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Telangana emerges as a ‘Challenger’ in the IT sector

The state has been focusing on geographical divergence by encouraging IT companies to set up units in major tier-II towns. Rather than concentrating on a select few cities, such a move will enhance economic activity across several districts

October 14, 2021 / 05:05 PM IST
Source: Shutterstock

Source: Shutterstock

Telangana has consistently performed well in promoting and nurturing the Information Technology/ITeS industry. The state government has laid emphasis on the IT sector ever since the formation of Telangana seven years ago.

The youngest state has achieved a manifold growth in terms of IT exports — 14.25 percent CAGR since the formation of the state — and employment generation, thanks to factors such as good civic infrastructure, connectivity, law and order, and a business-friendly environment. Measures taken to combat the COVID-19 pandemic too have helped the state to maintain a steady growth in the IT/ITeS sector.

The Department for Promotion of Industry and Internal Trade (DPIIT) of the Ministry of Commerce, which released its Industrial Parks Rating System (IPRS) 2.0 report on October 5, has rated three industrial parks in the IT sector in Telangana — Financial District IT, Hyderabad Knowledge City, and HiTech City IT Park Madhapur — as ‘Challengers’. Leaders are Industrial Parks and Special Economic Zones registering the highest level of performance, while Challengers are those who performed ‘quite close to leaders’, but marginally lower at the aggregate level. Aspirers are parks and SEZs that need significant interventions in the future to improve their performance.

What’s more interesting is that Telangana has surpassed the national average growth in software exports. The state government in its annual report has claimed that the exports from the state have more than doubled the national average in percentage terms.

India recorded a four percent growth in exports of software services (excluding exports through commercial presence). It is estimated at $133.7 billion during 2020-21, according to Reserve Bank of India (RBI). The total exports were estimated at Rs.9.92 trillion in 2020-2021 from India.


According to the Software Technology Park of India, software exports by units registered with it have increased by 7 percent YoY to reach Rs 5 trillion ($67.4 billion) in FY21 from Rs 4.66 trillion ($62.82 billion) in FY20.

Telangana achieved a growth of 12.98 percent in the IT/ITeS exports in the same period. It posted a record Rs 1.45 trillion ($~19.45 billion) software exports in 2020-21 as opposed to the Rs 1.28 trillion in the previous year. Employment generation in the IT/ITeS sector too spiked by 7.99 percent over 2019-2020.

As opposed to Telangana, the STPI-Pune, has achieved estimated exports of little over Rs 1 trillion in 2021. Estimates of exports from the region — STPI Pune directorate covers Maharashtra and Goa — are pegged at Rs 93,000 crore during the lockdown.

In terms of absolute numbers, the total number of employees in IT/ITeS in Telangana has increased from 582,126 in 2019-20 to 628,615 in 2020-21. Across India, this sector saw 138,000 new hires in 2020 — that’s ~33 percent of the national hiring in this sector was done by companies in Telangana. This is a reflection of the state’s IT prowess.

In addition to attracting large investments from global giants in the IT/ITeS space, Telangana also boasts the presence of marquee companies such as Apple, Google, and Amazon. Salesforce, Goldman Sachs, Fiat Chrysler Automobiles, OPPO, MassMutual, and the National Payments Corporation of India are among the many who have announced investments in the state.

The state has been focusing on geographical divergence by encouraging IT companies to set up units in major tier-II towns. Rather than concentrating on a select few cities, such a move will enhance economic activity across several districts. An incubation centre with 1,400 seats capacity has been made operational in Warangal, while a 556-seat IT tower in Karimnagar with 80,000 sq. ft space opened in July 2021.

The state government has completed IT tower in Khammam, and similar towers are coming up in Nizamabad, Mahbubnagar, and Siddipet.

The state government’s push for startups, through its T-Hub incubation centre, has helped 1,100+ startups raise Rs ~2,000 crore as investment since 2015. The second phase of this project is set for inauguration.

A Saye Sekhar is senior journalist.

Views are personal and do not represent the stand of this publication.
A Saye Sekhar is senior journalist.
first published: Oct 14, 2021 04:52 pm

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