Untitled Document

Dun & Bradstreet - Oriental Bank of Commerce SME Cluster Series 2014 : Hyderabad



Q. Please share with us the objective and achievements of The IT and ITES Industry Association of Andhra Pradesh.
A. ITsAP’s vision is “To position Andhra Pradesh as the leading intellectual capital of the world, by nurturing
entrepreneurship, research and innovation, to achieve global excellence in IT products and services”. ITsAP’s endeavors
led to the setting up of GoAP’s Consultative Committee, under the Department of Information Technology and
Communications (CCIT) to fast track the implementation of the incentives that had been announced.

ITsAP has also been actively involved in working with the Government on Policy formulation and implementation;
generating opportunities for working with trade delegations; improving security in the Hitec city area in Hyderabad;
organising workshops on leadership and latest technologies; organising community initiatives, the Technology day,
and Inter Corporate Sports and Cultural activities; instituting a CEOs forum, SMEs forum, HR forum, and the Annual
Industry Awards, which include awards for Tier II Cities and the Green IT Company Awards.

ITsAP worked closely with GoAP in getting the essential service status for the IT Industry. AP is one of the first states in
India to make this happen. During the power crisis, ITsAP worked closely with GoAP to ensure that the IT Industry had
uninterrupted power supply. AP is also the first state to come up with a preferential policy for SMEs and ITsAP’s efforts
have been instrumental in making this happen.

ITsAP has supported the IT/ITeS Industry expansion beyond the twin cities to Tier II and Tier III cities of AP. It also
recognizes the burgeoning domestic market and has been instrumental In enhancing coverage of cities in AP including
Vishakhapatnam, Warangal, Vijayawada, Kakinada, Tirupati, etc; expanding industry coverage to include all IT & ITeS
services (Domestic & Exports, Services & Products); building and promoting AP (Brand AP) as the most preferred
destination for the IT & ITeS sector in India; assisting the Government and Industry in developing and showcasing AP
as a Technology Hub.

ITsAP works closely with the Information Technology & Communications Department of GoAP and Software Technology
Parks of India (STPI), Hyderabad, and with various industry bodies to promote the growth of the IT & ITeS industry in

Q. Please throw some light on the performance (domestic and exports) and contribution (state level and national level)
of the IT sector in Hyderabad.

A. FY 2012-13 was a unique milestone for the state as it delivered export revenue of ` 51,285 crore, crossing the milestone
of ` 50,000 crore for the first time. ITsAP played a significant role in this achievement. Approximately one-third of the
state’s exports are from the IT Industry. The IT Industry in AP contributes to approximately 12.5% of the nation’s overall
exports and AP continues to be the fourth largest exporter in India.

Q. How has been the performance of the SMEs in the IT sector in Hyderabad? What are the major challenges faced by
them in exploiting their full potential? Please tell us about ITsAP’s efforts towards meeting these challenges.

A. Hyderabad offers a conducive start-up eco system because of the collaborative efforts of organisations such as ITsAP,
and leading academic institutions such as IIIT-H/IITH/ ISB/BITS/NIT-W. There are over 230 companies operating from
Tier II cities and most of them are SME/Start-Ups. Hyderabad houses around 1,500 start-ups – I think AP is the 3rd
largest state to host SMEs and Start-ups and the number is only growing.

ITsAP has done noteworthy work in propagating start-up/SME eco-system in the state. ITsAP’s efforts in this direction
were rewarded when GoAP announced the special preferential policy for SMEs, which is the first in the country. ITsAP
was also instrumental GoAP’s announcement of various incentives for SMEs including power subsidies, re-imbursement
of Quality Certification fees etc. ITsAP also facilitated the creation of incubation labs in academic institutions for

ITsAP’s annual SME Conference is a platform for SMEs to learn about opportunities in various verticals, meet successful
entrepreneurs and venture capitalists and witness the ways in which SMEs are leveraging technology to boost operational

Q. Please highlight the importance of innovation in driving the success of SMEs. What is the present status of technology
adoption and innovation among SMEs in Hyderabad?

A. Innovation is one of the thriving engines of SMEs and start-ups. Driving innovation is a key aspect of ITsAP’s focused
agenda. ITsAP organises its annual Advantage AP conference, where it provides an opportunity for SMEs and start-ups
to participate and demonstrate their products and solutions at a subsidised price. ITsAP recognises innovative SMEs
/ Startups from Hyderabad as well as Tier II cities. Awards are given to SMEs for innovative solutions on products in
Enterprise Solutions, that have a Social Impact, and on Consumer Solutions. ITsAP also recognises student innovations
and presents awards to deserving academic institutions.

Q. Skill gaps remain a major challenge for SMEs. How can the SMEs bridge the demand and supply gap for skilled
manpower? What role can the government play in this direction?

A. Competency building is a continuous process and AP has the highest number of engineering graduates in the country
today, which is a major differentiator. In fact, AP is a major talent hub because of renowned institutions like ISB/IIIT/
IIT/BITS/NITW/OU/AU/JNTU etc. In fact, from the last two years, ITsAP programmes include academic institutions,
providing an opportunity for institutions to network, share and collaborate towards enabling closure of competency
gaps. In this aspect too, AP has been a pioneer, and the Jawahar Knowledge Centres (JKC) were set up, which work with
academic institutions in the state to provide additional training, both on technical aspects and life skills to students.
JKCs work with companies and facilitate a greater collaboration for employing quality students.

Q. What has been the impact of the current economic slowdown, both on domestic business and exports, on the SMEs
operating in Hyderabad, particularly the ITITeS companies?

A. Hyderabad has witnessed expansion in terms of the companies that are operating here. Few large companies today
operate with more than 25,000 employees and this is an example of scale that the state can deliver. Hyderabad has
talent, a superior business eco system and state-of-the-art infrastructure. Many MNC technology companies have set up
large offices that focus on product development and design. Back office operations are expanding rapidly. Hyderabad
has a great future as an IT industry hub.

Based on ITsAP’s recommendation, the government has developed incubation centres with ready-to-move in
infrastructure in various Tier II cities in the state, and this is being offered to Start-ups/SMEs at a subsidised rate.

Q. How does the growth rate of the IT sector in Hyderabad compare that with the growth of the IT sector in Andhra
Pradesh? What is your outlook on growth prospects for the year ahead?

A. More than 90% of the industry output is from Hyderabad, but there has been a conscious focus on Tier II cities such as
Vizag, Warangal, Vijayawada, Tirupathi and Kakinada. The export turnover from the Tier II cities is over ` 1,600 crore,
led by Vizag with ` 1,445 crore, followed by Vijayawada with ` 115 crore. Each Tier II city is a major talent hub in the
state and hence a potential destination for future growth of the Industry.

Q. Please throw some light on the necessary measures and policy support that will drive growth of SMEs in Hyderabad,
and take them to the next level of growth.

A. There is a lot of demand from SMEs/Start-ups to have a subsidised, ready-made incubation center, preferably created by
the Government in an SEZ space. ITsAP has already made this recommendation to the state government and is looking
forward to this becoming a reality. Hyderabad has everything to offer – a good start-up eco system, good infrastructure,
and lot of support from the government.