T.N. needs a ‘tech’tonic shift to accelerate growth

For long, Bengaluru was the technology capital and Chennai the technology services capital of India. With large companies such as Texas Instruments, Motorola, Intel, Cisco and SAP establishing in-house technology centres in Bengaluru, the city grew into a heterogenous technology hub for products, services, embedded systems, e-commerce, BPO and tech-focused start-ups.

Chennai, on the other hand, had a homogenous technology ecosystem of mostly IT services and BPO companies leveraging the city’s domain and technology talent. A long and thriving financial services, manufacturing, healthcare and retail heritage helped Chennai steal a march on the other IT hubs in attracting the top 10 IT services companies. The IT services and BPO sectors were at the forefront of adding talent, thanks to some of the best engineering and science colleges in the State. Chennai thus scaled quickly to emerge among India’s top three IT services destinations.

Yet, while Bengaluru could boast of many home-grown companies such as Infosys, Wipro, MPhasis and Mindtree with annual revenues of $1 billion to $14 billion, Chennai only has a handful of names such as Intellect Design Arena, Zoho and Freshworks with annual revenues of under $800 million.

Even so, Chennai has had a roaring success with companies founded outside Tamil Nadu and India. Although headquartered elsewhere, TCS and HCL Technologies have their largest software development base in Chennai. Multinationals such as Cognizant and Sutherland, too, have had a great growth run in Chennai.

However, this early mover advantage for Chennai did not quite extend through subsequent waves of growth driven by in-house technology centres of global enterprises, digital natives such as Facebook, Amazon, Google and Salesforce, and new-age tech start-ups.

Two decades ago, Chennai was the first port of call for names such as Citigroup, Bank of America, American Express and Standard Chartered Bank looking to set up in-house centres. While Chennai did attract other marquee names from across sectors such as financial services (The World Bank, BNY Mellon, PayPal, Barclays, BNP Paribas), manufacturing (Ford and Caterpillar), telecom (Verizon) and energy (Shell), it is far from realising its full potential.

What is the ‘tech’tonic shift needed for Tamil Nadu to reclaim that momentum? Here’s what the State can do to accelerate high-value growth along with social inclusion.