Gujarat’s 1st IT SEZ hires 800 engineers

L&T’s Rs500 cr Knowledge City began operations in January 2010

Gujarat’s first IT/ITeS special economic zone (SEZ) is now humming with activity, what with hundreds of engineers and others working in it. No, it is neither in Ahmedabad nor in Gandhinagar. Instead, engineering and construction major Larsen & Toubro’s ITeS SEZ, known as ‘L&T Knowledge City’ is located near Waghodia, in Vadodara.

It has a strength of about 800 engineers. With the beginning of its operations, L&T Knowledge City has become Gujarat’s first IT/ITeS SEZ among 17 notified IT/ITeS SEZs in the state.
The L&T Knowledge City is spread over 112 acres while its SEZ is spread in 10 hectares. The SEZ got approval from the Board of Approval (BoA) in November 2008. But, it could start its operations in mid-January this year after getting all necessary approvals from the Union government. The first phase of the knowledge city has been completed at an expenditure of Rs500 crore. It will meet the high-end design and engineering needs of the hydrocarbon and power sectors. “At present, we are in a transit mode – moving from STPI zone to SEZ. We started with 130 people and later around 700 engineers were recruited. Currently, we have 800 engineers in the Knowledge City,” said a source.

Apart from Vadodara, the company has six other facilities in the country. “We have two facilities each in Bangalore and Chennai and one each in Mysore, Mumbai and Vadodara,” he said.
He did not put a number to exports from Vadodara. “But, with seven facilities we have set a target of exports of $125 million in 2010-11,” he added.

GESIA president Nirav Shah said, “This SEZ has been developed for the company’s own use. But, yes, it has become the state’s first IT SEZ to start operations.”

The condition of other IT/ITeS SEZs is not exciting, says the director of STPI, Gandhinagar, Ajay Sharma. “L&T’s SEZ in Vadodara has been developed by the company, and not by any developer; hence, it could start its operations early compared to other SEZs in the state,” he said

Gujarat well-positioned for IT Boom

In the next two years, the city is expected to create thousands of jobs in the service and manufacturing sector that could trigger a boom in demand for residential properties, mainly in and around a radius of 15-km of the city towards Gandhinagar in the north and Nano town Sanand in the west.

The last five months have seen a spurt of construction activity in information technology (IT), IT Enabled Services (ITES) and knowledge centres in this stretch.

These include Gujarat International Financial Tec (GIFT) city and the Rs 1,200-crore Mindspace IT SEZ near Raisan village to be operational in July this year.

Western region head of K Raheja Corp, Pankaj Kotak, says, “The first phase of Mindspace IT SEZ would create jobs for 50,000 in the coming years. Residential demand is increasing for those working in the service sector”. The city is expected to create at least 70,000 direct and indirect jobs by 2012, say speculators.

Gloom a boom for Guj IT exports

source:TNN

Information technology in Gujarat was always seen as a marginalised industry, thanks to the absence of large companies. But when major IT hubs of the country were reeling under a slowdown in the West in 2009, Gujarat’s disadvantage turned into an edge. IT exports from the state have grown by an impressive 72% year-on-year in 2008-09.
Data available with Software Technology Park of India (STPI), a nodal agency set up by the Central government to promote software exports, indicates that while exports from Gujarat have consistently grown over the past three years by over 20 per cent, during recession-hit 2008-09, it skyrocketed from Rs 740 crore in 2007-2008 to Rs 1,270 crore in 2008-9, a jump of over 70 per cent.
“The meltdown helped Gujaratbased small players as many US companies chose to outsource work to reduce costs. These companies preferred smaller companies over biggies due to competitive rates offered by them. Most IT firms in Gujarat are SMEs,” said Ravi Saxena, principal secretary, science & technology. Exports have already crossed Rs 1,000 crore in the first three quarters of the current fiscal, says Ajay Sharma, director, STPI (Gujarat).
Large companies like TCS expanded their footprint in the state, which further augmented outsourcing business, said Nirav Shah, president of Gujarat Electronics & Software Industry Association.
And, it were not just firms in the space of Business Process Outsourcing, Knowledge Process Outsourcing and call centres that gained. “Gujarat companies are building good reputation in the field of Engineering Design Software (EDS),” said Chirag Mehta, managing director of a software company. A chunk of EDS business came from Australia, USA and UK companies.
Software export from Gujarat was mere Rs. 4.75 crore in 1996 and until 2000 exports remained below Rs 10 crore. “Software exports crossed Rs 450 crore in 2004-05 due to improved infrastructure, ” said Sharma. Small US companies offshore more
Beneficiaries Are Mid-Size IT Vendors Sujit John | TNN
Bangalore: Despite Barack Obama’s efforts to discourage offshoring by US companies, there is some evidence to suggest that now even smaller companies in the country are increasingly looking at outsourcing to regions like India to cut costs. And given that smaller companies would prefer to deal with smaller vendors to get the attention they seek, the beneficiaries are expected to be mid-size IT companies in India.
Aditi Technologies, which focuses on providing software services to companies with revenues of between $50 million and $2 billion, has seen a 300% increase in its sales pipeline in the past two months, compared to the four months prior to that. The company said it had closed “multiple high potential deals” in these months.
Sonata Software recently won an order from a $50 million, 400-people company in Muncie in Indiana, US, the first time that this 25-year-old company has offshored work. B Ramaswamy, MD of Sonata, told TOI in November that he expected many more deals like this.
Sunil Gupta, VP in ITC Infotech, a company that has a greater focus on Europe, said more and more mid-size companies in that continent too are becoming first time outsourcers. “As of now, we have seen evidence in terms of enquiries. The budgets are still in the approval stage. We’ll get a better picture in the second quarter of this calendar year,” Gupta said. Divyabh Mishra, director-marketing in Aditi, too added a caveat: “I’m not sure if the better pipeline now is a reflection of a new trend, or simply the end of the recession.”
But some independent analysts believe the trend of smaller companies outsourcing will gain momentum this year. Investment advisory and research firm Tholons said the primary reasons for this were cost optimization and better synergy between core competence and market requirements. “These businesses will find that not offshoring may well translate into competitive threat. If one firm offshores, which helps to increase its margin from say 8% to 20%, then it immediately gains a huge advantage over others in the business,” says Avinash Vashistha, CEO of Tholons.
Mid-size IT vendors in India are expected to be the biggest beneficiaries of such a trend. “To use a clinched term, they would not like to be a small fish in a big pond,” said Gupta. The ability of a midsize vendor to give individual attention and its willingness to cede more control to the client is seen to give more comfort to the small outsourcer.
Vashistha predicts that 2010 will see service providers gearing up to enhance their capabilities to assist SMEs through the entire lifecycle of outsourcing, “as these businesses are still largely immature in offshoring”.

US cos tell Modi to lift prohibition

source: TNNGandhinagar:

A high-level delegation of American multinationals has asked Chief Minister Narendra Modi to lift prohibition in the interest of business development in Gujarat.
A presentation by top consultancy firm KPMG before Modi, made on behalf of the American Chamber of Commerce in India (AMCHAM) on Wednesday, mentioned this is one of the “key concerns” for improving American investment prospects.

KPMG has also served as a key consultant of the Gujarat government for Vibrant Gujarat investors’ summits every alternative year since 2003.
During the interaction with Modi, at least two members of the delegation also asked the CM to move towards lifting prohibition. They believed it would improve American business prospects in Gujarat and generate high revenues for the state government.

MNC representatives at the meeting were led by Tejpreet Singh Chopra, president and CEO, General Electrics (GE) India, who is also the AMCHAM chairman. Representatives from Boeing International, Quaker Chemical, Deloitte Touche Tohmatsu India, Marriott Hotel, Brown Forman Worldwide, Crown Worldwide Movers, Cognizant Technology Solutions, DuPont, Exxon Mobil, Monsanto, PricewaterhouseCoop ers, Coca-Cola and Intel.

GE showed keen interest in setting up a nuclear power plant in Gujarat. The Coca-Cola representative informed Modi about the company’s decision to double the capacity of its Goblaj plant with an additional investment of Rs 100 crore.

Monsanto, a key factor in the sharp rise in Bt Cotton output in Gujarat, as also DuPont, showed interest in value addition in farm produce. “They wanted to enter into developing biotechnology devices, drought proofing and weed control,” a senior official said.

Modi, on his part, invited MNCs to invest in environmentally safe technologies, health and education in Gujarat. Though he has been denied a US visa, he wanted American presence in Gujarat to further go up.

Amidst protests from some quarters, the Gujarat government partially relaxed the prohibition policy for economic zones (SEZs), national and international conventions and business and academic meets in 2006. Anybody living in an SEZ is entitled to get a `liquor card’ for a duration of three years on payment of Rs 500. There is a provision of granting a `group permit’ for major events.