Being most eligible among tier II cities, it will enjoy courtship of IT companies

The 21 century dawned with the promise that Madurai, the most eligible among tier II cities, will enjoy the courtship of information technology companies. Its human resources, low cost land, good connectivity and infrastructure kindled hopes of the gateway to the south Tamil Nadu becoming a much favoured IT destination.

After a decade into the new century, the promises still remain in the cloud. Of the two IT Parks promised by the Electronic Corporation of Tamil Nadu (ELCOT), one (Ilanthaikulam) has its physical infrastructure in place and remains under lock and key since its inauguration on February 19, 2011. The other at Vadapalanji is still in a nascent stage of development.

Entrepreneurs point to the timing of formation of IT Parks as the main reason for Madurai missing the first bus. It came at a time when global recession was setting in. Bigger players shelved their expansion plans at this juncture and were keen on consolidation. The scam that hit the IT major, Satyam Computers, resulted in withdrawal of intent. Apart from global and national factors, local conditions also contributed to the retardation.

Foremost, according to industrialists, is the absence of entrepreneurship zeal among the youth. Portrayal of Madurai in popular cinema as a city of violence has had a psychological impact on investors shying away from south. The political climate prevalent in the region has not helped in getting any investment.

But hopes of a second chance for Madurai to capitalise on the IT wave have been rekindled as the industry is confident of an economic turnaround soon. The question in the minds of small and medium IT entrepreneurs of the region is why Madurai could not capitalise on its strengths like Coimbatore. Has “negative branding” of Madurai by mass media led to missed opportunities? The issue has become complex in the last few years, says R. Sivarajah, member of Confederation of Indian Industry’s IT panel.

In the intervening years since the State Government unveiled its policy of promoting tier II and III cities and towns as IT destinations, real estate prices have spiralled to compete with Coimbatore.

Consoling factor

The consoling factor is that they are not as high as in Chennai. Mr. Sivarajah also points to the need for a collective effort to bring a big ticket investment to Madurai. He moots the idea of developing Madurai as a production hub, turning away from the service model of the IT industry. Bigger players can opt for small investments to develop specific products by small and medium enterprises.

Kathir Kamanathan, Chief Executive Officer, Chella Software, is very optimistic of a turnaround for Madurai. With tier I cities getting saturated it is only a matter of time for resources to spill over to tier II cities. A NASSCOM –A. T. Kearney study, ‘Location road map for IT-BPO growth: assessment of 50 leading cities,’ divides the cities across the country into four categories – leaders, challengers, followers and aspirants – on the basis of knowledge pool availability and skill set assessment; infrastructure; social and living environment; enabling business environment; government support and operating cost.

Madurai is placed in the ‘challengers’ category along with big cities like Ahmedabad, Chandigarh and Nagpur. International air connectivity has become a reality with the introduction of a direct flight to Colombo. Now, Madurai has a clear edge over other tier II cities, though flights to Singapore and Gulf countries will be an added advantage.

Mr. Kathir explains State Government and ELCOT are keen to develop Madurai as a preferred destination for investment in IT industry. The ELCOT is ready to make the prices for space at the Ilanthaikulam IT Park competitive for small investors. The first IT unit will become operational in the IT Park in a year, he says. V. V. R. Raj Satyen, Managing Director, Riseahead, has a different solution to the problem of small and medium players in the IT segment of Madurai. He feels that the government could give a boost to these units by promoting exclusive IT industrial estates.

Mr. Satyen firmly believes that only tourism and IT can be the growth engines for the city. Efforts should be made to bring back professionals of southern districts now working in the metros. It is not the salary that lures them to bigger cities. It is the product that adds prestige to their profile, says Mr. Satyen.

The Software Industries Development Association of South Tamil Nadu (SIDA) has called for a relook at the State’s IT policy to extend development schemes to small industries. It has appealed to the IT Minister to earmark a separate zone in the IT Park for local small and medium enterprises that fall short of the required export business or turnover. All the eligibility norms should be made feasible for local SMEs.

The SIDA is confident that its members will occupy 1000 to 1500 square feet of space available in the built up area of Ilanthaikulam IT Park.

The immediate need of Madurai is activation of the Ilanthaikulam IT Park. ELCOT announced the formation of IT Parks at Ilanthaikulam (28.91 acres) and Vadapalanji (239.58 acres) in 2008, with Special Economic Zone notification coming on April 30, 2008. It also revealed a plan to house the State’s Disaster Recovery Centre at Ilanthaikulam.

According to early estimates, the Ilanthaikulam IT Park was then expected to provide direct employment to 20, 000 people and indirect employment for 45, 000 others.

The Vadapalanji IT Park was estimated to have the potential to employ 40, 000 people and offer indirect employment to 1.2 lakh people.