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Every city has its USPs, and Hyderabad is no exception. In the heydays of the IT boom Bangalore was the most sought after destination for IT in India. While pockets like Gurgaon also attracted IT/ITeS investments in a big way, the countrys other southern counterparts absorbed investments in the realm of services and outsourced product development initiatives, in addition to some big-ticket BPO investments. Dataquest has been tracking the Hyderabad IT landscape since Chandrababu Naidu sowed the seeds of the IT boom that now has fully blossomed. Today most companies that operate out of Hyderabad consider the destination as an emerged location, no longer evolving. While after the exit of Chandrababu Naidu in the last elections created a flutter about the continuity of IT investments in the state, that has become a thing of the past as IT activity seems to be happening at a normal pace minus the hype of the previous regime.

Inherent Strengths
The IT industry leaders in Hyderabad feel that as one of the fastest growing cities in India, Hyderabad is certainly a location to watch out for. Much of the industry is concentrated in areas like Madhapur and Gachibowli in Hyderabad where global giants like Microsoft and host of others have their operations. Says Makrand Teje, president and CEO, AppLabs, "Hyderabad is a unique city where tradition and technology co-exist in perfect harmony. Offering great employment opportunities with the global conglomerates, the city attracts the best talent and is inhabited today by a growing workforce from across the world." Hyderabad is indeed a competitive IT location. The infrastructure has improved significantly over the last few years, and there are a number of good educational institutions that impart quality training. There is also increased availability of skilled professionals now. If we look at FY 08, the number of IT companies that started operations in Hyderabad was around 176. These are mostly small to mid-sized companies doing a range of services to product development work. "For the IT industry to grow, one major issue is that the place should be attractive for living and working. The government invested in roads, in buildings, in creating parks, in improving the quality of local amenities, and a hygienic environment. Utility services such as power, water and municipal services were streamlined by either corporatizing them or through Public Private Partnerships (PPP), this has acted as the key growth drivers for IT here," says Arjun Rao, CEO of Value Labs.

According to industry experts, Andhra Pradesh accounts for as much as 23% of the software professionals of Indian origin in the US. Over 6% of IT professionals in the Silicon Valley are from this state. Numerous first-generation entrepreneurs emerged from this base and created strong local linkages providing a fillip to the IT revolution in AP. This was further strengthened due to the availability of a large number of engineering graduates from the states numerous technical institutions.

Hyderabad is a unique city where tradition and technology co-exist in perfect harmony Makrand Teje, president and CEO, AppLabs	We started our operations in Hyderabad four years back and with the passage of time we have grown to about 1,400 plus employees Paresh Shah, managing director, Convergys Information Management, India	I dont see any kind of slowdown as yet and our expansion plans are right on track Santanu Paul, SVP, head of global delivery operations, Virtusa	"We are one of the early entrants in Hyderabad, since 1996" Ramakrishna Karnam, vice president, business planning and global HR, Intelligroup

Says Arjun Rao, "Besides, the IT boom has had significant impact on real estate development in Andhra Pradesh. The state offers tremendous development potential with Hyderabad at the epicenter of IT growth, followed by emerging cities such as Visakhapatnam, Vijayawada and Tirupati. Moreover, Andhra Pradesh has the highest number of SEZs approved by the central government for the IT sector."

Sprawling, glass fronted buildings now dot the Hyderabad IT landscape

Industry Landscape
If we look at Hyderabad today, it has developed an ecosystem for IT companies. Today companies like Microsoft do critical jobs out of Hyderabad. For instance, the Microsoft India Development Center (MSIDC) plays a big role in Microsofts product development. Some of the key modules of Windows Vista were developed in India. The MSIDC has also done cutting-edge work in the development of RFID solutions. Moreover, Microsoft IT is also based out of Hyderabad which uses all the Microsofts solutions, deploys that internally and creates successful proof-points for larger enterprise adoption.

So what makes Hyderabad tick? Says G Jayaraman, global head, corporate governance and company secretary, Satyam Computer Services, "Surrounded by good engineering colleges and management schools, Hyderabads biggest advantage I think is the availability of skilled manpower suiting the various needs of the business. Also I feel the quality and the quantity of the physical infrastructure in Hyderabad is much superior to other happening IT cities in India."

While the likes of Satyam are home grown big success stories, other companies that have leveraged the destinations strengths are many. Take the case of Convergys which started small and ramped up aggressively out of Hyderabad. Says Paresh Shah, managing director, Convergys Information Management India, "We started our operations in Hyderabad four years back and with the passage of time we have grown to about 1,400 plus employees. The government has made concerted efforts to improve the skill base, and we have found the talent suitable for diverse areas of our operations."

Hyderabad is Indias major IT hub

How would you characterize the evolution of Hyderabad into a leading IT destination in India? Post liberalization, proactive initiatives by the states successive governments, presence of a large number of higher educational institutions, and a large diaspora from Andhra Pradesh in the US have transformed Hyderabad to become Indias major IT hub. From the time of Chandrababu Naidus tenure as the Chief Minister, the local government has been favorably inclined to the IT sector. Though a late entrant into the IT space compared to Bangalore, Chennai, Mumbai, etc, the city was put prominently on the international map. Arjun Rao, CEO, Value Labs How friendly are the investor policies? In addition to providing incentives to this industry to set-up shop, the government created an exclusive IT cluster named HITEC City. Further, it initiated a single window clearance system for setting up IT firms facilitating hassle-free environment for investors. The Software Technology Parks of India also provided an impetus in channeling investments into the city. Land was made easily available for the industry and attractive rebates were offered depending on the number of jobs that were created. What according to you are some of the key advantages IT companies derive by operating out of Hyderabad? Unlike in other southern cities, outsiders in Hyderabad do not face any language barriers as people here are mostly multi-lingual or at least bi-lingual and are conversant in Hindi. The city has good civic amenities. Electricity and water supply has never been a problem in Hyderabad. The cost of living is lower as compared to other cities. Wide and extensive network of roads and a reasonably good public transport system ensure that home to workplace access is good. With relatively lower rental and commercial values when compared to major cities, Hyderabad is still affordable in terms of real estate costs and living.

The Convergys Information Management which is based in Hyderabad executes technology work relating to application testing, business system analysis, client support, product deployment and support among others. The company provides its customer management services to clients like AT&T, Comcast, The DirecTV Group, General Motors Corporation and Sprint Nextel. Its largest information management clients during 2007 were AT&T, ALLTEL, Sprint Nextel, Time Warner and Virgin Media. The HR management clients during 2007 were Boston Scientific, and EI du Pont de Nemours. Clearly Convergys is one of the biggest success stories out of Hyderabad and it has leveraged the talent pool to its advantage. Meanwhile, companies like Virtusa have also tasted big successes out of Hyderabad. Says Santanu Paul, SVP, head of global delivery operations, Virtusa, "Hyderabad is growing not only in terms of IT, but in the areas of bio technology as well. I dont see any kind of slowdown as yet and our expansion plans are right on track."

The Road Ahead
If we compare the IT scene in Hyderabad in the past decade to what it is now, it has clearly evolved from the predominantly Hi-tech city infrastructure, which was a pivot those days. Facilities like Hi-Tech city set the ball rolling and today the hot pockets for IT in Hyderabad are areas like Madhapur and Gachibowli around which all future activities would be centered. But like any city with an eye on growth it has to keep a check on infrastructure. Hyderabad has taken some concrete steps, though there is much room for improvement in this space. The new international airport terminal that has come up in Shamshabad near Hyderabad is indeed state-of-the art and connectivity to global locations is bound to get bigger. The city is also building lots of flyovers to de-congest the traffic. But these infrastructure projects have to move at a much faster pace, that will further boost the investment climate. Yet, again, these are not problems exclusive to Hyderabad, these are more of a national problem. With other Southern locations almost choked, Hyderabad is better positioned to take on new facilities and investments in the IT space.

Shrikanth G
shrikanthg@cybermedia.co.in

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