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'Kerala will soon emerge as the top IT state'

Kerala IT2000, a conference held at the Technopark ('The world's greenest technopolis') in Trivandrum in December was a success in terms of participation, enthusiasm, and the content of the discussions. Aruna Sundararajan, IAS, IT Secretary of Kerala, was the principal organiser of the conference.

Along with her colleague Ishita Roy, IAS, Aruna Sundararajan was practically ubiquitous at the show, engaging in crowd control here and making speeches there.

The highly energetic IT Secretary, who is also a trained classical dancer, spoke with Rajeev Srinivasan about Kerala's future as an information technology destination.

What are Kerala's sustainable competitive advantages in IT? In tourism, a concerted effort to market the state has paid off. What is the IT equivalent?

If you look at India, at the national level, the key factor underlying our IT success is the extraordinary pool of scientific and technical talent that we have; both in terms of sheer numbers and high quality.

Within India, Kerala's competitive advantage is basically similar. As you may know, Kerala has one of the highest densities of science and technology personnel amongst states; also, thanks to its excellent educational attainments, it has one of the largest pools of educated, English-speaking manpower.

If you look at the tourism sector, Kerala has been very successful primarily because of the range and variety of tourism options that it offers. For example, it offers not only beaches and backwaters; but also adventure and leisure tourism, healthcare and heritage products, etc.

I believe that we have a similar advantage in terms of IT manpower. We have a talent pool that is highly creative and has diverse skill sets. If you look at the next wave of IT development, which I believe will be more in areas such as IT enabled services, Internet and multimedia content, etc. (rather than merely software) this would be a critical asset, where Kerala has a distinct advantage.

In tourism, a concerted promotional effort began as early 10 years ago when Kerala was launched as 'God's Own Country'. However, it is only recently that Kerala Tourism has attained such a pre-eminent status. I believe that, with the development of IT-enabled services, Internet and multimedia content, Kerala will similarly see a major spurt in growth in IT.

What about the state's natural advantages as a dense, 'urban' place, more urban than rural, with a strong fiber-optic backbone already in place? And the fact that there are many underemployed graduates, especially housewives? Doesn't this make Kerala a natural for IT-enabled services that can be provided from the home, a new sort of cottage industry? You mentioned that Cochin is one of two cities (the other being Bombay) where a major underwater cable has its landfall. What is the impact of this on IT in Kerala?

Yes, you're quite right. Kerala has the highest level of tele-density in the country. In fact, visitors and tourists are often surprised to find that STD/PCO booths are practically ubiquitous wherever you go in the state! Thanks to the DoT (Department of Telecom), we have optical-fiber connectivity in all the talukas in the state, which is unparalleled in the country.

The state government has also taken a number of proactive measures to improve the level of connectivity; and we have Reliance, Bharti, Asianet and BPL wiring up the state with broadband networks. Once these works are completed, I'm optimistic that Kerala will emerge as one of the most 'wired' states in the country.

The other significant advantage that we have is that Cochin is the landing point for two major undersea cables; namely SEA-ME-WE 3 and SAFE, carrying international Internet and telephone traffic. There are only three points in India where high-bandwidth submarine cables achieve landfall: Bombay and Cochin westward, and Madras eastward.

A lot of the data and voice traffic from southern India will be routed through Cochin.

These two cables will enormously improve the bandwidth availability in the state; which will benefit the development of a range of bandwidth intensive activities. The state government is, therefore, focusing on developing Cochin as a major IT hub in the South; and we are developing a state-of-the-art IT park there.

There is another major advantage: data-intensive operations such as large server farms prefer to locate themselves as close to the cable landfall as possible, so that they can utilise the very high data capacity without resorting to land lines. Thus, Cochin will be attractive for data centers as well.

At the other extreme, a major resource pool that we have not been able to sufficiently tap up to now is the large number of highly educated housewives, who have the requisite skill sets and willingness to work, but are unable to do so in a typical office environment for a variety of constraints.

This is a talent pool that is ideal for the IT industry. We already have a fair number of IT&ES (information technology and e-solutions) enterprises, which are farming out work to housewives in the state; and they are very happy with the results. Although the numbers are still fairly small, this is a sector that is growing rapidly and has tremendous employment potential.

You were able to announce an amazing amount of proposed private investment in communications at the end of the conference. How much of it has materialised? How much is actual?

We were able to garner an investment of Rs 22.40 billion in response to our 'Rights of Way' policy. Of this, about Rs 5-7 billion will be invested in the state over the next 6-8 months.

Three companies who have been granted approval to lay optical fiber cable, namely Bharti, Reliance and Asianet Communications, are expected to commence work within the next couple of weeks. The remaining investment is expected to flow into the state over the next 2-3 years.

Kerala's cities are way behind Bangalore, Hyderabad, Madras and Bombay/Pune as IT centers. Trivandrum's Technopark is a terrific facility, and is probably one of the earliest IT parks in the country. This early-mover advantage and the low cost per man hour have not attracted the same kind of IT majors as the parks in other cities. Why?

Interestingly, the Technopark was the first IT park to come up in the country. Perhaps, it was a little ahead of its time. Although in the initial years, growth was fairly modest, this has changed quite dramatically in the last year.

Today, there are over 50 software export companies functioning out of the campus; and the strongest endorsement of the park is that 14 of them have doubled their capacities in the last 8-12 months. In fact, the park is currently full; and we are now facing a temporary problem of lack of space for new units!

We are expanding the park; and two new facilities are expected to be up by the end of this month.

Companies from the US and Europe have found the park an attractive facility, particularly in terms of the high productivity of people here, its cost effectiveness -- the fully burdened cost is the lowest in the country -- and the ease of setting up business. You could check this up with companies here! So I am fairly optimistic that Technopark has a very bright future.

I presume that when you say IT, you are primarily referring to the IT industry; and not areas such as e-governance, e-education, etc, where we are significantly ahead of a number of states. The comparison that you have drawn is basically between growth of the IT industry in large metros such as Bangalore, Madras, Bombay, Hyderabad, and Kerala.

If one were to map the IT industry in the country today, one would see that IT development is almost exclusively an urban, if not metro, phenomenon. For example, all the cities you have cited represent India's largest metros. Incidentally, these metros also have significant industry clusters.

For obvious reasons, metros have huge advantages, both in terms of infrastructure and hinterland resources. A strict comparison between Kerala and other states would really have to be in terms of these states, minus the metros; both Trivandrum and Cochin have been able to attract significant IT activity; notwithstanding the fact that they are not large metros.

In fact, Trivandrum is somewhat of an exception; somewhat like Bhubaneswar, in that it is not even a traditional industrial base. The fact that Trivandrum has emerged as a significant software hub is, I think, an interesting phenomenon; and probably indicates the state's inherent strengths in IT.

I also think, now that the Technopark has achieved a certain critical mass, we will see increased activity in future.

What are the success stories in Kerala's IT sector?

A number of companies at Technopark have been growing at over 100 per cent over the last 2-3 years. For example NeST (Networking System for Technologies), which started as a small software outfit is today an SEI CMM Level-5 company with diverse holdings in hardware, telecom, software and e-education.

Similarly, SunTec is today a leading Telecom Solutions Provider for telecom companies across the globe.

Toonz Animations, which develops animation software is again one of the fastest growing companies here. An other remarkable story is that of Softsystems, which started as a very small home unit, but is today one of the leading plantation ERP companies.

Another company which I can think of is IBS, which today does a substantive part of the software development for the international air carrier Swiss Air.

IVL, which is a major supplier of enterprise resource planning applications, is another success story. If you ask Bill Denis, who is heading Toonz Animations (he was earlier with Walt Disney) he says that moving to Trivandrum was one of the best things that has happened to the company.

I understand that many of these are home-grown entrepreneurial ventures. Is this one of your competitive advantages? I read a recent critique that the famed 'Kerala model' has resulted in a welfare state full of people who look to the government for hand-outs; one in which there is no entrepreneurship. Which is the right picture?

A majority of the companies in Technopark were started by first-time entrepreneurs, and so in a sense most of them are start-up companies. I wouldn't say that Keralites are non-entrepreneurial. In fact, if you look at the pattern of migration to other parts of India, the Middle East and the US, etc, you would agree that the average Keralite is highly entrepreneurial.

However, it is true that industrial growth in Kerala has not kept pace with other parts of the country; but this, I think, has to do with a number of other things, including non availability of land, high degree of environmental awareness and strongly organized labour, rather than lack of entrepreneurship.

What has the government itself done to promote IT-awareness in the state?

Given the high levels of literacy, media penetration and tele-density, I would believe that Kerala is probably the best placed amongst states in the country to take advantage of the IT revolution; and some of our indicators reveal that people in Kerala are as IT-savvy as their counterparts anywhere.

For example, you would probably be surprised to know that as far as domestic IT spending is concerned, Cochin had recorded one of the highest rates of growth in the country last year!

Similarly, this is a state where the use of cellular phones by fishermen is not uncommon! Again, it is amazing to see the number of cyber cafes that have sprung up even in the smallest rural towns here.

The state government has initiated a number of projects for IT dissemination and e-governance.

For example, we are currently implementing a project to IT-enable rural libraries in the state, that is, people can access e-mail, browse their favourite newspapers, download relevant information and chat at these Rural Information Centres.

We've implemented the pilot at Kallara Panchayat in Trivandrum district, and the response is remarkable. The entire community has been enthused by the project; and to see the excitement amongst the school children browsing the Internet is the most satisfactory achievement for the project.

We are also setting up computerised Integrated Citizen Service Centres in all districts of the State, where citizens can pay taxes and bills and access utilities.

In the next phase, we expect to be able to offer these services on-line (within a month or two); which will be a break-through for us.

Are you handicapped by the ideological constraints of your politicians? One of the conference sessions I attended had a Marxist speaker who wanted to put yet more money into government-sponsored education. Another spoke at length about the 'digital divide'.

As far as the IT sector is concerned, the Government of Kerala is fairly clear that it will play a facilitating, rather than an actively interventionist role.

The state government's policy as regards the IT sector has been broadly similar to those of other states, namely promotion of e-governance, HRD and provision of a favorable environment for the industry.

I do think that the 'digital divide' is something that governments need to factor in seriously, when framing policies for the development of this sector. Government intervention can (and probably should) play a major role, particularly in ensuring that common people are not denied the benefits of IT.

For example, the government has a major role to play in promoting public access facilities, such as public Internet kiosks, on the lines of the STD/PCO booths, through appropriate policies.

Others in your panel discussions spoke about the excessive pursuit of egalitarianism; and conversely the lack of a pursuit of excellence in Kerala. This was borne out by the fact that there are hardly any institutions in Kerala that are nationally prominent centers of excellence? What is the role of the new IIITM-K (Indian Institute of Information Technology and Management - Kerala) in Trivandrum?

As you may know, Kerala has a number of excellent R&D and scientific institutions, including the Vikram Sarabhai Space Center, the Center for Development Studies, the Sree Chitra Thirunal Institute of Medical Science, the Indian Institute of Management (Kozhikode); all of which are renowned centers of excellence. As far as IT is concerned though, I agree with you that there are no technical institutions similar to the IITs/IISCs in the State.

The IIITM-K that the Government of Kerala is presently setting up aims to address these lacunae.

The IIITM-K, which is envisaged as a centre of excellence in higher IT education will offer training in cutting edge technologies and management. The core programme of the institute will be a PGD programme.

Besides, focusing on high end technologies, the Institute will also be a resource center for developing IT-facilitated education, including remote education. We are also doubling the number of engineering colleges, besides exploring ways of upgrading at least a few of our institutions to national standards.

Will this address one of the concerns I have heard - that even though you might find the engineers in Kerala, it is hard to find the first level managers, those with about five years of experience? This is a perennial problem everyone in the industry anywhere in India wrestles with.

I think we have been able to overcome this (at least to a large extent), over the last 3-4 years. Today, the problem is that a large number of young people, i.e fresh graduates from Kerala go outside to other states! At the senior managerial level, there are a number of people who are looking to come back to Kerala, provided there are adequate opportunities here.

A distinct advantage that IT companies have in Kerala is that the turnover of employees here is far less than that in the metros. So normally when you recruit somebody, there is a greater chance that he/she will be around for a longer period of time.

A major attraction of Bangalore is the lifestyle there, and the cosmopolitanism; these attract people from all parts of India. How will Kerala compete with this, because, after all, there is a finite pool of skilled people in the country?

This is in fact a strength for Kerala: as far as quality of life is concerned, I think Kerala scores very high! In addition to reasonably well-developed urban infrastructure, the other attractions here are the fairly low cost of living and resort-town ambience.

Companies from Germany, for example, have been primarily attracted to Kerala because it offers a clean and unpolluted environment, without other problems that you face in metros. Besides, Kerala is one of the most attractive tourist destinations in the country, and a lot of people do prefer to work here.

Another perennial problem is the issue of labour unrest. There is a perception that Kerala's labour force is all too ready to fight for its rights, but has not recognised that these rights do come with certain responsibilities too.

Arguably, one of the biggest constraints that the state has been facing is the perception of Kerala as a militant labour state, which is not necessarily the reality. While this may, perhaps, have been true of earlier decades, I think it is more of a perception problem than a real issue presently. To cite an example, the Technopark at Trivandrum is one of the oldest functioning parks in the country and there is no record of labour problems here.

On the other hand, productivity within the park is very high, and this is one reason why a number of companies have opted to come here. If you were to speak to people like Bill Denis of Toonz Animation or V K Mathews of IBS or Sunil Gupta of IVL, they would tell you that their biggest asset is their work force in the state.

The lack of convenient air links to Kerala must be hurting the growth of IT. This has certainly handicapped Bangalore and Hyderabad in comparison to Madras. There is only one non-stop flight, Singapore-Trivandrum on SilkAir, that makes it easy for someone from California to get to Kerala. Are you going to improve on this?

Lack of convenient air links is a problem today, particularly the fact that we do not have direct flights to the US West Coast. This is, in fact, one of the highest priorities of the state government - to have direct flights to the US from here!

This is something that we have been pursuing with the Government of India very closely. I think the situation will improve, though, once more international flights are allowed into Cochin.

John Chambers, Cisco's head, on his recent visit to India, spoke of the importance of the 'Internet ecosystem', suggesting it is the network that matters. Why has Kerala not exploited its network? For instance, in Dubai where about half the population speaks Malayalam?

It is true that Kerala has a large expatriate population, particularly in the Gulf, the US, etc. Where the Kerala network can definitely contribute is in providing technical/scientific expertise and assistance, since we have a large number of eminently qualified people overseas in universities and R&D institutions.

We are trying to work out a mechanism, under the umbrella of IIITM-K, where some of these people can contribute; either in terms of collaborative course development, handling courses at the Institute, etc.

What are the strategic IT partnerships that Kerala has entered into?

The state has a number of strategic partnerships with companies such as Microsoft, IBM, CMC, C-DAC, Intel, etc in the area of e-governance. For example, Microsoft is jointly working with the state government on an ambitious project to computerise 1,100 local bodies at the grassroots level.

This project which would be a pioneering one of its kind envisages IT deployment for automating panchayat functions, besides utilising IT for delivering a range of services to the common man.

Similarly, we are working very closely with C-DAC and ER&DC, Trivandrum on local language development. In education, we have launched a major project entitled 'IT@School', which basically aims to introduce IT-facilitated education in about 1000 schools in the State. A number of agencies including Microsoft, Intel and Schoolnet are involved in this project for teacher training and content development.

Keltron was at one time a pioneer in the electronics sector. But it has now fallen on hard times. What are the lessons to be learned from this experience?

Keltron was established at a time when very few states had forayed into IT or electronics. Although Keltron had some of the best people in the industry at one time, one of the major problems has been that many of them have subsequently left, to either join the corporate sector or set up their own ventures.

As you are aware, the entire hardware scenario globally is one that is extremely competitive; and a large number of domestic hardware companies have had problems in coping with these new competitive pressures.

A major restructuring of Keltron may therefore be necessary if it is to compete successfully in the revised scenario. As I see it, Keltron's strategy would be to leverage its traditional strengths in networking/hardware, etc. to gain competitive advantage; while simultaneously developing emerging areas.

Given all the challenges (and the opportunities), where do you see IT in Kerala in the next five years? If you had a crystal ball, what would you say is the realistic scenario in 2006?

Five years is a long time, particularly in IT! However, I'm optimistic that Kerala will emerge as one of the frontline IT states in the country. The future is going to be in content and IT&ES, as much as software; and Kerala has inherent strengths in both these areas.

Once the state is wired up and access is assured, I think we will see rapid growth in this sector.

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