Growth Engine: IT sector unplugged, Vizag needs more space, uninterrupted bandwidth

By SNV Sudhir

Visakhapatnam, Feb 22, 2014: Despite having the ‘ideal location’ tag, IT sector in Vizag, always remained a dud and never took off. While successive governments in the united Andhra Pradesh promoted only Hyderabad, the city of destiny has been ignored all these years.

Barring three IT Parks with very little space, government did nothing to promote Vizag, which has potential and land availability in abundance. Local IT entrepreneurs, who are disappointed lot, opine that IT sector in Vizag would never witness growth, unless the government of the successor state, chalk out an action plan and go aggressively in implementing it.  

They say promoting Vizag for IT sector will add revenue to the state’s exchequer and also generates employment for thousands of engineering graduates and students of other professional courses who pass out from local colleges. All these years they were either going to Hyderabad, Chennai or Banglore in search of jobs due to lack of opportunities in the region.

There are around 100 medium, small and big IT and ITES firms operating in Vizag employing around 17,000.  Most of the units functioning in Vizag, deal in end-to-end business integration, medical billing, financial information processing, ERP product, content management, networking, business, recruitment process outsourcing, and medical transcription.

The state IT & C department has launched works for an IT incubation centre last year with a built up area of 50,000 sft at Rushikonda and STPI in collaboration with Vuda has decided to take up construction of another incubation centre providing plug and play facilities with a built up area of 1.25 lakh sft. However the space which is being created would be able to create employment for only 2,500 persons in a shift, which is also meager when compared to the space available at IT Parks like Cyber towers 1, 2 and Raheja towers etc in Hyderabad.

While the IT turnover from entire Andhra Pradesh is Rs 64,354 crs with Rs 51,300 crs export and Rs 13,000 cr of domestic business, only Hyderabad’s contribution is 97 percent and the rest of the state is only 3 percent.

Of the total 13lakh employed in IT sector only 23,000 are from rest of Andhra Pradesh. Employment is less than 2percent in rest of Andhra Pradesh when compared to Hyderabad. 

While Vizag’s IT sector turnover is Rs 1,445 cr and employs around 17,000, Vijayawada’s turnover is a meager Rs 115 crores employing only 2900.  Kakinada  IT companies does Rs 61 crores and employs 1900.  Tirupati IT sector makes a turnover of Rs 7 cr.  

“Unless at least 25 lakh sft of space is created in another 2 years, IT sector will not grow in Vizag.  The two incubation centres that are planned with a pittance is just eyewash. They can’t provide many jobs. No purpose will be served. Government should first concentrate on creating space with ready made infrastructure-plug and play facilities either under PPP mode or government cerate it and lease it out. With 25lakh sft space we can only match 10 percent of the employment Hyderabad provides. The new government should bring in players like Ascendas of Singapore to create business space to promore Vizag,” said Rushikonda IT Park Association (RITPA), vice president, O Naresh Kumar.

He also added that government should try hard and bring in at least 2 big IT players to set up operations in the city and other major, medium and small IT firms would follow.    

What is required now

·        Minimum 25 lakh SFT space with readymade infrastructure- plug and play facilities.

·        Uninterrupted free bandwidth.

·        A finishing school to hone skills of local pass outs in PPP mode or government can set up. Most of the engineering pass outs from the local colleges are said to be poor in soft skills. Since most of the IT companies deal with foreign business and global clients a finishing school is necessary.

·        Urgent promotional policy in compliance with new union government SEZ policy which has not been implemented here

·        At present there are two IT parks in Madhurawada and one in Duvvada SEZ. The IT entrepreneurs are asking the authorities to de notify these IT Parks from being SEZ to encourage new investments.

·        No IT entrepreneur has come forward to take plots at the IT SEZ in planned at Ganbheeram which was developed by the APIIC, in an extent of 51.28 acres around 20kms away from the city. All the 28 plots are still vacant since 5 years.

·        Social infrastructure like good schools, colleges and hospitals.

·        Good places for recreation activities.