Telangana government looking to set up more IT hubs beyond Hyderabad

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Hyderabad: Since its inception, the Hitech City area in Hyderabad has been the go-to destination for a host of information technology (IT) companies, even drawing big names such as Facebook Inc and Google. But the central business district, which houses more than 1,000 companies, may no longer be the jewel in Hyderabad’s crown as the Telangana government is now trying to spread the sector to smaller districts and mandals like Khammam, Karimnagar and Warangal to decentralize and create more such destinations across the state.

As a result of the Telangana Rural Technology Centres 2016 policy, two big companies—Cyient Ltd and Eclat Health Solutions—have set up full-fledged operations in Warangal and Karimnagar districts. Last week, Telangana IT minister K. T. Rama Rao also laid the foundation stone for setting up an IT incubation centre in Khammam district, and allotment letters have been given to seven companies.

“(An amount of) Rs25 crore has been sanctioned by the state government to develop IT incubation centres in Khammam and Karimnagar districts. We wanted to decentralize the IT sector, as it was concentrated only in Hyderabad, unlike in other states like Karnataka or Maharashtra. After a point, there will be a resource and infrastructure crunch in Hyderabad,” said Dileep Konatham, director, digital media, department of communication technology, electronics and communications.

B. V. R. Mohan Reddy, founder and executive chairman of Cyient Ltd and former chairman of industry lobby Nasscom, said that spreading to rural centres has its own advantages and challenges as well. The positives, according to him, include marginally lower cost structures, availability of local talent at entry-level and creation of “rural jobs”.

Reddy said the availability or willingness of the middle and senior managements to move to tier-2 towns, which lack infrastructure like hospitals, schools, hotels and restaurants compared to the capital city, were a challenge. “The other being a customer’s acceptance on account of poor connectivity,” he said in an email response.

Other companies like Ventois Software (Dallas, US) and Kakatiya IT Solutions have also set up operations at the IT incubation tower in Warangal. But shifting operations to a tier-2 city or any other rural centre means that companies will face infrastructural and manpower hurdles, as both are easily available in a big city like Hyderabad.

“If someone agrees to go there (tier-2 cities), we provide them benefits. The philosophy behind the policy is to offset what you are missing. We give a bigger power rebate and lots of subsidies for Internet (connections), because unlike in Hyderabad, you have to spend a lot on connectivity in a rural area,” said Jayesh Ranjan, principal secretary, IT department, government of Telangana.

Ranjan also pointed out that if a company goes further beyond tier-2 cities, to a mandal headquarter, it will get additional benefits like reimbursement of property tax by the state government. “Another important responsibility is to provide manpower to these companies as well. So, the worry of training or running around is taken care of by the government,” he added.

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For that, the state government has established the Telangana Academy of Skill and Knowledge (TASK). So far, the 527 engineering and other graduation colleges have tied up with the Telangana government, and over 60,000 students have been trained through TASK’s initiatives.

Another incentive for IT companies going to tier-2 cities is government procurement. Ranjan said a company in Huzoorabad mandal, which had developed an app for corporates called the Visitor Management System, has now been asked to design something similar for the government secretariat as well. “We could have given it to TCS (Tata Consultancy Services),” Ranjan added.

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