Mega-city Hyderabad

What India needs is software to get developed here and not by the sale of family jewelery software manpower. A software engineer earns about 45-50 dollar an hour on an average in the US. But it costs Indian companies 35-38 dollars an hour to keep him there and this excludes the taxes to be paid on the earnings in the US. The point is that all this effort earns only about 12 per hour for the engineer.

The same amount of money can be earned in India for a quarter of the problems. On an earnings of only 25 dollars an hour in India, the margin is the same of about 12. There are some examples of Indian companies already charging upwards of 40 an hour for work done in India. No wonder theirshare prices reflect it. But by sending the engineers abroad, a scarcity of good engineers in growing in India.

Sadly, most of the balance earnings happen on cut rate bargains. Last year it took nearly 30,000 software professionals in India to export services worth 500 million. It works out to less than 10 dollars an hour 8212; which is about what a plumber earns in USA. If by the year 2000, the software developed for exports in India has to grow to two billion, the number of people required is simple arithmetic.

There are only two major issues that must be addressed to fix this. How do we increase the availability of manpower and how do we move up the value chain and attempt for a 25 an hour average rate.

Government should be asked to only do a limited number of things that can otherwise not be done. A software technology park STP initiative in every state capital can not fix it. What India needs is one software mega-city with the world8217;s largest software university at its heart and an entireindustry built around it. Such a city will be easier to create an information highway for as well. The existing STPs in places like Bangalore would anyway keep on doing well.

What the government also needs to create is a dedicated television channel for software education including regional languages 8211; what better use can there be for Doordarshan National channel.

For India to move up the value chain, the manpower being churned out must have a good industry experience and exposure. It must have access to computers to start with. For this the domestic market must do well and also serve as training ground. The domestic market has almost flattened and needs a kick start 8212; much wider proliferation of computers than the current 500000 an year. Government must make all hardware duties to zero whether on components or on finished products. Computers must be freely importable with no special import licence required and finally a 100 per cent depreciation in the first year must be allowed.

The balance willhappen by the market forces taking over and creating the real software miracle for India. Who is better placed than Hyderabad to become that Mega-City. With Microsoft in Hyderabad, other firms will follow. The right city, the right CM and the right PM, all it now needs is a couple of decisions to make it the mega-city for software.

The author is an industry analyst.