The infrastructure is fairly stable with education system, skills availability and power

ITs beginning in Tamil Nadu was deceptively quiet, tentative, and known only to a limited circle of technical brains in the 1970s. The information technology sector has grown phenomenally in the three decades that followed to lead a commercial explosion. The State now ranks second in software exports and continues to attract larger investment and foreign direct investment flows. The information and communication technologies (ITC) sector employs around eight lakh people and provides indirect employment to a further 2.2 million in the State.

The natural choice

With its excellent education base and the innate ability of its people for mathematics and logic, the State has provided the most important resource for the sector in the form of talent pool, and organisations within and outside India have come here to lap them up. While Chennai has been the torch bearer for this revolution, other cities are opening up as well. The boom in construction, the phenomenon of retail growth and deluge of vehicle deployment show the visible impact of the change brought about by the IT industry in the economic fabric of the State. The industry has expanded itself to cover not just outsourcing of software work from global destinations but also of business processing and computing infrastructure management. The focus lights now turning on the domestic industry as the hitherto elusive Indian market is poised for high growth. This will not just be an export-focussed industry, but will be of great benefit to Indian society as well.

At the start of this decade, Tamil Nadu needed to be promoted as a destination of choice when neighbouring Karnataka had an and Bangalore was on the business map of global forces. Tamil Nadu at that time had very few players like TCS, Polaris and Pentafour, setting up their first campuses around the Sholinganallur area on the Old Mahabalipuram Road (OMR). As years rolled by, the path of progress was well-laid: now one can look back with justifiable pride at OMR which has transformed as the IT Highway, dotted with technology parks, campuses, colleges, and even budding townships and malls representing the neo-lifestyle of the global citizen. All leading IT players have not only set up huge shop here, but have their platters full, facing challenges of a different order in meeting the enormous demand placed on them.

Flight to future

Some factors that gave India commercial success were the competitive advantage offered by its resource pool, education infrastructure, the ease with which the people and processes operated, the English language capabilities that scored vis-a-vis China and in a way the protectionist practices in some western markets. Would the same factors drive future growth? How do we go forward to become leaders, and sustain the leadership?

Plans of countries with similar advantages like China, the Philippines and Vietnam and the protectionist measures in countries like the U.S. will necessitate a change in the business model. Indian IT will have to elevate itself to the next level, move from outsourcing to smart sourcing, as the means for colossal savings to shore up top and bottom lines of companies. India needs to be designers and developers, delivering world-class products and services at low cost, and offers strategic services with integrated solutions, ranging from re-engineered internal business processes to full business process outsourcing along with IT and infrastructure services.


Tamil Nadu has a thriving automobile and ancillary industry; it has acquired a major name in the healthcare field; and it rivals Mumbai and Hollywood in the scale of its entertainment industry. Can all these industries reinvent themselves through a greater infusion of IT? The redefinition is imperative to succeed in the wave of smart sourcing the critical IT intervention to world-class companies. The significant presence, for example, of automotive and IT companies together in a cluster in Chennai should be used to encourage cross-functional collabo- ration. This in turn should provide stimulus to the innovation engine leading to the possible emergence of India as a frugal design centre of the world.

Healthcare for all

In this scenario, the State needs to gear up to address critical questions like providing bandwidth to offer all the players, getting research units and hardware majors to set up shop, and creating enablers for the education system to cope with the growing demand for skills, quantitatively as well as qualitatively. Government role is critical in encouraging growth and stimulating innovation.

The industry on its part will have to gear itself to handle important issues of developing sustainable growth models, identifying opportunities in the global economy, strategising to face possible backlash, and scale up to become global companies.

Delivering affordable healthcare to India's masses presents enormous challenges and opportunities for the medical community, insurers and other service providers. Innovative technologies, processes and partnerships forged by the Central Government and private companies have made a beginning in bridging the healthcare gap. The synergies of healthcare and technology will need to grow at an exponential rate in the near future, if the country is to meet the needs and expectations of people to deliver healthcare with the perspectives of inclusiveness, collaboration and innovation, using technology to reduce disparities. The country needs to make ‘Healthcare for all' a reality.

Model city

Chennai has come this far because its ecosystem including education institutions kept pace with the requirements. The IT corridor has allowed expansion of IT offices into campuses. But the next stage of growth will have to result in creation of sustainable cities with high efficiency buildings, roads and their integration with transit systems to achieve smoother flow of people, integrated townships and energy demand management initiatives.

One should recognise the right of children to free and compulsory education, while at the same time, create employable and productive workforce through the introduction of IT in education. As IT transforms the governance process, the digital ecosystem will narrow the gap between affluence and poverty.

Can Chennai be that dream city one aspires to live in, a financial city a la Shanghai or London? A livable city, green, eco-friendly, with traffic snarls dispersed? Is the city equipped to meet the challenges of a financial city in terms of growth, the latest advancements, innovation in financial products and financial inclusion? How do HR and skills, innovation and entrepreneurship contribute to making the State a forerunner for India in its growth story? What does it take to see the transformation of the city to be the services capital of India? IT companies in Chennai help the world financial centres, and can now look inwards, to help this transformation.

To promote innovation, one needs to have a highly collaborative four-anchor ecosystem, with academia, industry, venture funds and government playing critical roles. These form the classic pieces of the puzzle that fitted well to power the Silicon Valley or the Cambridge model. To create such innovation clusters, Chennai can try to garner some learning from other successful Indian examples like Bangalore, and examine what elements of this formula Chennai owns. The infrastructure is fairly stable with education system, skills availability, power, teaching-oriented research, and strong industry presence in some sectors being other strengths.

Capitalising on these, the State needs to focus on building an ecosystem around the dominant industries like automotive that would bring in world-class domain expertise as well as ready market, promoting innovative entrepreneurship.

Academia-facilitated incubators have had a welcome beginning with the IIT Research Park that houses large players as well as small venture caps that can be good candidates as co-innovation partners. With such promising start, the State needs more universities and institutions to show similar initiative inviting industry to aid incubators.

The missing pieces in the jigsaw could very well be the facilitation with finance, guidance and mentoring for venture capitalists, plus government and regulatory support to de-risk enterprise innovation and provide positive impetus to R&D through appropriate incentives.

S. MAHALINGAM, Chief Financial Officer and Executive Director, Tata Consultancy Services.


Connect 2010 to unfold critical issuesSeptember 5, 2010