GTECH reaction to the Kerala state Budget

GTECH welcomes and appreciates the move of the Government for the deferrement of 50% of rent to the financial year 2010-11. However, considering the impact of the recession on the Knowledge Industry in Kerala, the move may not be of substantive help to the affected companies, as they would still have to provide for this rent, though this would help in cash flow management.

It is also not clear how this deferred rent would be recovered from the year 2010-11. A 12-installment recover would lead to a severe burden in the financial year 2010 – 2011. On the other hand, a 50 % rent waiver for the period of the recession would have brought the much-needed relief to the IT Industry. In addition, a waiver of the additional electricity charges for the 25% excess consumption over the previous year would also significantly benefited the IT Industry.

Technopark to adopt a Healthy Life Style

Technopark is all set to adopt a healthy life style at the Workplaces. This was reverberated at the session on Healthy Life style at IT Workplaces organised by the Group of Technopark Companies (GTECH) in association with the Kerala State IT Mission and Technopark. The session brought together the Human Resource Professionals, Health Experts and Health organisations on a common platform and discussed the concept of maintaining a healthy life style at the workplace and sensitised the Technopark Community on Health and Wellness at the IT Workplace. The session included discussions and presentations on the foundation of creating a healthy workforce, which dwelt on prevention of life style diseases, Healthy Nutrition and Stress Management.

Stressing on the need for a healthy life style, speakers stressed on the need to balance the different components of life style like the workspace, family space, Social Space and personal space. Dr L Vijayalekshmi, HOD, Applied Nutrition, Trivandrum Medical College, stressed on the need for IT professionals to re-engineer the life style on a regular exercise and healthy diet.

Dr. V Mohanan Nair, State Nodal Officer, National Programme for Prevention of Diabetes, Cardiovascular Diseases and Stroke stressed on the responsibility of the IT firms to provide healthy food options at the cafeterias and also on the importance of taking precautionary measures to fight the onset of Non-communicable diseases.

Mr. R Narayanan, Chief Mentor, Faith Infotech spoke on the need for the professionals working in the IT Sector to embark on a personal mission to be healthy.

Other speakers at the session included Mr. Mohan Kumar, Industrial Psychologist, Tiger India, Mr. Anil Thricovil, CEO, Alamy Images, Mr. S Rama Rao, President GTECH and Mr. Satish Babu, Secretary, GTECH.

In a Press statement, GTECH stated that such sessions would be an ongoing activity and will strive for creating a platform in Technopark to regularly communicate with the medical fraternity in the state.

Recession Proof: Spirit and Spirituality in Kerala

An interesting article appeared in Indian Express which is truly a thought provoking one- A peice of Economics.

The intoxicating industries of spirit and Spirituality in Kerala seem to have beaten the economic downturn.
Liquor sales registered a robust growth in the last three months, though the period had been marked by the loss of employement for many and crash in the prices of agricultural produce. Spirituality too seems to be on a high in recent months if the record revenue at pilgrim and retreat centres is anything to go by.
The Kerala State Beverages Corporation (KSBC), the sole distributor of Indian Made Foreign Liquor (IMFL) in the state, has registered a 29 per cent increase in the sale of liquor for the quarter ended December 31 compared to the corresponding period last fiscal.
Managing Director Shanker Reddy said the economic downturn has had little impact on the sale of IMFL. Total IMFL sales in the last fiscal stood at Rs 3,669.49 crore. The figure likely to touch Rs 4,500 crore in the current fiscal, added Reddy.
Compared to IMFL sales of Rs 971.27 crore from November 2007 to January 2008, KSBC had sales of Rs 1175.83 crore from November 2008 to January 2009.
One of the highest liquor-consuming districts is Kottayam, also the largest grower of natural rubber in the country. Though rubber prices have plunged from Rs 140 per kg to Rs 65 in last five months, the mood is still upbeat in the IMFL outlets and bars in this Christian heartland.
Bacchus isn't the only God on people's minds either. Though the flow of tourists has come down due to the recession, pilgrim and retreat centres are still doing roaring business.
Sabarimala Ayyappa temple, one of the most famous pilgrim centres in India, had an all-time record revenue from its two-month annual festival season which ended in the third week of January.
According to the temple governing body, the Travancore Dewaswom Board, this season's revenue was Rs 112.22 crore, while the figure of the last season stood at Rs 83 crore. This is the first time in the history of the hill shrine that the collection has crossed Rs 100 crore. A major chunk of the revenue came from pilgrims' offerings at the temple.
The picture is also rosy at the Christian spiritual centres. The Catholic Church has 89 affiliated retreat centres in the state, which run five-day meditation camps every week throughout the year.
The Divine Retreat Centre at Chalakkudy in Central Kerala is one of the most popular. At least 3,000 people attend the weekly retreat session here. "We have not reported any drop in attendance," said A B Mathews, accountant at the centre. Coincidentally, Chalakkudy is also the leader in IMFL sales in Kerala.
We expect more people to turn to God during the economic crisis. Hence, a heavy turnout is expected in the coming months," said a spokesperson of the Sehiyon Retreat Centre, Palakkad.
"In Kerala, people have a tendency to heavily depend on God and liquor during a crisis. The trend is likely to go up when the impact of recession becomes more severe," says Dr C J John, a consultant psychiatrist in Kochi. "The state has a migrating community which moves from one retreat centre/pilgrim centre to another in search of panacea for their problems. That group keeps the spiritual centres filled throughout the year," added John.

Technopark gets Healthier

Concerned with the rising health issues among the young professionals working in the IT Industry, the Group of Technopark Companies (GTECH) in association with the Kerala State IT Mission, is organising a Session on ‘Healthy Life style at IT Workplaces’ on 12th February 2009 at the Technopark Campus. Represented by CEO’s of all companies in Technopark Trivandrum, GTECH is an apex organisation founded in 2000 to promote the cause of the community of IT companies in Kerala.

According to Binu Sankar, CEO of GTECH, “The main objective of this session is to bring together the HR professionals, Health Experts and select health organisations on a common platform, and to discuss the concept of maintaining a healthy life style at the workplace. I hope we will be able to sensitise the Technopark Community on Health and Wellness at the IT Workplace”.

The session on ‘Healthy Life style at IT Workplaces’ will include discussions and presentations on the foundation of creating a healthy workforce, which will dwell on prevention of lifestyle diseases, Healthy Nutrition and Stress Management. The half day programme will see a leading Cardiologist, Diabetologist and also an Industrial Psychologist, among others, making presentations on preventive strategies to the Techies.

Spreading the awareness on preventing lifestyle diseases associated with the IT industry seems to be the best HR initiative which companies can offer. After all, prevention is better than cure!

The Global Economic Slowdown and Kerala's IT Industry

The Global Economic Slowdown
and Kerala’s IT Industry
The Urgent Need for a Stimulus Package

Kerala IT Industry

An annual turnover of about Rs. 1,500 crores
Direct employment to about 60,000 people
30-35,000 Technical workforce, of which 20,000 are in
Technopark and 8,000 in Infopark
10,000 non-technical workforce estimated conservatively
A much larger number of indirect jobs
A “high-quality” employer

Still much smaller than Karnataka, AP and TN which are
Each over 30 times Kerala’s IT industry
With the right blend of policies, Kerala can attract a higher Share of the industry
Conversely, if the policy regime is uncompetitive, the Industry will experience poor growth

Technopark

The first IT Park in the country
The prime destination for IT in Kerala, and a centre of
Excellence in the country
A major share of IT industry in Kerala (80% of IT turnover)
Largest IT employer (70%)

GTECH

A charitable society registered under the 1955 Act.
Members are Technopark companies
Has a full-time CEO and programmes for members as well as community
Companies have direct programmes for CSR and joint programmes for the larger community through GTech

GTECH Recent Programme

Some recent programmes include:
SafeDrive@Technopark (Dec 2007)
Investment opportunities in Germany (May 2008)
Green Computing Initiative (July 2008)
Employability Enhancement for People with Disabilities (7 Aug 2008)
Interaction with Venzuelan Minister (24 Aug 2008)
Session on TerraCotta (12 Sept 2008)
Venture Capital Summit (10-11 November 2008)
HIV/AIDS Awareness (12 Dec 2008)

GTECH Programme Planned for 2009

Programmes planned for 2009 include:
Healthy Livestyles in IT (12 Feb 2009)
Session of Food Quality in Technopark
Session on Corporate Governance
Social Conclave: IT in Development
Conclave on Changing Role of HR Professionals
Session on CSR and Global Reporting Initiative
Vision 2020: Kerala As a Knowledge Hub
Kerala Venture Capital Summit 2009

The Slowdown

steep drop in GDP throughout the world
Negative growth in many parts of the world
India, however, expects to retain growth at about 6-7%
Most target countries of Indian IT exports are hit
The impact on Indian companies will be differential—some companies will continue to grow, while others may scale down
Overall, the Indian IT Industry’s growth may come down to around 10
Expected to last until end of 2009

Impact on Kerala

Many export-oriented industries in Kerala (including Tourism, IT, spices, seafood and rubber) may be hit
For firms in the IT Industry, survival depends upon Retaining global competitiveness
Cost control becomes an imperative for the IT industry, and this requires operational flexibility

Response from the Industry

During this period, IT Companies may have to resort to Serious cost cutting, through steps such as:
Reduction of operating costs
Reduction or stagnation of remuneration
Reducing recruitment
Enhancing productivity
As a last resort in protecting the remaining employees,
Termination of services of some employees

Government Response

All over the world, governments are supporting their Industry to cope with the slowdown
GTech fully understands the concerns of GoK such as Equity and social justice in employment
However, GTech maintains that operational flexibility and Freedom is of paramount importance competing in global Markets
In any case, no company likes to get rid of people that they have invested in


This is the time

We stress that the GoK should take immediate action that is decisive and substantive
We enumerate below some steps that could make a Positive difference


Specific Measures

Incentivize new companies for infrastructure (for example, a 6-month rent holiday)
For existing companies, immediately stop rent escalation
Rentals are rapidly falling in different parts of the world. IT
Parks should also consider reduction of rental to the tune of about 30%
Ease restrictions on the use of power

Treat Technopark as an Essential Service to minimize Disruption
Clarify the legal frameworks that companies are requested to comply with
Where laws are anachronistic, amend them, re-legislate, or provide exemptions for the IT Industry
Be more sensitive in dealing with companies so as not to Hurt their reputations. In particular, directly going to the Media without a due process should be avoid

Have a dispute resolution mechanism within Technopark, with industry participation, so as to resolve internal issues
Have an out-placement mechanism for placing people in Other companies
To protect local jobs, modify the IT policy guidelines to Permit Technopark companies to take up e-governance Projects for the GoK and quasi-government agencies
Based on clearly stipulated criteria Persuade the Government of India to extend the STPI Framework for another three years
Withdraw sales tax on software products and services

Technopark Administration

Companies are the primary stakeholders within the Technopark Community
It is strange and undemocratic that the Technopark Governance systems completely keep out the primary Stakeholder
For this reason, Technopark companies request that there is representation in the Technopark administration from the Companies

In Summary

The worldwide economic scenario is grim
Kerala’s fledgling Software Industry is facing serious Threats that may set it back substantially
However, it is also clear that once the downturn is over, the IT Industry will bounce back
Starting immediately, and for the duration of the downturn, IT Industry seeks a stimulus package
This will protect the Industry, protect jobs, and ensure that the Industry is still robust when the downturn is over

Kollam to get a New Information Technology Park

February 10th will be a stepping-stone for the Kollam District. The Chief Minister of Kerala will lay the foundation stone for setting up a Technopark on a 40-acre land on the outskirts of the city. Truly in a sense the development of the park will herald a new age of inclusive development in the state. Researchers often pointed out that, two industries, which can co-exist in Kerala, are Tourism and the Knowledge Industry. This particular move from the Government can change the economic landscape of the district by providing opportunities for the youth to embark a career in the IT/ITES space. The toughest thing in the entire framework of the development of the park would be to market the park to potential investor. One plausible thing, which could lure potential investors, would be the rentals, which can come as cheap as Rs 10 per square feet. And also clubbing the IT/ITES Industry with the tourism Industry would go a long way in marketing the parks to potential investors. The proposed park can be a hub for Entrepreneurship by creating an enabling mechanism through which young Entrepreneurs are nurtured and supported by the Government with the necessary market linkages being established. And also many companies operating in Technopark can outsource a part of their operations to these new build parks. In the era economic recession and global meltdown companies keen on cutting cost can pursue this option.

Session on Business Response to HIV/AIDS

GTECH in association with the Kerala State AIDS Control Society organised a session on Business Response to HIV/AIDS on 12th December 2008 in Technopark.
The companies in Technopark who attended the session nodded positively to the suggestion from KSACS that a module on HIV/AIDS should be included in the staff induction and training programmes
Inaugurating the meeting, Project Director of KSACS and Secretary Social Welfare Department, Government of Kerala Dr. Usha Titus IAS said that it was important to mainstream HIV through workplace initiatives and public-private partnership could go a long way in spreading the message on HIV. She also sought the active involvement of Technopark companies and its employees in forming Red Ribbon Clubs to promote voluntary blood donation.
Through workplace initiatives, KSACS is looking at forming partnerships to ensure that every organisation has a policy regarding HIV/AIDS. Such partnerships will also address issues of discrimination faced by HIV-positive persons at workplaces.
Satish Kumar Amarnath, Director, Manipal Cure and Care who led a technical session pointed out that HIV was indeed everyone’s business and that no persons or groups were free from risk.
Presentations were made on stigma reduction, challenges in implementing workplace initiatives. Those who led the sessions included Rita Cross, Joint Director (Care and Support), KSACS, K.B. Sudhir, team leader (Mainstreaming), KSACS, Binu Sankar, CEO, Group of Technopark Companies and S. K. Harikumar, consultant (Behaviour and Sexuality).
A programme protocol and work plan for the joint initiative will be discussed at the next meeting of the CEOs of Technopark companies.

India @ Risk 2008

A report published by the World Economic Forum highlighted the risks that the Indian Economy is facing the near future. The report was prepared by the Global Risk Network, an arm of the World Economic Forum which is composed of an unparalleled network of Industry, risk and country experts who work with Business leaders and policy makers to create a framework for assessing and prioritising existing and emerging risks to Global business over the short and long term.
The four areas of focus of the report are
* Energy Security* Agriculture and Food Security* Economic Security* National Security
Under the Energy Security the report finds that the gap between demand and supply has worsened in the last years. Energy demand increases as the population grows and the country develops; energy supply has increased at a slower pace. Over one-third of the power generated fails to reach consumers. Energy subsidy schemes discourage efficient use of energy and diminish the incentives to increase the use of clean energy sources. The report further adds that the production of crude oil has been stagnant and has boosted the dependency on crude oil imports. India imports more than 70% of its oil. The government has initiated several policies to cover the increasing demand and has intensified foreign relations with world energy suppliers in South and Central Asia, Russia and the Middle East. Energy supply is vulnerable to geopolitical tensions with energy suppliers and energy transit countries. Increasing consumption and increases in oil price would add more pressure to the current account deficit. Corporations and society at large are willing to increase their energy bill to benefit from a reliable energy supply, but generation and distribution infrastructures need to be in place and extraordinary investment is required. According to the World Bank, transmission and distribution losses account for 27% of the generated power and are the highest in the world. Various government agencies report losses between 30% and 40%. Those losses are associated with technical inefficiencies and mismanagement.
Liquid petroleum gas (LPG) subsidies in India are widespread; US$ 1.7 billion was spent in the first half of the current financial year on supplying fuel to poorer households. Nearly 40% of the subsidy expenses benefit only 7% of the population. Energy subsidies encourage consumption and waste, which generate harmful effects on the environment and represent an important liability to the government budget.
Under the Agriculture and Food Security concerns, the report dwells on how rural populations are highly dependent on agriculture and pressures are increasing to transform agricultural activity into a sustainable economic sector. Almost 65% of India's population is directly or indirectly dependent on agriculture, although it only accounts for approximately 16% of GDP. Despite current self-sufficiency in food production, approximately 25% of India's population is malnourished and lives below the poverty line. Child malnutrition is responsible not only for 22% of India's disease burden, but also for 50% of the 2.3 million child deaths in India each year. Agricultural output and rural communities face risks of changing weather patterns linked to climate change and threats from water scarcity and quality. Water for agricultural use currently represents 92% of renewable water resources, compared with 3% for industry and 5% for domestic use. The report identifies the major risk involved in the Indian Agriculture which is the biggest shift in the agricultural sector has been the move to more horticultural products. Rising demand for fruit and vegetables and shorter growing cycles, which allow several harvests a year, enable farmers to spread their risk over several crops. Horticultural produce is highly perishable and requires better storage, distribution and retail conditions. These crops also place pressure on water resources.
Under the economic security the report adds that the deterioration of the global financial Environment has affected the national economy and spillover effects on the real economy are still unfolding. India remains vulnerable to the vagaries of the world currency, commodity and financial markets. The report says that the India's dependence on capital inflows to finance its current account deficit is a Macroeconomic risk and the global crisis could generate a sharp increase in capital outflows and a reduction in the availability of finance. It could also weaken the balance sheet of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking Global growth. India has accumulated reserves of US$ 295 billion over the last years of economic expansion,providing a cushion to overcome a potentially pessimistic economic outlook. The level of reserves has decreased recently due to imports paid in US dollars, Reserve Bank intervention and equity portfolio adjustments abroad. The recent fall in commodity prices might help decelerate inflation and could thus benefit the imports bill, while also having a positive impact on reserves.
Under the National Security risks facing the nation, the report identifies the External and Internal sources of insecurity: India's security policies must address potential threats coming from outside its borders. India's security policies will need to combine economic, diplomatic and military aspects to protect Indian society and also secure energy supply and trade routes. Radical groups organized along ethnic, far left or religious lines are gaining ground, especially in disadvantaged districts. These need to be closely monitored to prevent the spread of unrest in certain regions and deter extremist attacks.

Recession and Kerala IT Industry

We, the companies of Technopark, after careful consideration of the issues facing the IT and ITES Industry of Kerala in general, and of the Technopark community in particular, would like to bring to the attention of the people of Kerala as well as the Government of Kerala the following points:
1. The IT Industry in Kerala is estimated to employ a workforce of over 60,000, which includes both highly-skilled professionals as well as non-technical personnel, with Technopark employing approximately half of this workforce.
2. The IT Industry in Kerala had an approximate annual turnover of Rs. 1500 crores last year, with Technopark contributing about Rs. 1200 crores.
3. The global economic meltdown has begun to impact Kerala's IT Industry. The magnitude of impact and its timing will vary between companies. However, the growth rate of the industry is likely to be seriously impacted for the next 1-2 years. In particular, the year 2009 is expected to be the most impacted period.
4. The industry will be forced to take a series of steps in order to tide over the slowdown. The steps that may need to be taken include reduction in operational expenses, reduction or stagnation of remuneration, reducing employee intake, and in rare cases, termination of services of personnel.
5. We affirm that these measures may only be necessary for a limited period, and that the industry will continue to contribute to the economy of Kerala in a significant manner, even during this period.
6. The world over, Governments are coming out with a slew of measures help their industries tide over the present crisis. We call upon the Government of Kerala and the Government of India to adopt supportive steps to help the IT and ITES industries cope with the economic slowdown.
7. The IT and ITES industries have to compete globally, and therefore must have parity in operational costs to retain the global competitive edge. We request that the Government of Kerala act immediately to ensure that the administrative regime in the Government-run IT parks must be enabling and competitive vis-a-vis other IT destinations in the country.
8. We request that the Government does not impose any additional taxes or duties on the industry at this time.
9. We recognize the need for socially justice and equity in personnel policies as articulated by the Chief Minister in the recent meeting with the Industry. We reiterate that large-scale termination of employment will be a last-resort action, to be adopted only when the survival of a company is in jeopardy without it.
10. We would like to point out that collectively, Technopark companies have invested many times the amount of investment made by the Technopark itself. However, the companies have no say in the administration of Technopark. We request the Government to rectify this anomaly by including representatives of Technopark companies in governance bodies such as the PIB.
11. In order to sustain the current levels of Business, we call for the following specific steps to support the IT and ITES Industry:
a. We request the Government to re-examine the rental regime in the Government-run IT parks and ensure the rentals are harmonized with the recent trends in other metros. We consider that a rental reduction of about 25% is warranted to retain our competitive advantage.
b. We request that the restrictions on electricity consumption is removed and the recent tariff hike reversed, as electricity is the only and most vital raw material consumed by the industry
c. We request the Government to treat Technopark as an Essential Service, as has been done in West Bengal, so that events such as hartals and bandhs do not disrupt the functioning of companies
d. We seek clarifications as to the exact legal framework under which Technopark companies operate. Where new legislation or legal frameworks are to be created, we request that this is done with industry participation
e. While the Government retains the right to examine compliance of companies to the applicable laws, we request that a mechanism for this be instituted within Technopark itself. In particular, we request that the Government does not go public or to the media with such issues in the context of any one or more companies.
f. We request that the current policy regime of the IT Department be suitably modified so as to enable Technopark companies that possess certain minimum requirements to take up e-Governance projects for the State of Kerala and its parastatals.
g. We request that the Government of Kerala to take up with the Government of India in order to extend the STPI Scheme by 3 more years.
i. We request the concessions made to Special Economic Zones be made available to the Technopark as well.
j. We request that sales tax be withdrawn on computer software. We, the companies of Technopark, are confident that the IT and ITES industry will successfully tide over the current crisis. However, for this, we need parity in cost structures with other states and the operational flexibility and freedom to run our businesses. We request the people and the Government of Kerala to support the industry in retaining its operational viability in these difficult times so that the industry can continue to provide employment and contribute to Kerala's progress.

Kerala an attractive Destination for Venture Capital Community

Kerala is fastly emerging as the ideal attractive destination for the Venture Capital Community. This was reverberated during the Venture Capital Summit 2008:Financing the Knowledge Economy in Kerala organised by the Group of Technopark Companies (GTECH) in association with the Department of Information Technology, Government of Kerala, Kerala State Industrial Development Corporation (KSIDC) and Technopark. In his Inaugural address, Mr. Vinay Deshpande, CEO, Founder and Chairman of Encore Software said Venture Capital not only bring in the Financial Commitments but also networks, partnerships and market access. In his special address, Dr. Ajay Kumar said that the Kerala has an enabling Environment for creating and nurturing home grown companies.

The summit deliberated on the need for the Technology Companies in Technopark to build stronger partnerships with the Venture Capital Community. The summit had sessions on the Opportunities for Kerala in the Global Venture Capital Industry and case studies of Venture Capital funding in the IT/ITES Industry. In the various presentations at the summit Venture Capital experts identified the emerging areas of Venture Capital funding in Kerala like cloud Computing in the IT Industry and also non IT areas like Clean Energy, bio fuels, solar and wind energy. Many of the speakers felt that Venture Capital brings in increased Market awareness, enhanced Corporate Governance and access to additional funds at competitive rate. Apart from these , Venture Capitalists brings in expertise in the area of sales and operations and wide network for sales and partnerships. The Summit felt the need for a policy and mindset change to convince sceptical investors.

The speakers at the summit felt the need for creating an enabling ecosystem for Entrepreneurship. The summit also deliberated the need for the IT Industry in Kerala to build partnerships with Research and Development Centres and Venture Capital Community. This sort of trilateral relationship can transform the business landscape of the State.


Prominent speakers included Mr. Pradeep Udhas, Managing Director, Greater Pacific Capital, Mr. Kumar Shirlagi, Managing Director, NEA – Indo US Ventures, Mr. Rajeev S, Professor Corporate Strategy and Policy Area, IIM Bangalore, Mr. Ravi Narayanan, Managing Director, Mentor Partners, Mr. Natarajan Rangarajan, CFO, Helion Venture Partners, Mr. Prashanth Prakash, Partner, Accel India Venture Fund, Mr. G Vijayaraghavan, Founder CEO, Technopark, Mr. Rakesh Kumar Gupta, COO, Allianz Cornhill Information Services, Mr. Nandakumar, President and CEO, Suntec Business Solutions, Mr. Klass Oskam, Associate Director, Ernst & Young India, Mr. Joseph C Mathew, IT Advisor to the Chief Minister of Kerala, Mr. Siddhartha Bhattacharya, CEO, Infopark, Mr. N Radhakrishnan Nair, CEO, Technopark and Mr. Balaji Pasumarthy, Chief Catalyst, Buisnessgyan.