Gujarat is fast emerging as the next IT hub in the country. The rapidly-growing IT sector is on the constant lookout for new avenues for development. With the country’s highest GDP of more than 16 per cent, the slow and steady plunge of the State into the IT and the ITeS sector is well justified.

The State Government has made a long-term commitment to the Information Technology industry with initiatives in policy, facilitation of IT infrastructure, nurturing of a sound human resource base and active involvement in urban development. The IT industry in Gujarat is in the process of identifying young budding talent base coupled with opportunities of collaborating with global enterprises. To further boost IT penetration, plans are afoot for setting up multiple special economic zones in Ahmedabad, Gandhinagar and Vadodara (which also happen to be the top 3 hubs in the IT map of Gujarat) along with private players. The Government has set up an InfoCity at Gandhinagar and announced a new industrial policy in 2003.

The growth of the SME sector alongside the IT heavyweights has been very impressive from time to time. The story of success that these SMEs have written has been instrumental in carving out their niche in the IT firmament of the State and stimulating economic growth by contributing their expertise. 

Rakeshkumar V. Patel, who is into Computer Hardware sales and services, started his company Prime Infotech, way back in 1993. Recalling his initial days of how he got involved in this business, Rakeshkumar said that he was undergoing training in Baroda which involved assembling of computers and selling them in the market when his true calling came.

“I was very much impressed by the kind of business that I was into and thought of doing something on my own. This urged me to start my own company that is mainly into selling of computers, peripherals, desktops, laptops and networking products. My first opportunity came when I was asked to deliver 17 computers to the Ganpat University and it was then when I first built my association with HCL Infosystems in 1997. Since then, we have nurtured a close association with Dell, HP, Canon and many more.”

Another old player in the SME sector is Deepak Shah of Hurricane Systems. He has been in this line since 1986, addressing the peripheral industry. “Our company sells printers, scanners, AiO printers and has associated with different brands like Sony and Dell from time to time. With an annual turnover of over Rs.15 crore, we have a business share of 80% in the line of distribution, while the rest 20% is in the retail sector.”

The Gujarat market has been very conducive to the growth of these SMEs and has a concrete role in promoting them. The mushrooming of these small enterprises is a testament to this very fact. The price policy (without much fluctuation) and the services offered by the vendors that they are associated with, also go a long way in giving rise to such kind of market conditions.

Opportunities
It is said that education and government vertical are the most promising and growth driving verticals in the State. Sardar Vallabhbhai National Institute of Technology located in Surat is one of the best engineering colleges in India. It is one of the 20 National Institutes of Technology created by the Central Government. Also, there is Nirma University which is ranked 14th in self-financed engineering colleges in India. In 2008, Indian institute of Technology was established at Gandhinagar. IIT, Gandhinagar is mentored by IIT, Mumbai. IIT's first batch started on 1st August, 2008, at a temporary building of the government college, Chandkheda, Gandhinagar. This means that not only at the campus level but also at the individual (home level), many students require IT products.

Jignesh Mehta of DHWANI Computer has been in this business since 1992-93. His company has been dealing with mostly consumer goods from HP, Samsung and Canon and has been a corporate partner for companies like Vodafone and Airtel. When asked about how motivating the Gujarat market has been for the SME vertical for conducting their business, Jignesh remarked, “It is a healthy market growing very rapidly, compared to all other markets. Telecom, petrochemical and construction are the fastest-growing sectors in the Gujarat market. Companies like Tata DocoMo, Videocon have already commenced their businesses and eight more companies are starting their services in the next two months. The new companies coming in also provide the scope to conduct productive business, which is of great help for businesses like us to grow.”

Challenges
There can never be any story without tears and smiles. Likewise, Hemant Shah of Care Solutions Unlimited has a different tale to share altogether. “I started my company in 1998. The market has now gone through a drastic change from what it was a few years back. Looking at the present scenario, the competition is at an all-time high. The market has become all the more competitive and profit making has become a big concern for all, whether they are small-time or mid-sized resellers and distributors. For each and every product, the competition has grown manifold. If you are to survive in such a market condition, you need to have that edge over your competitors operating in the same arena.”

On the other hand, there are companies like Elitecore, which overcame all odds that came in their way to realize its vision and created an IT company based in Ahmedabad. In order to give a final shape to his dream, Hemal Patel, CEO of Elitecore Technologies, banked on the fast-growing Internet security and convergent billing solutions markets. He instinctively knew that people living in the Tier-II cities, if given a chance, could work wonders to his company. “I chose Ahmedabad as the centre of operations since it was his native place and applied his vision for Elitecore products with a strategic initiative in maintaining low-cost operation base from India. The company has successfully leveraged the low cost and highly skilled talent of Gujarat to develop superior quality IT products and that allowed us to compete with players from around the world,” Hemal concluded.

The recent financial crisis had cast a gloomy spell on major IT corporates. Reeling under its impact, most of these players went through difficult times and witnessed a drastic fall in their profit margins. However, the small-scale IT companies in Gujarat remained immune from its impact. These companies, undeterred by the slowdown, continued to witness good business growth and recorded impressive surge in the export of software and hardware products.

According to estimates available with the Software Technology Park of India (STPI), IT exports from Gujarat registered 72% year-on-year growth in 2008-09, rising by over 20% over the last three years despite the challenging times. Revenues from IT shipments from Gujarat soared to Rs.1,270 crore in 2008-09 from Rs.740 crore in 2007-08 and this growth pertains to the SME sector at large.
Navdeep Goyal, who owns Silverline, deals in almost all the hardware products starting from motherboards to laptops and desktops and peripherals like printers and scanners.  His company also deals directly with the system integrators. On the recent slowdown that had hit the market a year back, Navdeep commented, “The recession had little or no impact at all on our business. Ours is a Rs.70-crore company and we remained intact to this margin even during the recession, though with a little bit of fluctuation. The reason is that we do not cater to a single product. If you look into our product profile, we have been associated with a lot many brands and deal in every kind of hardware products. So, hard times like the recession do not affect us much.”

To this, Vadodara based, Sajeev Nair, Head-Product Management, Matrix ComSec Pvt Ltd adds, “Despite of the economic slowdown, the exports of information and communication technology (ICT) industry have estimated to cross Rs 1,000 Crore mark form Rs 750 Crore. The slow down did not impact this segment substantially.”

Road Ahead
It is said that there is something in the soil of Gujarat, which makes it an industrially advanced state. It is a fact that the people of Gujarat have entrepreneurship in their genes. The support of a proactive government is the key factor for rapid industrial growth. The Government of Gujarat has undertaken several policy measures and incentives to invest in various sectors. These policies aimed to promote overall development in the economy.

The success of these small and mid-sized entrepreneurs lies in their art of striking a right balance between the market conditions and right decisions. They see every business challenge as the part and parcel of the game and readily fights back them.   The State is also known for its entrepreneurial spirit as well as robust social and physical infrastructure. It enjoys excellent labor environment and is supported by a responsive bureaucracy. All these advantageous features make Gujarat a Golden Hub for all Business Technologies.