'Vizag well positioned to boost sector in residual AP'

Total IT and ITeS revenues from undivided Andhra Pradesh were at Rs 64,354 cr in 2012-13 as compared to Rs 53,246 cr in the previous financial year. Figures for 2013-14 are yet to be published

While this city, India's second-largest information technology (IT) hub, will continue to grow after the bifurcation of Andhra Pradesh, Visakhapatnam (Vizag) is well positioned to boost growth in the sector in residual Andhra Pradesh, say stakeholders in the sector.

If the government of residual Andhra Pradesh were to develop new growth engines, the best way to go about this would be to create an ecosystem that fostered innovation and new intellectual property start-ups, said Ramesh Loganathan, vice-president and managing director of Progress Software India and president of the IT and ITeS Industry Association of Andhra Pradesh.

"This can be accelerated with government support. It can work closely with leading universities and engage product majors in some years. If some of these tech start-ups were to be globally successful, the next Googles and Microsofts will come out of our own backyard," he added.

He says this is viable for both states (Telangana and residual Andhra), adding both governments have to introduce well-branded initiatives, while focusing on funding for infrastructure and risk-capital in this regard.

Until the mid-90s, Hyderabad didn't figure prominently on India's IT map. Now, it is home to one of the largest academic incubators in the country (International Institute of Information Technology-Hyderabad, with 50 start-ups).

For 2012-13, IT revenue from undivided Andhra Pradesh was about Rs 65,000 crore; for 2013-14, it is expected to be about 15 per cent higher. Revenue from special economic zones stood at about Rs 15,000 crore for 2012-13.

In terms of Software Technology Parks of India, the undivided state was third, with revenue of Rs 34,492 crore in 2012-13, after Karnataka and Maharashtra. On the list of cities, Hyderabad was second (Mumbai and Pune jointly held the first position, with Rs 25,000 crore each).

"The Outer Ring Road and the planned peripheral ring road will render many districts around Hyderabad effective satellite extensions. This will also enable a large interconnected swathe to be an extended IT hub," Loganathan said.

According to BVR Mohan Reddy, executive chairman of Hyderabad-based Cyient Ltd (formerly Infotech Enterprises Ltd), residual Andhra Pradesh has a very tiny IT sector, largely confined to Vizag, Kakinada, Vijayawada and Tirupathi. "The state will have several cities and towns that have reasonably good infrastructure. They (residual Andhra) have plenty of fresh talent in engineering and computer science. The key challenge is social infrastructure, largely to do with good schools for children of middle-level managers; world-class health care (Hyderabad has a good reputation for both) and social life after office hours," he said.

Reddy said the challenge for the new government would be to build a brand for cities such as Vizag, Kakinada, Vijayawada and Tirupathi. He added it also had to improve physical infrastructure, especially international air connectivity, and develop social infrastructure.

"A government-industry joint advisory group should be set up to evaluate and streamline existing processes and attract investment. The timing can't be any better - global economies are on a strong recovery path and, therefore, so is the Indian IT sector. As long as the governments can implement these, we will see benefits accruing to both states," he said.

On Telangana's IT sector, Reddy said it was largely represented in Hyderabad, adding its brand image had taken a hit. "We need a peaceful atmosphere with no uncertainties. We need an industry-friendly and supportive government. We need less government and more governance - transparent, consistent and decisive," he added.

At least three cities in each new state, with complete broadband connectivity and mobile technologies, as well as innovation, entrepreneurship, start-ups and online digital courses, would boost the IT sectors of both states, he said.

When asked whether IT and ITeS Industry Association of Andhra Pradesh would change its name or float a new association for Telangana, Loganathan said the new government had to provide guidance on this. "We will support any request. That said, the association members are primarily based in Hyderabad. We will continue to work towards supporting their collective needs, interfacing with the government and working towards growth enablers."