Lower costs, talent availability in tier-II cities will attract IT cos: Hysea

IT/ITeS sector has been evolving continuously over the last three decades. At every step, the underlying ethos has aimed at enabling customer success. To achieve success, the IT industry has to keep re-discovering the way it operates. Hyderabad Software Enterprises Association (Hysea) believes that emerging technologies drive future growth of IT sector.

In an exclusive interview, its president Bharani K Aroll tells Bizz Buzz how the non-profit organisation is supporting the expansion of the IT sector beyond Hyderabad and into the tier-2 cities of Telangana. Hysea continues to collaborate with the industry, academia and other players in the ecosystem for skilling and sharing best practices

The government's proactive investments in tier-II cities in developing IT Towers in Warangal, Khammam, Nizamabad, Mahabubnagar and Siddipet will fuel the growth of IT industry across tier-II cities. Ready availability of infrastructure and changed circumstances due to Covid where majority of IT workforce is working from districts will surely push growth in tier-II cities

What are Hysea's plans for this year? Could you share your vision?

Hysea's plan for the year broadly covers the key-focus areas including return to office (RTO). The RTO is a coordinated plan to safely bring back employees and contractors to the workplace. We are supporting the IT companies' efforts to RTO even as we recognise the longevity of the hybrid model of working.

Another key area is strengthening the innovation ecosystem across the industry. Furthering our aggressive promotion of innovation, we are planning to launch a few CoEs (Centres of Excellence) on emerging technologies to accelerate the collaboration and innovation across the local industry to promote upskilling and exchange of application use cases.

Hysea also continues its corporate social responsibility (CSR) journey. This year, we would like to mobilise more support from the industry for areas like education, healthcare and wellness, and environment.

Hysea is applying for an 80G certification shortly, which we feel will help in drawing increased support from the member companies to the CSR activities. Section 80G of the Income-Tax Act offers tax deductions on donations made to certain funds or charities, with an aim to provide tax incentives to individuals indulging in philanthropic activities.

How is the IT/ software industry in Hyderabad doing post Covid-19? Till when will the hybrid work / WFH culture continue at the city's IT offices?

In terms of Hyderabad's IT industry growth, we forecast 2022 as the year of peak demand and growth similar to the growth witnessed a decade ago during 2011-12. We expect industry to grow minimally at 15 per cent, which is about 2 per cent more than the growth recorded during last year.

Hyderabad will lead once again by growing at double the national average primarily because of the digital transformation that the industry is going through. It is very apparent that the hybrid work model is here to stay for long. Yet, industry is poised to increase its RTO proportion beginning March this year, depending on the impact of the Omicron variant.

At present, how many employees are working across various IT firms in the city and how many are doing WFH? Going forward, will there be any changes in that percentage?

Currently, about 6.5 lakh people are working in the IT companies. Almost 95 per cent staff of large companies, 75-80 per cent of mid-sized companies, and 30-40 per cent of small companies are still availing the WFH option. These numbers willcomedown to 50 per cent on an average by June this year, which of course will largely depend on the Omicron spread.

Let us know briefly on the investments happening in the IT/ITeS sector across Telangana?

Telangana is set to maintain its healthy traction as global players are set to set up their centres in the city. New global in-house centres (GICs) are expected in sectors like BFSI, automobile and telecom especially in the 5G space. These new investments are in addition to the ongoing aggressive expansions by the existing companies of their facilities in the city.

With more IT companies expanding their base in Hyderabad, could you predict what will be the overall number of IT employees in the city by the end of next year?

The number of IT workforce in the city is expected to rise by 10 per cent by this March over 6.5 lakh till the end of last year. The conservative growth over the next three years would be around seven per cent year-on-year. The growth factors could be primarily due to the huge demand in talent across the globe in digital technologies, especially cloud technologies.

With the encouragement from the government and intervention programmes by Hysea and other industry bodies, skilling in cloud technologies has been accelerated at the IT offices and also at the college-level. Hysea is focused on making sure the ecosystem is capable of maintaining the required supplies of talent to meet the spike in demand in digital technologies.

How are the city-based IT companies dealing with the high attrition rates? Do you think the demand for talent will continue this year as well?

The heightened demand for talent will surely be sustained at least for the next five years as industry goes through the inevitable digital transformation and not all players can complete this transformation at the same time due to various factors like funding needs, pandemic impact and scaling up of talent.

Attrition is bound to keep peaking due to the growth in the industry by way of new GICs coming to Hyderabad and existing ones expanding their operations. The spike in demand will lead to high attrition for another year or two. The IT firms will continue their focus on employee retention strategies, re-skilling and intake of young talent from the institutions.

This could prove to be a golden era for the industry-academia partnership with compelling incentives for both sides due to sustained levels of talent demand over the next few years.

Do you see IT/ITeS companies spreading beyond Hyderabad, particularly to tier-II cities of Telangana?

The pandemic has made hybrid model and remote working as a 'new norm'. The companies are more likely to establish their satellite offices in tier-II cities now more than ever. They could do well by retaining workforce that has already started working remote from the rural parts of the State. Lower costs and talent availability will make tier-II cities more attractive.

How will the new ICT policy support the expansion of IT companies in other cities of the State?

The new ICT policy focusses on creating a sustainable ecosystem in and around Hyderabad and the tier-II cities also, creating an attractive proposition for investors and better jobs for local youth. Besides fuelling the digital empowerment of citizens and use of technology for social good, the new policy sets its sights on taking IT to tier-II and tier-III cities.

The government's proactive investments in tier-II cities in developing IT Towers in Warangal, Khammam, Nizamabad, Mahabubnagar and Siddipet will fuel the growth of IT industry across tier-II cities. Ready availability of infrastructure and changed circumstances due to Covid where the majority of IT workforce is working from districts will surely push growth in tier-II cities.

What will Hysea be doing to boost the IT/ITeS sector in the State? How many people were trained by your mentoring platform so far? Would you continue such training programmes in the next year as well?

Hysea believes the future growth areas for IT/ITeS will be surrounding the digital and other emerging technologies and also transitioning from pure services to a combination of services and productisation of services model. Hysea contemplated some key steps including setting up of a cloud CoE in Hyderabad in partnership with the State government, MeitY and industry players.

Hysea has also launched a unique mentoring platform, 'Beyond Mentoring', for women leaders in partnership with Beyond Pinks in October 2021. Breaking away from the traditional mentoring journey, this programme empowers women to choose the mentor and the length of mentoring relationship.

The coveted Hysea leadership development programme exclusively for women leaders has trained more than 1,000 mid and senior level women IT professionals to take up leadership roles. This programme will also focus on industry becoming friendlier and encouraging women IT professionals looking to join back the industry after a break.Our goal is to increase women in leadership from the current 5-20 per cent.