‘Still Plenty Of Legroom For The IT Services Sector’

Karnataka’s IT, BT and tourism minister Priyank Kharge explains the reasons behind the slowdown in the IT sourcing industry, the startup ecosystem in the state, and much more in an interview with Ayushman Baruah.

Edited excerpts:

While Karnataka, specifically Bengaluru, has been one of the biggest beneficiaries of the IT outsourcing revolution, the sector seems to be under pressure now with the large IT services providers reporting subdued growth and projecting even lower growth. What according to you are the reasons for this?
There is high and low for every industry. There have been times when we have seen extremely high growth that has propelled the industry, and times when we have hit a plateau. So I don’t agree that it’s completely down. It’s just part of a business cycle. There is still plenty of legroom for the IT services sector; it’s penetrating into other sectors, such as banking, as well. Bengaluru has matured as an IT services industry and we are moving into emerging technologies such as big data sciences, IoT, animation, artificial intelligence, cyber security, etc.

What is your action plan for the Indian outsourcing industry? What is the government doing to promote further investments and growth in the sector?
We go beyond the typical incentives that other states give as well. We focus on what more we can do by providing a complete ecosystem in terms of skills, talent, centres of excellence for R&D, etc. If you look at our current ecosystem, you will see that Nokia has its biggest R&D centre here, Oracle has its biggest digital unit here, and so is the case with technology giants such as GE, Microsoft and Apple. We are slowly emerging as an R&D destination. I am providing an ecosystem for ideation, innovation and invention that will lead to investment. When I have the first three Is (ideation, innovation and invention) in place, the last I (investments) will automatically follow.

After Donald Trump took over as the president of the United States, the H1B visa , which has direct implications for the Indian IT outsourcing industry, is being discussed a lot. What do you think will happen in the next 12-18 months?
What other countries should realise is that they are getting very high skills at a very affordable price through the H1B visa scheme. More than us, it is a cause of concern for the big corporations in those countries because they would have already set their businesses, and profit and loss accounts based on these models. It’s a cause of concern for us too, but I think, the bigger losers will be the foreign nationals and companies because they are not skills ready.

Protectionism across the developed world is rising. Are there significant domestic opportunities that Indian IT companies can tap into?
The ecosystem in our state, especially in Bengaluru, is already strong. Any protectionist measures will only enhance this further.

The IT/ITeS industry is faced with an acute skills shortage. As per reports, about 95 per cent of the technical graduates in India are unemployable. What do you think is lacking and what are you doing to help produce more quality graduates?
The government of Karnataka is very serious about this. We have to bridge the gap between the industry and academia; we are trying to come up with a scheme where we involve the industry to train students in their curriculum. For example, recently we have announced a Rs 288-crore centre of excellence for aerospace. There is no point of my announcing an aerospace park without investments, and the investments will come only when there is talent and skills. To create the necessary skill sets, we have partnered with Dassault Systems and a couple of other European companies wherein the curriculum comes from them.

Over the next year or so, we are also launching a programme called ‘Yuva Yuga’ to train over 1,50,000 students with employable courses prescribed by the industry and for the industry.

What is the biggest challenge that you are facing in your IT portfolio?
One of the biggest challenges is with the startup ecosystem. There are umpteen number of startups here, and everyone thinks that theirs is the biggest idea. The challenge is to validate these ideas. About 95 per cent of these startups are failing. So I must ensure to reduce this number to say, 90 per cent. I need to provide an ecosystem, where failures are reduced by providing them with the right mentoring and funding.

How do you plan to attract more startups and small and medium enterprises to the state?
We are the only state in the country that has come up with a multi-sector startup policy. From agriculture to aerospace, we are ready to accommodate every sector. We have something called an Idea to PoC (proof of concept) grant that none of the states have. Our ecosystem allows startups to ideate, and if the committee thinks the idea is good enough, we give a grant of up to Rs 50 lakh for turning it into a PoC, and then, we also help to make it a commercial product. Besides that, we are the first ones to come up with a startup cell that has dedicated relationship managers to help registered startups navigate through the maze of governance. As a result, we have some 2,379 startups registered with us today compared to just 27 startups seven to eight months ago.