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Is Mysore emerging as the next IT destination?

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CIOL Bureau
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MYSORE, INDIA: Mysore being the leading tier-II city in Karnataka seems to be the next inevitable option for those in IT. Why else would former Satya Narayan Zindal visit the city, which once was once referred to as Pensioners’ Paradise?

publive-imageSatya Narayan Zindal, former director general of STPI was in Mysore to explore possibilities publive-imageof entering a new venture in the field of IT. With over 34 years work experience in private, public and government sector including autonomous societies with unique blend of background of IT/ telecom/ electronics sector, including last 11 years of CEO, the former director general, in an interview to CIOL, stressed the need for government to consider its move to withdraw tax benefits to IT companies in March 2009. He suggested that BPOs and low skill intensive units should be moved to tier-II cities considering the infrastructure available and other benefits that are on par with the metropolitan cities.

Abinanth Kumar: Having headed STPI has director general from 2000 to 2007, what according to you are the challenges faced by the IT industry in the country?

Satya Narayan Zindal:
The software industry today faces few challenges. Some of them include rupee appreciation, manpower shortage, infrastructure bottlenecks and withdrawal of income tax 10 A and 10 B benefits in March 2009 by the government.

AB: What do you see as solutions to these problems or issues faced by the software industry?

SNZ:
One of the options available for big players is to set up centers in special economic zones (SEZ). They may enjoy tax holiday. Nevertheless, small players will face problems. For instance, SEZs will be located in some pockets and it will be difficult for small players to make fresh investments in new locations. The cause for concern for them is manpower, which may not be willing to move to new location. The small companies will have to forego infrastructure. These problems are bombarding them.

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AB: There is a rising fear among youngsters that the rupee appreciation will not fetch them jobs in IT industry?

SNZ:
Even in a healthy economy, such situation is possible. We need to do a broad survey on this. The rupee appreciation will not have huge impact in the next year or two. Companies will have less profitability. I think they should move to SEZs, which again are facing several issues. Innovation is the key. IT companies should step into niche areas.

AB: On the other side, the IT industry needs huge manpower. How do you think this issue can be addressed?

SNZ:
The opportunity to grow is still large for the IT industry. Operations that are not high skill intensive could be shifted to leading tier-II cities. This way, the issue of cost can be addressed. We need IT skill set. Educational institutions are producing IT engineers but many don’t have adequate skill set to be employable. Hence, the concept of finishing schools is relevant in the present scenario.

AB: What do you think the governments should do to help the IT industry address these issues?

SNZ:
Firstly, the government should consider move to withdraw income tax concession to ensure that this issue doesn’t cause hardship to IT industry. India has to move to products, I mean high value addition activities. We need employment also. 

The government should encourage innovation, research and development and provide financial assistance since small companies are finding it difficult to obtain loans from financial institutions.

The Karnataka government has been promising the entry of IT giants into tier-II cities. This seems to be mere lip service.

New BPO units or low end of technical activities should be moved to tier-II cities. There is potential for higher level of growth. We must expect tier-II cities like Mysore to go Bangalore way.