total services exports in 2015-16. The benefits of IT revolution have started percolating to the hinterland. The Minister for IT, Government of Telangana, K T Rama Rao, said during the launch of the new ICT policy that close to 50 per cent of jobs created in this sector have gone to young men and women from the smaller towns and mofussil areas.

Hyderabad has several congenial factors to further fuel growth in IT sector. It has earned global reputation as a cosmopolitan city known for its assimilative cultural ethos. When the IT sector was opening up in the country in mid-90s , Hyderabad became a natural choice for the IT majors. It has become a critical national and international IT hub. The presence of leading national research and academic instituitons has provided the right eco system for the growth of this knowledge-intensive sector.

Despite challenges in empolyability of graduates churned out from certain colleges, which resemble as what the Chief Minister himself described as poultry farms, the city offers the industry with a vast pool of skilled man power vital for the growth of any sector. Hyderabad has global connectivity. The presence of world’s major IT comapnies like Microsoft, Google, Facebook, IBM etc., provide the city a firm launch pad for further momentum in this highly competitive sector.

A large presence of Telugu disapora who have an emotional connect with the sprawling city provide the state with avenues for transmission of knowledge through expatriate nationals. According to the Socio Economic Outlook 2016, Government of Telangana, “ICT industry in Telangana State consists of Business Processing Organisations and Knowledge Processing Organisations, providing professional services across the globe. State’s ICT service is mainly oriented towards foreign markets and contributes largely to India’s IT exports.”

Over a period of time, Hyderabad has become a premier global destination for IT and ITES industry of India, next only to Bengaluru. The IT industry in the State has grown by leaps and bounds in recent years. There are 1,300 IT units employing as many as 3.7 lakh professionals in the State, with an annual export turnover of Rs 68,258 crore in 2014-15.

However, in the wake of global economic slowdown, resulting in weak global demand for software exports, companies have adopted various methods such as diversification of market base towards emerging and developing countries, product diversification and cost reduction etc, explains the Socio Economic Outlook ,2016.

Hyderabad accounts for nearly 11 per cent of national IT exports. The sector registered an annual growth rate of 16 per cent in 2014-15 . This is 3 per cent higher than national average growth. The new ICT policy has set ambitious targets. The policy statement aims at making Hyderabad the national leader in terms of IT exports and to leverage on the strong infrastructure that exists to attract more investments.

The objectives of the policy include: To double the value of current Rs 68,232 crore IT exports in Telangana in five years; to double the current employment of four lakhs in five years; and to establish three tier-2 cities as IT hubs in five years. While Hyderabad will remain the centre of product development and R&D activities, companies, particularly ITES companies, will also be encouraged to locate themselves in tier-2 cities like Warangal, Karimnagar, Nizamabad etc., states the new ICT policy.

Hyderabad already has the premier electronics companies in the public sector. The Electronics Corporation of India Limited (ECIL), Bharat Electronics Limited (BEL) besides defence electronics units provided the much needed industrial base in the city even before the emergence of IT infrastructure. In fact, a large number of semi-skilled persons can get employment in this sector rather than in IT and ITES.

The sub policy on electronics plans to make Hyderabad a global hub for electronics. Two electronics manufacturing clusters will be set up in the suburbs of Hyderabad. These will be dedicated clusters for electronics manufacturing. India home to a new breed of young startups has clearly evolved to become the third largest base of technology startups in the world. Within the last one year, the number of startups grew by 40%, creating around 80,000 jobs in 2015. This emerging sector is set to get a fillip with the Startup India programme, says the Economic Survey, Government of India, 2015-16.

The new ICT policy states that the Government of Telangana aims to build a booming startup eco system that will unleash the entrepreneurial spirits amongst the youth and in turn aid in job and wealth creation. It aims to bring the entire startup community in the state under one umbrella, T-Hub, located in Hyderabad.

The global gaming and animation market is expected to grow to $240 billion in the next three years. A significant portion of this work is outsourced to India. Hyderabad is already home to a number of gaming and animation companies. Many of these companies have made a mark in national and global market. The new policy aims to give a further push to it. The gaming and animation sector will further enhance the global brand image for Hyderabad, besides yielding revenue.

Firm foundation, futuristic policy, strategic advantages associated with the city etc., would significantly contribute to the enhancement and enrichment of the IT landscape of Hyderabad. Government, industry, academia etc. should be partners in this Brand Hyderabad mega venture.