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Hyderabad: The IT Factor

Feb 1, 2006
2006 / February 2006

Monumental architecture is nothing new in Hyderabad, capital of the southern Indian state of Andhra Pradesh. Presiding over the old town is the magnificent 16th century mosque Char Minar, with its four 160-foot minarets. The mosque is almost as ancient as the city itself, and stands impassively amid the constant cacophonous throng of trucks, taxis, motorized rickshaws, bicycles and pedestrians around its base. This is India as we imagine it.

In a suburb 10 miles northwest of Char Minar, new monuments are rising and an alternative vision of India is being forged. The area is officially known as the Hyderabad Information Technology and Engineering Consultancy (HITEC) City, but the popular name is Cyberabad. Here, in less than a decade, a shimmering complex of modern office blocks has sprouted from the dusty plains.

The drive from Hyderabad to HITEC City is a leap through time. You leave behind the crowds, odors and noise of traditional India and reach an idealized, hermetic IT paradise. Encompassing 151 acres, HITEC City has its own reliable electricity supply (the rest of Hyderabad is prone to blackouts), its own armed police force, state-of-the-art communications and an ambitious development plan that has facilitated phenomenal growth.

Underpinning HITEC City’s dramatic ascent is a document titled Vision 2020, drawn up by U.S. management consulting firm McKinsey & Co. and adopted by Andhra Pradesh’s former chief minister, Chandrababu Naidu (nicknamed “chief minister for laptops”). The achievements of Vision 2020 are undeniable. In just a few years, Hyderabad has been transformed from a provincial backwater into a significant player in the global economy.

HITEC City can be regarded as a monument to the unofficial patrons of modern Hyderabad, the “Three Bills”: Clinton, Gates and the dollar bill. President Clinton visited the development in March 2000, and endorsed Hyderabad’s headlong rush toward a brave new future. One of the first corporations to establish a major presence was Gates’ Microsoft, and its 42-acre India Development Center campus is the company’s largest facility outside the United States. (Not to be outdone, Infosys is looking to build a 100-acre software development campus in the city.)

In December, Gates reaffirmed his belief that information technology (IT) and the IT-enabled service (ITES) sectors offer India limitless potential. “In the beginning, it was your engineers who went to the U.S. to enable the IT industry to develop,” he said. “Now the flow is in the reverse direction, with these engineers translating the benefits of their knowledge back home.”

Hyderabad’s burgeoning high-tech economy is being converted into huge profits — software exports alone are now worth more than $1.5 billion each year, and rising. A recent report indicated that the net worth of Hyderabad’s IT and related service industries could be $50 billion within seven years.

In addition to the booming IT and ITES sectors, a 370-square-mile area to the north and east of Hyderabad known as Genome Valley is home more than 100 biotechnology companies involved in training, research and manufacture. The biotech industry was identified as one of the “engines of growth” in the Vision 2020 document, and government policy has strongly encouraged biotech initiatives. Controversially, this has included the introduction of genetically modified (GM) crops.

Two-thirds of Andhra Pradesh’s population of 80 million are involved in agriculture, and it was the agricultural policies advocated in Vision 2020 that contributed to Chandrababu Naidu’s ultimate electoral defeat in 2004. Under his government, long-standing subsidies for the local staple, rice, were slashed; agricultural costs increased; and farmers were encouraged to switch to GM crops that were relatively untested in the tropics (subsequent harvests were often below expectations). The result was an economic and political rift between the rural and urban communities.

The new state government is seeking to redress the balance. Ironically, technology could be the answer, providing the potential to establish IT and ITES centers in even the remotest villages, which would offer alternative forms of employment for the hard-pressed farming communities.

But Hyderabad will inevitably remain the linchpin of the state’s rapidly evolving economy. A $3 billion nanotechnology park is under development, and plans have been unveiled for the construction of a 113-acre financial district close to HITEC City. Multinationals such as UBS and Franklin Templeton have already ear-marked sites within the district, and real estate prices have surged.

Although the pace of the city’s current economic growth is unprecedented, its role as a hub for international commerce goes back centuries. Thanks to its strategic location in the heart of the subcontinent, Hyderabad has long been a trading crossroads, and in the late 16th century it was one of the world’s leading centers for fabrics, diamonds and, above all, pearls.

Hyderabad’s fortuitous geography has been enhanced by an increasing number of air links. The whole of India is potentially within an hour’s flight, and new international routes linking the city with Southeast Asia, the Arabian Gulf and the United States have been established. Direct British Airways flights from London are also in the pipeline, and work has just started on a new international airport — which will open in 2008 — with the potential to handle up to 40 million passengers each year.

A short distance to the south of HITEC City, atop a 400-foot granite hill, lie the rambling ruins of Golconda Fort. Dating to 1143, this extensive complex reveals the multiple layers of Hyderabad’s history. Over the centuries, the region has been ruled by Hindu and Muslim dynasties, and each has left its mark on the architecture of Golconda, the seat of power.

In this ancient fort, there is an unusual antecedent to HITEC City. Thanks to remarkable acoustics, if you stand beneath the dome of the fort’s southeast Victory Gate and clap your hands, the sound will be heard clearly in the Bala Hisar Pavilion at the highest point of the hill, three-quarters of a mile away. Interconnectivity has a long tradition here. These days when you clap your hands in Hyderabad, the whole world hears.

Entry Requirements

All U.S. citizens require a valid passport and visa to enter India. For the most current information on entry and exit requirements, check with one of the Indian consulates in Chicago, New York, San Francisco or Houston, or contact:

The Embassy of India
2536 Massachusetts Ave. N.W.
Washington, DC 20008
tel 202 939 9849 or 202 939 9806

More Information

American Chamber of Commerce in India
Maurya Sheraton Hotel
Suite 1262
Sardar Patel Marg
New Delhi, India
tel 011 2410 2690/91

State Government of Andhra Pradesh

Genome Valley Biotechnology Hub


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