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
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
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