The Hindu : Business : Kerala IT scene changing rapidly

Online edition of India's National Newspaper
Friday, Dec 09, 2005

Business

Business

Kerala IT scene changing rapidly

Vipin V. Nair

Software exports from the State may double in the current year

KOCHI: From the status of a State that had to watch the software boom from sidelines while its neighbours marched on, Kerala is fast emerging as a key destination of information technology (IT) services. The State's two technology parks are full with companies, IT-related jobs are rising by the day and its cumulative software exports are set to double from the last year's level.

The enthusiasm now visible in Kerala's IT sector is unparalleled. Kerala's homegrown companies are growing rapidly, and some like IBS Software is now matured enough to raise capital through initial public offers in the near future. Along with services, their products are also getting international acceptance.

Surge in software exports

Not so long ago, Kerala was nowhere in India's IT map as States such as Karnataka, Andhra Pradesh and Tamil Nadu hogged the limelight. But now, it seems Kerala has finally arrived, albeit silently.

One indication of that is the surging software exports. It is expected that software exports from the State in the current financial year will double to Rs.600 crores on a year-on-year basis. Even this amount is just one fraction of other south Indian States' software exports income (last year Karnataka exported software worth Rs. 27,600 crores), but the 100 per cent growth that Kerala is poised to achieve in 2005-06 signals that software is indeed happening.

A Technopark official pointed out that the entry of companies such as Infosys is a major factor that is contributing to this growth. Infosys, for instance, has around 1,000 people in its Technopark unit. The billing rates that this unit charges on its clients and accounts in its books would be significantly higher than that of other smaller companies in the state. For one, when it comes to billing clients, Infosys commands a premium for its brand equity.

Another reason is that many Kerala-based companies with their headquarters in the U.S. show their billing on a transfer-pricing basis, which tends to be much lower than the real rates.

Along with Infosys, Wipro and Tata Consultancy Services, two other software biggies, have also set up units and are fast ramping them up. Not to be outdone, local companies such as U.S. Technologies, IBS and NeST are also adding more facilities and people.

Technopark and InfoPark, the two Government-owned IT parks in the State, are now chock-a-block, with many prospective companies having to wait for a piece of suitable real estate in the State to set up their facilities. Sensing an opportunity there, private sector companies are also coming up with IT parks in Kerala.

The Leela Group has already built a 1.37 lakh square facility at InfoPark, now occupied by Outsource Partners International, a business process outsourcing firm. It is now planning to invest Rs. 260 crores in creating more such facilities.

Manpower to double

The number of people working at companies in Technopark has crossed the 10,000 mark, taking only three years to double the 5,000-employee base it had once struggled to reach. InfoPark has over 2,500 people now.

Kerala has also come up as a favourite hunting ground for talent for the country's leading technology firms.

Many engineering colleges in the State now regularly contribute to India's burgeoning pool of IT professionals through campus recruitments.

With such an impressive performance behind it, now Kerala needs to ensure that it will not lose this momentum in the coming years.

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