IT SMEs to demand salary subsidy

Taking a leaf out of the step taken by the Andhra Pradesh government, information technology (IT) small and medium enterprises (SMEs) of Orissa will approach the state government for the reimbursement of the basic salaries of technical personnel joining the sector for a period of 1-3 years.

This is to boost the IT SMEs that currently comprise 98 per cent of Orissa's 139 IT companies registered with the Centre-promoted Software Technology Park of India (STPI).

The demand of the IT SMEs for the reimbursement of the basic salaries will shortly be made known in the form of a letter to the state IT department.

Andhra Pradesh recently adopted the stand of reimbursing the basic salaries of technical personnel joining IT SME sector in the state. The owner of an ITSME firm in Orissa says, "If the state government agrees to our demand, it would immensely help ITSMEs combat the onslaught from the big IT companies."

Mostly because of salary and other inftrastructural problems, attrition rates in the ITSMEs are genuinely prohibitive, by industry standards. It is hovering at well over 23 per cent while the big names in Orissa have attrition rates between 11 to 16 per cent. According to the owner, "It is next to impossible for us to compete with big names like TCS, Infosys and Satyam".

The Temple City has, of late, become an IT hub with other big names like Wipro, Hexaware, MindTree and BPO Genpact making moves along with international giants like IBM.

Accenture and Cognizant have also been invited to join them in Orissa. To cater to the requirement, the government is setting up three IT infocities covering an area of 1074 acres.

Simultaneously, Orissa ITSMEs would also approach the state government to keep incentive provisions in the proposed ICT Policy on lines laid down by states like West Bengal, Uttaranchal and Himachal Pradesh.

Another major demand of ITSMEs in the state is about pruning prohibitive land prices and floor area ratio (FAR) for setting up structures. While land prices in West Bengal, Uttaranchal and Himachal are in the range of Rs 10 -12 lakh an acre, in Orissa it is over Rs 25 lakh an acre.

This, according to ITSME sources, is gradually becoming untenable for the sector. If things are to change on the ITSME front, the Orissa government will have to veer land prices on the lines laid down by West Bengal, Uttaranchal and Himachal Pradesh.

The other area of concern was the low FAR permitted to ITSME companies. While the FAR provided to the IT sector in Andhra Pradesh, Tamilnadu, Karnataka, West Bengal, Uttaranchal and Himachal Pradesh is around 4, in Orissa it is about 0.6.

Besides, infrastructural problems arising out of necessity for space, transport, proper power supply, security and policing and waste management are current areas plaguing the ITSMEs. The demand is that the government should give a thought to refurbishing these in a correct fashion.

Recently the demand for the extension of taxation provisions, kept in the STP Act beyond March 2008, has also been put up by the ITSME seeking the state government's intervention.

Local preference on using the ITSME sector in the state government's different e-governance programmes would also be a major boost for the sector, feel ITSME companies.