Telangana agitation hits IT exports
HYDERABAD: They say misfortunes come in a series. First came the economic meltdown of 2008, then the Telangana agitation and now fears of double-dip recession and the eurozone crisis. For the IT industry in Hyderabad, it couldn't get any worse.
Once the showpiece of AP, the software industry recorded an abysmal growth rate of 4.5 per cent in 2010-11 -- while clocking Rs 36,000 crore -- much below the national average of 18.7 per cent estimated by the National Association of Software & Services Companies (Nasscom).
Hit by macroeconomic factors in 2009-10, India's IT services exports registered an all-time low growth of 5.5 per cent. Karnataka, the largest exporter contributing 30 per cent of the total exports, slipped to a low of 1.4 per cent growth.
Maharashtra did 10 per cent and Tamil Nadu 8.5 per cent. Andhra Pradesh, the fourth largest software exporter, registered just 3 per cent in 2009-10 (Rs 33,500 crore), much lower than its internal estimate of 12.5 per cent.
Software Technology Parks of India (STPI) director P Venugopal takes some comfort from the fact that the growth rate this year is an improvement over last. 'The industry is just recovering from the global recession and we anticipate double digit growth in fiscal 2011-12,' he added.
Interestingly, the top four software exporting states, excluding AP, are on a rebound and have indicated double-digit growth in 2010-11. While Karnataka is likely to post 20 per cent, Maharashtra is likely to do 10.77 per cent followed by Tamil Nadu 11 per cent.
On the other hand, AP is stuck at 4.5 per cent. 'There are multiple reasons for this sluggish growth. One is the global recession. Secondly, some of the top five companies have slackened, which is dragging down growth in Andhra Pradesh.
Lastly, and more importantly, due to the uncertainty over Telanagana, we are losing out on growth opportunities. We could have fared better in 2010-11, but for this ambiguity,' said L Suresh, president of the IT & ITES Industry Association of AP.
As a result of the uncertainty, some firms are folding up operations in AP, while newcomers are opting for alternative locations such as Pune and Chennai.
A case in point is Convergys, which shifted its 600-seater call centre from Hyderabad to Bangalore. The sector which typically employs over 20,000 to 25,000 annually hired just about 15,000 in 2010-11. Companies are deferring expansion plans.
'The real impact of frequent agitations and an an unfriendly business climate will be reflected in 2011-12 and growth may be adversely affected in 2012-13 if the situation continues,' Suresh explained.
News Posted: 18 August, 2011
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