IT success hinges on power: McKinsey

BANGALORE: The preliminary report of McKinsey & Company - engaged by the Karnataka government, the STPI and the CII to primarily look at creating jobs in the IT sector - unlike most other documents in the genre is not sugar-coated.
Sample this:
* In the longer term, Karnataka faces the threat of losing its dominant position in the IT sector due to competition;
* Karnataka currently faces severe power shortage and incumbents are not satisfied with current service levels;
* Lack of transparency in direct land acquisition process results in lengthy delays;
* IT enabled services (ITES) offer the highest potential for job creation, but Karnataka is behind in the race with only a 10 per cent share and limited top of mind recall.
``The government is aware of all these problems. Without a hardware policy the state is bound to lose out in the future. However, the power problem due to a combination of factors will take some time to be resolved,'''' says IT minister B K Chandrashekar.
The report notes that even after quick clearances from KPTCL, projects have to wait for 2-3 months before power is actually commissioned to a facility. The use of power generators, costing anywhere between Rs 50 lakh and Rs 1.5 crore, to bridge the power supply gap results in the escalation of project costs which is a major concern for investors, according to the report.
It maintains that Karnataka has been very successful in creating about 80,000 jobs as a result of Bangalore being established as a `cluster'' for IT services and bio-tech. ``It could aspire to create another six lakh such jobs over the next six years in the state by expanding Bangalore as a cluster for ITES and creating IT\ITES `clusters'' in tier-2 cities like Mangalore, Mysore and Hubli,'''' recommends the report.
STPI director B.V.Naidu observes: ``Compared to Gurgaon, the state has been late in realising its potential in ITES. But with our inherent strengths, it''s just a matter of time.''''
Says IT secretary Vivek Kulkarni: ``Karnataka has the largest number of pure-play ITES companies in the country, which are now expanding their operations rapidly.''''
After meshing certain elements suggested by the state IT department, a refined and final report will be presented to the CM and the IT Task Force chief N R Narayana Murthy - sometime next month.
On McKinsey''s recommendation, the Karnataka government plans to craft an ITES policy shortly. ``We have developed a draft of an ITES policy for the state, similar to the IT and BT policies. This will serve both as a marketing document and also as a rallying point across different government entities,'''' says the report. Chandrashekhar agrees.