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Brand Hyderabad takes a beating due to Telangana turmoil

Sunday October 02, 2011 01:07:56 PM, Mohammed Shafeeq, IANS

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Hyderabad: Brand Hyderabad has taken a beating with the ongoing turmoil for separate statehood to Telangana continuing to impact the information technology (IT) sector and new investments in this technology hub.

As the buses of state-owned Road Transport Corporation (RTC) have remained off the roads for the past two weeks and the frequent protests have affected local trains, the IT firms are reporting a low employee turnout.

The BPOs and call centres that operate round-the-clock are the worst-hit.

"The image of Hyderabad as an IT destination has already taken a beating, but if this (uncertainty) prolongs further, it may erode brand Hyderabad," L. Suresh, president of the IT and ITES Industry Association of Andhra Pradesh (ITsAP), told IANS.

The power outages, as a result of nearly three-week-long strike in state-owned Singareni Collieries, have also increased the operational costs, especially for small and medium companies.

Over 20 percent employees have not been reporting for work in many IT firms since a fortnight due to the RTC strike, said IT sector sources.

The frequent shutdowns, rail blockades and the two-day strike by auto-rickshaw drivers last week also hit employee attendance.

As the protests are also creating law and order problems, the industry leaders have warned that the situation may impact the overall growth and exports unless the central government intervenes to clear the uncertainty.

The problems have increased this time compared to the earlier spells of agitation, according to ITsAP sources.

Hyderabad observed a shutdown Sep 30 on a call by the Telangana Joint Action Committee (JAC), spearheading the movement for a separate state.

Earlier, during the road blockades, the protesters tried to stop cabs carrying employees to Hitec City, an IT cluster.

"One- or two-day bandh is okay, but a prolong shutdown will have a bigger impact. There will also be anxiety when employees who travel to companies and go back home are stopped or targeted," Suresh said.

Hyderabad is home to about 700 IT/ITES firms, including global giants like Microsoft, Google, IBM, Oracle, DELL, Motorola, Deloitte, Convergys, UBS, Bank of America and HSBC.

Hyderabad is seen as critical to the entire issue in view of demands from some quarters for it to be given the status of a union territory or a joint capital of the proposed Telangana and Seemandhra states. But pro-Telangana groups are increasingly focussing on the city to show their strength.

"Imagine a situation where IT companies are closed. A large number of people will be badly hit as the sector provides largest number of jobs," said Suresh.

The IT companies in Andhra Pradesh employ 300,000 workers, an overwhelming majority in Hyderabad. The sector also provides indirect employment to 1.2 million people.

"Brand Hyderabad is getting badly impacted. No new investments are coming," J.A Chowdary, co-chairman of the Federation of Indian Chambers of Commerce and Industry's Andhra Pradesh unit, told IANS.

The sector also fears impact on the business it gets from offshore.

"It is difficult to quantify the losses at this point of time, but this will become clear after one quarter," said Chowdary, former chairman of the Software Technology Park of India.

The law and order situation on the ground may not be worse, but there is already a lot of bad publicity and this creates apprehensions among offshore customers, say industry leaders.

While the employees of some major companies travel by cabs, a sizeable number also commutes by public buses and local trains.

Lack of public transport has added costs for the companies as they are forced to make alternative arrangements for the transport of their employees, according to Suresh.

The costs for companies, especially small and medium enterprises, are also increasing due to power outages as they have to invest more in running the backup.

Authorities have already declared one-day power holiday for industry in addition to daily four-hour cut during peak time. The situation may worsen with a two-day holiday proposed next week to tackle the mounting deficit between demand and supply due to the ongoing strike.

The sector may face more problems in coming days as JAC has called for a three-day rail blockade Oct 9, 10 and 11. During the two-day blockade last month, the railways had cancelled all trains including local trains.

The industry fears the turmoil may affect the overall exports, which were flat during 2009-10 due to various factors including the political turmoil.

The city, which emerged on the global IT map in the1990s, ranks fourth in the country in terms of software exports. The exports from the state, which were a meagre Rs.284 crore in 1997-98, touched Rs.32,509 crore in 2008-09.

With the JAC is giving call for road blockades and shutdown, the IT sector anticipates more problems if something is not done immediately by the centre to address the issue.

"The uncertainty is not good for future business and investment. Whether the state is divided or kept united is not an issue for the industry. The central government should do something quickly and clear the uncertainty," said Suresh.
 


(Mohammed Shafeeq can be contacted at m.shafeeq@ians.in)
 

 

 
 


 

 

 

 

 

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