Wednesday, October 24, 2007

Technopark updates - October 24

A lot of action is happening in Technopark these days. This week, to be more exact. Two of Kerala's leading IT firms, both based at Technopark, have unveiled ambitious growth plans which will propel them into the big league.

IBS

IBS has inaugurated the first phase of its 450,000 sq.ft campus in Technopark Phase I. The campus will be complete by 2009 and employ 4,500 professionals.


UST Global

Just a couple of days later, UST Global has launched work on its 10,000 seater campus at Technopark Phase II.

The first phase with a built-up space of six-lakh sq.ft and a capacity to accommodate 5,000 professionals, would be ready within 12 months. The investment plan for the first phase was about $ 60 million (about Rs. 240 crore).

The second phase to be completed by 2010 would have a built-up area of four-lakh sq.ft and a seating capacity for 3,000 professionals. The proposed investment plan for the second phase was $ 40 million (about Rs. 160 crore).

Finally, the third phase had been designed to have a seating capacity for 2,000 professionals and it would have a built-up area of three-lakh square feet.

The software development area alone totals a whopping 1.3 million square feet, the overall campus could have a built-up area of close to 2 million square feet, when ancillary areas are also factored in!



The first phase is a behemoth with a total of 1 million sq.ft of built-up area, with about 14 floors at 70 m tall. Its yawning atrium is said to span a football field while the building's footprint extends over 5 acres! It will overtake the 850,000 sq.ft. Thejaswini as the largest IT building in Kerala and will be one of the largest single buildings in India.

Well, that is about 2.5 million sq.ft launched in the span of a week, but the good news does not stop there.

Infosys

Work has finally begun on the signature campus of Infosys. The 1-1.5 million sq.ft campus, designed by Hafeez Contractor, will seat 8-10,000 professionals and be completely finished by 2010. The first phase of 400,000 sq.ft is expected to be complete by end-2008.

Tata Consultancy Services

Closeby, at Phase I, Infosys' arch-rival and India's largest software firm, TCS, is reported to be ready to commence work on its massive development centre by December 2007. The centre, the first in Kerala, will have over 1 million sq.ft of built-up area.


So it's raining campuses in Technopark, now if only the Government were one-tenth as active. The acquisition of the 100 acres of Technopark Phase III is expected to be complete by December as is the first 200-250 acres of Phase IV - Technocity. These have been pending for years now, and we can only hope that the burst of activity from the IT majors will spur, if not shame, the netas and babus into action!


I have often been told, sometimes by readers of this blog, that the "who's who in IT are already in Cochin". Well, I guess they mean TCS, Wipro and CTS - although 3 out of the 15-odd Indian and MNC majors in India is a long way from "the who's who already being in Cochin". Of the these, only small operations - less than 500 personnel apiece - are in place. Only Wipro has shown signs of expansion, with an 8000-seater campus by 2010-11. On the contrary, TCS is now getting ready to commence construction of an ODC in Trivandrum instead. In Trivandrum, all the majors - Infosys, TCS, UST Global and IBS - have started work on their own campuses, as I have detailed here.

I sympathise with those who choose to ignore reality, they have a serious malady indeed! It is blindingly obvious that actions speak louder than words. Whereas the projects in Trivandrum are already being built and occupied, elsewhere all those countless "millions of sq.ft" are still on the drawing board, if at all, despite years of relentless crowing.

On the website of Technopark, it is mentioned that about 3.2 million sq.ft of space has been completed and occupied, and that another 2 million sq.ft are under development, not even including Phase II. On the other hand, the Infopark, Cochin site mentions that "it plans to have 1.7 million sq.ft" without mentioning much about the actual space as of today. The creative use of the words "plan, expect, confident, will happen, in another 10 years" and so on - an integral part of any confidence trickster's repertoire , are the cornerstones of most news reports coming out of our neighbour by the Vembanad Lake. The saddest bit is not that such media reports come out in a most media-aware of States, but that so many of our enlightened citizens fall hook, line and sinker for all this.

Wake up!

Wednesday, October 17, 2007

The Printed Word Unsaid.....

The CM's been making waves recently by conducting a road show at Bangalore for IT CEOs. Surprising? Well, maybe yes, though the incumbent has certainly taken more initiative despite limitations of ideology, political environment and experience (or the lack of it) than the previous gentlemen, who was all hype and no action. But the surprise of the visit was not in the happenings therein, not even in the official Govt. press announcements.

No, the bombshell was left to a vernacular daily, one which claims to be the big daddy of dailies. In this report, it claimed that during the CM's visit to the Infosys campus at Electronics City, Infy officials had reportedly said that "Trivandrum and other cities in Kerala need to upgrade their infrastructure to attract investments. Kochi is the only city in the State to have the requisite facilities to attract investment!"

Image Hosted by ImageShack.us


Wow, now that's an endorsement if any. Right? Well, maybe not, if one pauses to consider the facts. Infosys is developing a mammoth development centre - designed to eventually accomodate 10,000 or more techies - in Cochin.....err no....Trivandrum. So, why in heavens's name would they be doing that if they think Cochin is the only worthy "destination" in Kerala? Could they be making a titanic mistake in not following that pioneer of IT development (no, not Microsoft, not IBM) Dubai Internet City in making a beeline for Cochin?

Well forget that the latter does not have a muncipal water supply or a sewerage system. Forget that one often needs to borrow a lunar buggy from NASA to negotiate its roads which bear closest resemblance to the craters on the Moon or that to live here is to attract a higher life insurance premium on account of the likelihood of expiring on account of malaria or swamp fever. Forget even that Cochin accounts for less than 20% of the IT exports of Kerala and less than 0.2% of the IT exports of India, it is still after all the "IT hub of Kerala and a close competitor to Bangalore" That is, if the same vernacular daily is to be believed.

Shocked, like many a sane person, to read this latest report, I thought of dropping Infosys a mail and asking if they had radically changed their mind about Kerala. In the midst of contemplating whether to drop a line to Kris Gopalakrishnan himself (yea right!), I was pleasantly surprised to receive a reply in double quick time from the Infosys media office.

And here it is....I suggest you take a look yourself and see how "truthful" our media are.

Image Hosted by ImageShack.us
TAG this image (Link)

Chances are that there was no statement of this kind was ever made. Perhaps, someone said that cities in Kerala need to improve, maybe they didn't say anything at all. When there is a vested interest with a newspaper at its disposal, a whole lot of noise can be created.

I remember, a couple of years ago, the same daily had run banner headlines stating "IT giant Oracle comes to Cochin; 1400 jobs to be created", whereas the truth was that Oracle had opened a one-man sales office to service Small and Medium Business. Funnily enough, the same daily somehow overlooked the fact that the CM had put a lot of emphasis on the Rs 6000 Crore Technocity project - the largest of its kind in Kerala, while the others papers had carried it prominently in their reports! (Check out the report in The Hindu)

Instances of selective reporting and misreporting by a section of media are rampant these days. Perhaps it will serve them well to remember that whatever their claims of readership, the day these readers abandon them due to their lack of credibility, the advertisements will dry up too. Perhaps it is also time to send a clear signal that prejudice and bias will not be tolerated in an institution - like the press - which is supposed to be a symbol of justice and impartiality.

Sunday, October 07, 2007

Pachyderms of the white variety....... (Part I)

We seldom bat an eyelid when we see a pachyderm of the species "elephas" a.k.a. the Indian elephant. After all, despite the recent fall in the numbers of tame elephants, these black giants are a common site on the roads of Kerala, plodding along or hitching precarious rides on lorries. Except for when an enraged elephant occasionally polishes of its mahout or vice-versa, the headlines seldom feature these symbols of Kerala. Much more print space and news-bytes are being grabbed by another manifestation of the species, one which doesn't exist in the real world but affects all of us even more profoundly - the white elephant. A reference to a King's prolific expenditure on his "sacred" white elephant which eventually bankrupted him, these days it has been coined to refer to any project - big or small - which has limited utility but ends up sucking in vast amounts of resources.

In a State whose exchequer cannot even afford to pay its employees without creating miles of arrears, one would think financial prudence would ensure that such projects are not considered for implementation in Kerala. But seeing what the Govt. is upto, one would think that a suicidal tendency has gripped the whole of that monumental white building formerly called "Hazoor Kutcheri" (a.k.a. The Secretariat).

The best case in point is a project which is often half-heartedly mentioned whenever there is a hue and cry about the cratered roads and snail-crawl traffic of Cochin - the Metro Rail. On the face of it, the whole thing looks snazzy and truely a mark of a metropolitan city, a word often and inexplicably tossed around these days in the same breath as any random mention of Ernakulam. After all, New York, Singapore, Hong Kong and London all have a Metro, so why not Cochin? After all, it will reduce congestion on the roads and transform the city overnight. And with the backing of a personality as eminent as Mr. Sreedharan - the man who made Konkan Railway and Delhi Metro a reality against great odds - one would think that the scheme is on pretty firm ground.

Ahem.....think again. Actually the whole idea is on weaker footing than the worst marsh in Kakkanadu or Maradu. For starters, there is the size of the market. Mr. Sreedharan himself has gone on record to say that only for metropolitan areas with a population of 4 million or above does Metro Rail (here I refer to an elevated/underground rail-based mass transit system) become feasible. Hmmmm....last heard of, Cochin and its suburbs - even when the area nearly from Cherthala to Angamaly is taken into account - could only account for about 1.5 million people (1.3 million in 2001). So that leaves a slight deficit of....err...2.5 million people to reach the threshold of viability. Unless someone plans to ship in people en masse via the Dubai Ports' terminal, that's a biggg deficit - 2,500,000! And not to say that all the cities with more than 4 million people have Metro Rail projects. In fact, Cochin ranks 20th in the list of Urban Agglomerations in India. Of the top 20, only Calcutta (Population - 16 million) and Delhi (Pop: - 18 million) have operational projects while Mumbai (Pop: - 15 million), Hyderabad, Chennai and Bangalore all have projects still in the planning or construction (in the case of Bangalore) stage. Not to mention the remaining 14 cities above Cochin. Perhaps, that's why the Union Ministry of Urban Development has washed its hands of the project or why it has been in gestation for three years now. Metro Rail costs upwards of Rs 150 Crore per Kilometer, and the total cost will be more than Rs 4000 Crores of burden for the taxpayer - you and me. And when even the Delhi Metro is struggling to break even, this project will take forever to do so. There are already serious doubts about the viability and benefits of the Bangalore Metro, as voiced in this article. A project perpetually in the red means either a ignominious end or a massive bill for the public. After all, the netas and babus who moot such hare-brained but good-to-print schemes don't have to foot the bill for their follies.

What a city like Cochin (urban area population of 600,000 in 2001) needs is to have its roads widened and grade separators installed at strategic points. That will be much cheaper, if less glamourous, and much quicker to implement. At the most, a less-snazzy version of mass rapid transit system called a Bus Rapid Transit System (BRTS) is what Trivandrum and Cochin need. In fact, Ahmedabad - a city five times the size of Trivandrum and Cochin - has already gone in for it, as have many major cities across the world. So perhaps, we should also contemplate a lesser pachyderm, one which suits the requirement.

Seemingly not satisfied with one behemoth white elephant, moves are afoot for a plan to create one in each district. No, they are not planning Metro Rails all over the place, that has yet to arise is someone's brilliant brain! Instead, the Govt. is planning to set up an IT park in each district, except for Trivandrum and Ernakulam. The idea sounds interesting enough, after all why limit the benefits of the "knowledge industry" (as IT/ITES is euphemistically referred to these days) to just Trivandrum and now to Ernakulam. Spread it around, after all there is a socialist (ahem....that's how us commies call ourselves now, to sound less Maoist) Government in power now, remember?. And it will be a first-of-its-kind exercise. Well, perhaps there is a good reason why it is so. A reason why states like Karnataka, Andhra Pradesh and Maharastra, each of which has an IT industry 15-20 times the size of Kerala's, haven't tried the same tactic eventhough the regional inequity is greater in their cases than for Kerala and hence the imperative to spread things around is more urgent.

The reason could be that the knowledge industry, unlike what has come before - manufacturing - is people dependent. And the people in question are not ones who would camp out in the middle of nowhere and pretend to be happy and industrious. They usually demand facilities (at least when they are still single and ready to mingle) - hangouts, chillouts and other assorted outs - which right now even Trivandrum and Cochin are only starting to provide. The knowledge industry also needs quality urban infrastructure and accomodation. Not to mention connectivity - both data and air. The latter seems to be a perpetual and insistent demand, eventhough the vast majority of techies only make a once or twice annual migration to that great, wide world called "Onsite" and back. So where does this put the plan to set up IT parks at all districts? In very murky waters indeed. So what will prompt IT/ITES firms to come setup shop in these new destinations, when most of them are atleast 70-100 Kms from the nearest airport and have no nouveau urban facilities to speak of.? Ever heard of a Cafe Coffee Day or Barista in Malappuram, or a five-star hotel in Pathanamthitta? Of course not to say that these towns don't have their charms, after all they are essential components of God's Own Country. But the question is whether they can compete with a Coimbatore, a Jaipur or a Vizag, and the answer is quite resoundingly NO. In plainer terms, they cannot even compete with the homegrown champ -Trivandrum. One more problem is that despite the recent proliferation of colleges (especially of the engineering variety), the great majority of existing and in-process (sounds rather mechanistic, I know!) talent pool is focussed around Trivandrum (19 out of 76 engineering colleges) and to a lesser extent, Ernakulam and Calicut.

So if the parks in the districts can't be sold (leased), where does that leave the Govt? With a bunch of empty buildings or land, at the very least. And on a familiar and worrying note, it again leaves the tax-payer with a rather large hole in the treasury. NASSCOM President Kiran Karnik, on his latest visit to Technopark, had a more practical idea - the familiar hub-and-spoke model. Make Trivandrum, the State's IT hub, a centre-point for IT developments in the adjoining districts like Kollam, Pathanamthitta and maybe even Idukki. Thinking beyond Baalus and Velus, we could even extend the linkages to Kanyakumari, Tuticorin and Tirunelveli districts which have about 50 engineering colleges between them. And what are these linkages? Transportation connectivity, for starters. 4-lane roads to all these places from Trivandrum, so that the travel time to the Trivandrum International Airport is cut from hours to one hour at the most. Build up Trivandrum as an IT destination, through Technopark. By developing Technopark Phases III and IV (Technocity) at double-quick pace, bring in at least 50-60,000 techies in the next 3-4 years. Then, keeping Technocity as the focus, allocate land or built-up space to companies in the "spoke" districts. Once companies are confident that these location are within the business and logistics sphere of Trivandrum, they will be more comfortable in moving there. This is essentially what Mysore, Navi Mumbai and Hosur are all trying to do now. While these towns are lapping up what is essentially the overflow from their neighbouring behemoths Bangalore and Mumbai, we still don't have that luxury. Trivandrum barely accounts for 1% of the national IT exports and Cochin for about 0.2%. Yet, with a bit of foresight and luck, those figures can go up and pave the way for the hubs to feed the spokes. Trivandrum and Cochin, for starters, and maybe Calicut a few years down the line. Price Waterhouse Coopers have been engaged to study the whole idea, and one hopes that they will advise soundly and that their advice will be received without being massively diluted by political imperatives.

End of Part I

(This is a long one, so it's going to be in two parts.)

Saturday, October 06, 2007

Pachyderms of the white variety....... (Part II)

As if we didn't have enough white elephants roaming around the State, here comes another one - in the shape of the proposed Kannur Airport. On the face of it, a fourth international airport to cater to the needs of the NRI-heavy North Malabar looks like a welcome proposal. It could avoid the long trips that the people of this region have to make to Calicut or Cochin Airports to catch flights to the promised land - the Gulf - be it for employment or to fulfill the sacred Haj. And with so many potential travellers in the region, there surely must be potential for a new airport.

At this rate, Kerala will be overrun with airports. They are already clamouring for one near Ambalapuzha. And the Union Govt.'s decision to lower the minimum separation between proposed airports and existing ones from 150 Km to 75 Km looks set to aid this proliferation. In this age of low cost carriers, let the common man fly. After all, there are airports in pretty much every town in the US and Europe and people more often fly than take a cab. Well and good. However, we are....ahem...atleast twenty years behind on the evolutionary curve of air travel than those regions, and even there, the budget carriers and legacy airlines alike are struggling to stay in the black. Too much competition, combined with the stratospheric cost of fuel these days is oft cited as the main reasons. And competition is bad not just for airlines, but for airports as well. Simply put, as more airports compete for the same base of passengers, the lesser the traffic each can garner. The three airports in Kerala already divide up the pie pretty well. To make matters even more interesting, neighbouring airports like Coimbatore and Mangalore are commencing international operations, luring away even more traffic. While in the case of short-haul and even longer duration domestic flights, increased competition may slightly expand the market by reducing fares, in the case of international flights this may not be the case. Kerala has perhaps the third highest foreign tourist influx in India, one of the highest NRI (non-gulf) populations and a burgeoning IT industry to boot. Despite all this, there is not even a single major non-Gulf based international airline (with the notable exception of Silk Air/SIA) flying out of Kerala. On the other hand, Amritsar (with a smaller airport and lesser traffic) now has direct connectivity to the US and UK. The reason, other than the Universal Brotherhood of Sardars, is that Amritsar manages to concentrate all the traffic of the State whereas in Kerala it is spread over three airports. Whereas regional and domestic flights can operate aircraft with capacities from 50 to 180, international flights typically use 250+ capacity aircraft like the Boeing B-777 or Airbus A-330 to achieve economies of scale. Hence, while the former can adjust to pick up smaller loads from multiple airports, the latter prefers to fill up at one airport. To take an example, even when there are 250 passenger per day from the three airports of Kerala to New York, no airline can afford to hop its aircraft across the three cities to pick up the entire demand. The result is that passengers from Kerala to and from the US or Europe are forced to hop via Dubai, Abu Dhabi, Colombo or Singapore. So while there is the convenience of an hour or two's saving in travel to the airport, one ends up spending up to a day more catching a connecting flight or flights. On the whole, a losing proposition.

The proposed Kannur Airport will eat into the traffic primarily of Calicut Airport, which even today has poor domestic and international connectivity compared to the State's other two airports. The basic point is that an extra airport does not generate totally new traffic, it will more likely tap into the traffic of existing airports in its vicinity. Thus, while Kannur Airport may generate a few of its users anew because of the convenience and lower fares, most of its traffic will be residents of Kannur and Kasargode districts who earlier used to use the Calicut Airport.

The State Govt. proposes to acquire 2000 acres for the project. Even if the proposed BOT model reduces the outflow from the State Treasury, it does mean a whammy for the Calicut airport. So, the sum total of things may be worse off than they are today. Two airports with poor connectivity in place one with a potential for good connectivity.

A better solution? Keep the three international airports as they are and develop commuter airports - say at Kannur, Kottayam and Pathanamthitta - which could have direct connectivity among themselves as well as feeder connections to the three main airport. The advantages - better international connectivity, lower overall travel times, lower development costs (for the commuter airports) and faster implementation. Instead of acquiring mammoth strips of land for the planned white elephant airports, the Govt. can better focus its efforts on acquiring the around 100 acres required for the drastically necessary expansion of the Trivandrum Int'l Airport and about 130 acres needed for the next phase of development of Calicut Airport.

So where's the rocket science in all this, the powers-that-be know all this, please quit yapping - you may say. And I would be damn happy if that were the case. Unfortunately, all that is in evidence is a runaway population of white pachyderms, even while the current Govt. loudly and frequently professes financial prudence. Perhaps part of the reason is that the most powerful and tortuous of the feudal provinces within the corridors of power - the Finance Department, is run by bureaucrats and accountants. With due apologies to both of the above, they may lack some of the abilities of true financial planners. A financial planner will recognise that there is often a strategic angle to a decision and not a purely financial criterion. So, the cheapest necessarily may not be the best. Having professional managers helps in this regard since they can examine all the contributory factors to and the resultant impacts of what may appear to be a purely cash-flow based go-no go decision. After all, it is very easy to be penny-wise and pound foolish (rupee wise and crores foolish, to put it in local terms). Add to this, the political motive - an IT Park or Airport (atleast the foundation stone of one) in your constituency is very strong resume point for the next election, especially so when there are only foundation stones to count and not live projects. So no matter whether a project is even remotely viable or actually suited to/required in that region, the decision is taken often on a purely political basis. Maybe that is why one tends to find tea research stations suspiciously located on the seashore and desalination plants located even more suspiciously on hill-tops.

Add to this the profit motive - the under-the-table profit of course - and we have a winning cauldron of skulduggery which prevents logical reasoning ever seeing the light of day except in very, very rare circumstances. Considering that a worthy in the Finance Dept. was recently given a dressing down by the CM for notching up a long list of objections to the Vizhinjam deep-water port project apparently to protect the interests of someone near and dear who owns a resort in the vicinity of the port site, one cannot discount the profit motive at all. In fact, it may be the strongest one of all.

Okay, we have seen some of the symptoms and causes of white-elephantiosis govermentus, is there a possible cure? No quick fix, I must admit - unless we adopt the Chinese (shoot everybody and don't ask questions later) model of dealing with financial incompetence. But for starters, one can ensure professional financial planners are called in for major projects. Independent viability assessments - perhaps involving that taboo C word, consultants - will also help. Will there be enough commuters to ever make Metro Rail break even or investors to occupy the oodles of space at "Smart" City if it ever does make it off the drawing board? A bit of prudent analysis will go a long way in answering at least the basic viability question, if not the nitty-gritties - like will a project even in 15 years or 18 years? Setup a citizen oversight committee to examine major proposals as well as random samples of more mundane decisions. And NOT pack this committee with retired Finance Secretaries and Accountant Generals, but more proactive, perhaps younger, souls. Those who understand that Excel-based modeling is mathematical analysis and not a fashion parade for plus-sized women, would be a big help, for starters!

Let's not hold our breaths over this. Maybe it will take the complete and utter bankruptcy of the State by its herd of white elephants for someone to realise that we should all have been smarter. Let's hope it doesn't need to get to such dire straits before we realise that truth - that we need to be smarter!