'It is a much cheaper option to take services from national operators than to provide them'

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Why has Gujarat been slow in the uptake of IT services?
It is difficult to pin it on a specific reason. One thing is that Gujarat has traditionally done very well in the industry. It has done well in trade and commerce as well. Its investment in stock markets has been very high. Traditional businesses like chemicals, petrochemicals, diamond have done well. So one thing would have been, they were far too busy exploiting whatever else they were doing.

The other reason could be that the IT industry started taking off in the mid 90s. It started in Bangalore, the NCR region, and to a lesser extent in Mumbai.

Many of these boys went outside for better opportunities. The new engineering graduates were able to find jobs in the south, with the help of such support groups. The number of engineering graduates was very less, and with this outflow, the number of graduates got reduced further. Companies did not come here because people were not there. And people did not stay back because the companies were not there. It became a cycle and the critical mass never took shape.

Now things are changing. Many engineering colleges have been set up in the last 10 years. There has been some natural growth-companies which are here despite all this, are doing well. 2002-03 were bad years for IT, so the investment climate was in any case not very good. Those things are now past. I would say that we are seeing some kind of inflection point. One, there are a much larger number of graduates available. Because of organic growth, the IT industry in Gujarat is slightly bigger now.

How did the software industry come up in the first place if there was no IT trained manpower in Gujarat?
The industry existed, but there was no scale. The IT industry even today would be a couple of thousand crores. That is not a small amount. If you take the STPI figures, the exports were Rs 500 crores. But, if you see contextually, the 1 lakh crore for the country and out of the Rs 15-16,000 crore for Karnataka alone, Rs 500 crore is very small. But for Rs 500 crore also you need people.

A lot of cultural issues are also held responsible for that. Is knowledge of English a reason for that?
The command of a particular language has nothing to do with the culture per se, but I agree that English had been an issue here. English in Gujarat is possibly not of that high standard as it would be in Bangalore or Delhi or even Calcutta. This is the skill that is helping Calcutta and West Bengal a great deal over the last few years.

What is the current manpower deployment in Gujarat's IT industry?
It would not be more that 20,000. The total investment would be roughly 1.5 lakh to a person. Actually, this figure applies to ITeS/BPO industry, which is heavily technology dependant. In some of the other IT-related industries, the figure could be lower.

How will the growth of ITeS affect the existing industries in Gujarat? Won't it create a situation where the already scarce engineering resources will move to the better paying IT services industries?
I don't think that would happen. If the IT industry grows, an ecosystem would develop which would be useful to all the other industries. The growth would attract more customers, enrich the existing ecosystem and that would benefit the entire economy of the state. We are talking from an overall perspective. So, while a unit or two might get definitely affected, overall the industry will develop.

Do you think the new industries will stretch thin the existing talent pool?
There would be an overlap. Gujarat produces 7,000 engineering graduates a year, currently chances are that 200 get employment in the state, 4,000 go outside the state and the rest may change their line-going for an MBA, go abroad, or manage ancestral business.

With the growth of the IT industry, the number of people going out of the state would reduce. Even people who have migrated to other states, may consider coming back. The comparison is with NRIs. A whole lot of them are coming back to India because the opportunities available here, today, are better than that may be available outside the country.

What are your plans over the next two years?
Currently, the space we are operating in has to do with Internet security, online applications, and a major focus is in the e-Governance area. Our hands are full with whatever activities we have. But, there are areas like managed security services. Currently all the services that we provide are within the country, now we want to take them abroad. We are focusing on electronic procurement mainly in Gujarat. My certification services are provided on an all-India basis. So I am working with many state governments and other large PSUs also for e-procurement. Sometimes we even go further and enable their entire vendor network, enabling their entire ecosystem. We are doing this with many organizations like IFFCO, Northern Railway, now also with Indian Railways. We have also developed PKI enabled DGFTs online application which accepts applications for import licenses online. We are doing similar work for the Gas Authority of India, government of Karnataka. Two-three states are looking at digital signatures for filing of VAT returns, Deptt of Income tax-our role here was enabling their systems so that their software could accept the digital signatures.

With its huge IT network catering to its internal needs, is the GNFC into the business of providing connectivity?
We were in the business of providing bandwidth, but we are slowly withdrawing from it. Because the scales just did not justify it. It is a much cheaper option to take services from national operators, than to provide these services.

Which are the new technologies being evaluated?
We are working on quite a few applications, essentially relating to digital signature certificates technology for innovative things. We use it for gatepass systems, for improvement of material and vehicles out of our factory in Bharuch, etc. Normally, an authorized officer signs a gatepass and a security guard at the gate checks it. The security person relies on the scratch of a signature and he is too afraid to ask the authorized person if he signed it or not. With 100s of vehicles moving out everyday, there could be pilferage or tracking may be missing. With this system there is automatic tracking, a system of locks, and it is the system that verifies the signature. We are looking to implement it elsewhere as well.

We have done a successful pilot for the treasury department of Gujarat, where the money or request for money, which was till now a paper-based request, would be based on digital signatures.

On your expansion plans?
We have only scratched the surface in terms of digital signature certificates, especially for different applications. Data center's the same story. We are an expanding team, we will take on more complex projects, and more number of projects as well. Leasing of data center space is not on our radar. This is a conscious decision.

What are the marketing initiatives for digital certificates?
Distribution is very important for digital signatures. Support is also important. Ultimately, it is used by an individual user and he will have individual problems. We have 175 partners across the country for the distribution of these signatures. While others have a multi-tier distribution channel, we supervise all our partners directly. And more the number of channels you have, these may start being treated like commodity. We don't do that, it is still a technical product for us. We like to have better control of our channel. So if it means me keeping 10 people with me to supervise 180 people, I think that is a better option.

Alok Singh
aloksi@cybermedia.co.in