ICT in India

ICT Development in India J A Chowdary President & Managing Director, PortalPlayer Pvt. Ltd. President of HYSEA [email protected]

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ICT Development in India • • • • • •

India Advantage Current ICT scenario in India What are the Strategies for sustained growth Impact of ICT dev on Digital Divide Case study of AP ICT implementation Summary

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ICT Development in India • • • • • •

India Advantage Current ICT scenario in India What are the Strategies for sustained growth Impact of ICT dev on Digital Divide PortalPlayer’s case study Summary

PortalPlayer

India Advantage • Large Economy – $ 450 bn GDP: 4th largest in Purchasing Power Parity

• Stable growth and strong macro-economic parameters – – – – –

GDP Growth rate over 6% in last 5 years Declining inflation rates-under 5% Stable exchange rate-5 year CAGR depreciation under 6% Current account deficit averaging 1% External debt / GDP under 25%; short term debt manageable

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India advantage contd..

India Advantage • Stable politico legal system • Rapid approach to globalization • Human resources – – – –

Large pool of intellectual capital English as medium of education Fast growing middle class group Good educational infrastructure

• Capital Markets

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India advantage contd..

India Advantage • Stable politico legal system • Rapid approach to globalization • Human resources – – – –

Large pool of intellectual capital English as medium of education Fast growing middle class group Good educational infrastructure

• Capital Markets

PortalPlayer

India advantage contd..

India Advantage • Stable politico legal system • Rapid approach to globalization • Human resources – – – –

Large pool of intellectual capital English as medium of education Fast growing middle class group Good educational infrastructure

• Capital Markets

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India advantage contd..

Good Educational infrastructure • As of March, 2000 India had over 340,000 employed software professionals, which is likely to reach 2.5 million by year 2008 • India produces 122,000 Engineers per year , out of which 73,000 are in ICT area

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India advantage contd..

India Advantage • Stable politico legal system • Rapid approach to globalization • Human resources – – – –

Large pool of intellectual capital English as medium of education Fast growing middle class group Good educational infrastructure

• Capital Markets

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India advantage contd..

Market Capitalization of listed Indian Infotech companies (in US$ Billin)

• Sharp re-rating in valuations of companies in the knowledge sectors – consistent out-performance over main indices 95

55 48 41

13.6 0.6

1

18.5

0.76 30 Jun 2000

30 Apr 2000

28 Feb 2000

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30 Dec 1999

30 Aug 1999

31 Mar 1999

31 Mar 1997

31 Mar 1997

31 Mar 1993

100 90 80 70 60 50 40 30 20 10 0

India advantage contd..

India Advantage • • • • • •

Huge Domestic market in India Availability of Datacom infrastructure Time Zone advantage Lower cost of infrastructure Quality as the key focus for ICT development Government support

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India advantage contd..

Domestic market in India • The ICT domestic market in India has grown from $10 million in 1991 to $1.75 billion in 1999 • 19 States out of 26 States have announced new IT policies • E-Governance, e-Banking, e-Manufacturing, e-Commerce, etc are the new mantras in India • Major private industries participating in providing high bandwidth optical fiber network in India

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India advantage contd..

India Advantage • • • • • •

Huge Domestic market in India Availability of Datacom infrastructure Time Zone advantage Lower cost of infrastructure Quality as the key focus for ICT development Government support

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India advantage contd..

India Advantage • • • • • •

Huge Domestic market in India Availability of Datacom infrastructure Time Zone advantage Lower cost of infrastructure Quality as the key focus for ICT development Government support

PortalPlayer

India advantage contd..

India Advantage • • • • • •

Huge Domestic market in India Availability of Datacom infrastructure Time Zone advantage Lower cost of infrastructure Quality as the key focus for ICT development Government support

PortalPlayer

India advantage contd..

India Advantage • • • • • •

Huge Domestic market in India Availability of Datacom infrastructure Time Zone advantage Lower cost of infrastructure Quality as the key focus for ICT development Government support

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India advantage contd..

Quality, the magic mantra • India is home to 18 out of 34 SEI CMM Level 5 companies worldwide • Out of top 300 software companies, 170 have acquired ISO 9000 certification

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India advantage contd..

India Advantage • • • • • •

Huge Domestic market in India Availability of Datacom infrastructure Time Zone advantage Lower cost of infrastructure Quality as the key focus for ICT development Government support

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India advantage contd..

Government support • • • • • • •

Setting up of STPs/EHTPs/EPZs Setting up of IIITs High Speed Datacom links Tax incentives Proactive State Government initiatives Creation of huge domestic market Setting up VC funds exclusively for ICT

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ICT Development in India • • • • • •

India Advantage Current ICT scenario in India What are the Strategies for sustained growth Impact of ICT dev on Digital Divide PortalPlayer’s case study Summary

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Current ICT scenario in India Indian IT Software and Services Industry (in US$ Billion) 87

90 80 70 60 50 40 30 20 10 0

14 2.85 97-98

3.9 98-99

5.7 99-00

8.75

00-01

01-02

Projections PortalPlayer

2008

Offshore Software Development

Offshore software development using high-speed satellite and video conferencing links provided by VSNL and Software Technology Parks PortalPlayer

Destination of Indian Software Exports

Australia & New Zealand 1.5% Japan 3.5% Europe 23.5%

South East Asia 3.5%

North America 62%

West Asia 1.5% Rest of the world 4.5%

Source: NASSCOM

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An increasing number of tech majors and emerging technology companies are using India as a development base

Some Multinationals doing Research & Development in India • • • • • • • • • • •

Sun Microsystems Microsoft Silicon Graphics Cisco Oracle Lucent Motorola SDRC IBM Analog Devices Hewlett Packard

• • • • • • • • •

Intel Texas Instruments Nortel SAP Generic Electric Unisys LG Alcatel Sony PortalPlayer

• • • • • • • • •

Agilent Selectica Amber Networks Sharp Corp. Peak XV Networks Sitara Networks Netplane Systems Metrowerks ConvergeLabs

Seasoned IT Service Companies • Leading Indian IT service companies have served Fortune 1000 companies for over a decade and matured through technology cycles

Mainframe

Client server

1980s

1990

Networking

Internet/ e-commerce

e-Business/ e-Markets

Wireless/ M-Commerce

1990

1990

2000+

1990

Source:Deutsche Bank Research Viewpoint

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Five-Year Growth Cagrs (FY95-00) for some leading IT companies (%)

5-Yr Rev Cagr

5-Yr EBITDA Cagr

5-Yr PAT Cagr

Infosys

74

82

85

Wipro

24

46

52

NIIT

38

45

46

Mastek

64

48

48

Source: Company Information

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List of Indian IT services companies listed on US Exchanges Ticker

Listed on

Priced at (no of ADS per share)

Amount raised (US$m)

CMP (3/11/00)

Infosys

INFY

Mar-99

34.0(2)

70.4

140.0

Silverline

SLT

Jun-00

25.0(0.5)

108.8

14.0

Wipro

WIT

Oct-00

41.4(1)

130.9

54.5

Source: Company Information

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Select Acquisitions by Indian IT companies Company

Acquisition

Country

Date

Amount (US$m)

DSQ Software San Vision Technology

US

Jul-00

30.0

Silverline Tech

TIS

UK

Aug-00

12.5

Software Solutions

AlbionOrion Company LIC

US

Sep-00

63.7

Silverline Tech

Sky Capital

HK

Oct-00

22.0

Silverline Tech

SeraNova

US

Oct-00

99.0

Source: Company Information

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India – IT Partner of choice! India is playing a key role in fulfilling IT service needs of an increasing number of countries (No.of Visas allowed)

200000 180000 160000 140000 120000 100000 80000 60000 40000 20000 0

What next?

Temporary Increase Due to Y2K?

10/97 - 9/98

10/98 - 9/99

10/99 - 9/00

Source: Industry Data

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10/00 -9/01F

10/01F - 9/02F

10/02F - 9/03F

A Strong Business Model • Having successfully used the offshore delivery model and realised the cost benefits, companies are gaining comfort with shipping work offshore Company

Hourly bill rate (US$)

Company

Hourly on-site bill rate (US$)

Sapient

200 – 240

Infosys

70 - 110

Braun

180 - 220

Wipro

70 - 120

Diamond Technology

320 – 420

HCL Tech

65 – 120

Proxicom

220 – 260

MphasiS

75 – 140

Scient

270 – 350

Polaris

55 - 100

• Demand for skills for complex back-end enterprise integration needs arising out of e-business should further benefit India IT service majors Source: Company Information, Deutsche Banc Alex Brown

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Product and Technology companies • The last two to three years have seen seeding and growth of many technology and product-led companies in India • Ranking high on scalability and cost, India is becoming the destination of choice for IT-enables services • A large number of product and technology initiatives in India have been the brainchild of professionals with experience at leading technology companies • Components and technology licensing represent an even bigger opportunity for India companies.

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Venture Capital in India VC

Association

Size (US$m)

Key Investments

Baring India

Barings Pvt Eq.

BFL Software, Cybernet Software, Texworld.com

BankAm Pvt. Equity

Bank of America

DSQ Software, Sivan securities

Carlyle

250

Placements.com, itnation.com, Educomp Datamatics, Convergent s/w

CDC Advisors

Commonwealth development

Chrysalis Capital

Microsoft, Rothschild

Citibank Venture

Citibank

Sasken, Convergent Software, Polaris

GE Capital

GE capital

Rediff.com, Infotech Enterprises

Intel Asia

Intel

Global Technology ventures

Bank of America, Sivan

IndAsia Fund

BPL Telecom, Alumnus software, Aquila tech, iCode, NetKraft, Opus 65

Transworks, egurucool.com, productorion.com, iVega Corp, Cheecoo.com, Bazee.com

100+

Sasken, Cyber India online, Rediff.com, Network solutions, Eastern software, Amoeba, Bharati Mindtree, Kshema Tech, DSR solutions, Ivega Corp, Aarzoo.com

75

Indbazaar.com, Melstar, Ziptelephone, Geometric

Source: Company Information, Industry Data

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Enabling One Million jobs by 2008 IT enabled services

Employed 1999

Employed 2008

Size (Rs bn) 1999

Size (Rs. Bn) 2008

14,000

260,000

6.8

190

Remote maintenance and support

4,100

180,000

2.7

135

Medical Transcription / Insurance claims processing

6,100

160,000

3.0

110

Call centres

2,800

100,000

1.0

60

Database services

1,400

100,000

0.7

65

Content development

12,600

300,000

6.1

250

Total

41,000

1,100,000

20.3

810

Data entry/conversion/back office operations/revenue accounting

Source:NASSCOM

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Systems implementation captures bulk of solutions spend SW licensing

Solutions (implementation/integration)

100

75

50

25

0 Mainframe

Client/Server

Source:Deutsche Bank Research Estimates

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Internet

Wireless

Expanding Demand/supply mismatch for IT professionals Industry estimates of unfilled IT workforce positions in the US in 1999 vary from 700,000 to 850,000 and is expected to increase to close to 1m by 2003. This would represent about 15% of the total IT workforce in the US in 2003. Demand (‘000)

1999

2000

2001

2002

Cagr (%)

Demand (‘000)

4,061

4,492

4,970

5,499

10.6

Supply (‘000)

3,685

4,054

4,460

4,907

10.0

62

72

82

784

857

939

Increase in Gap Cumulative shortage

722

Source: IDC, Deutsche Bank Research Estimates

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9.1

ICT Development in India • • • • • •

India Advantage Current ICT scenario in India What are the Strategies for sustained growth Impact of ICT dev on Digital Divide PortalPlayer’s case study Summary

PortalPlayer

Strategies for sustained ICT growth in India • • • • • • •

Improving the quality of Education Increasing the number of Universities and colleges Industry Academic linkages Providing High bandwidth Data-com Network Tax incentives for R&D Setting-up dedicated VC funds for ICT dev Promotion of IP development

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ICT Development in India • • • • • •

India Advantage Current ICT scenario in India What are the Strategies for sustained growth Impact of ICT dev on Digital Divide PortalPlayer’s case study Summary

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Impact of ICT Development on Digital Divide • Increasing gap between Information Haves & Have-nots • Huge disparity in compensation with respect to non ICT industry

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Strategies taken for bridging the Digital Divide • • • • •

Linking the Rural India with Urban India Distance Education Implementation of E-Governance projects Drive for Local /Regional Language support Promotion of IT enabled services industry in the rural India

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ICT Development in India • • • • • •

India Advantage Current ICT scenario in India What are the Strategies for sustained growth Impact of ICT dev on Digital Divide Case study of AP ICT implementation Summary

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Case study of AP ICT implementation

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The Vision Andhra Pradesh will leverage IT to attain a position of leadership and excellence in the Information Age and to transform itself into a Knowledge Society

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Objectives of AP’s IT Policy

Economic Development

•Investments in IT •Exports •Employment

Quality of Life

•Education •Healthcare •Rural Development

Good Governance

•Anytime, anywhere Citizen Services •High Internal Efficiencies PortalPlayer

The Strategies •

Getting enablers in place – Decision making bodies, institutions, policies, IT Architecture

• • • • •

Defining thrust areas Catalyzing creation of infrastructure Leveraging private sector initiative Accelerating emergence of a knowledge hub Generating the right social environment

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Thrust Areas

• • • • •

Citizen services Infrastructure for IT IT education IT-enabled services IT-enabled education

Extensive use of PublicPortalPlayer Private Partnerships

Catalyzing Infrastructure Creation

• Cyberabad – a knowledge city • Hi-Tech Space • HITEC City Phase I –550,000 sft • HITEC City Phase II – 870,000 sft • 120 acres of plotted area for Hitech cos

• IT Parks – Vizag, Vijayawada, Warangal & Tirupati – 3 million sft of IT Parks in pvt sector in next 3 yrs

• International Airport – at award stage • International Convention Centre • Hardware park – Planned over 5000 acres near International airport PortalPlayer – World-class layout being prepared

Bandwidth – a determinant of competitiveness • Optical fibre backbone – 20,000 route kms of BSNL – Promoting competition from private sector • Policy of free right of way • Reliance , Bharti OFC projects in progress

• Landing point for sub-marine OFC at Vizag • Connectivity to Singapore – West Coast of USA

• Satellite communications • INSAT 3B • MEASAT PortalPlayer

Traditional Government Citizen Interface

Information System

Information System

Government Department

Government Department

Citizens PortalPlayer

Government Citizen Interface in the future Government Department

Government Department

Information System

Information System

Citizens PortalPlayer

Infrastructure for e-Governance • APSWAN ( AP State Wide Area Network) – – – –

• • • • • • •

Connects Hyderabad to 25 cities & towns in AP Provides connectivity for data, voice and video Video-conferencing – enables close monitoring Implemented with private sector funding - BOO model

AP Secretariat Campus Area Network – 2000 nodes Citizens database with 76.7 million records Land records database with 12 million records Datawarehouse (on PARAM super-computer) AP Development Monitoring System on GIS IT Architecture, Security Policy & Public Key Infrastructure Extensive training infrastructure – CIOs programme, Project related training, computer literacy PortalPlayer

Major E-Governance Projects in AP Convenient Citizen Services • MPHS .. IT services at the grassroots (1125) • CARD .. Registration of deeds in 1 hour (214) • TWINS .. Redefining citizen services (1+18) • FAST.. RTA services through IT (3+34) • (AP Portal) Convergence of services, forms, info. Improved Internal Efficiency • Treasuries Computerized accounting (330) • APDMS.. Geographical info. for development planning • C2K.. IT at pivotal level of Collectorates • (SKIMS).. Knowledge-led governance PortalPlayer

MPHS Project (Multi-Purpose Household Survey Project)

• Uses MPHS citizens database & land database • Implemented in 1125 mandals • Application packages implemented so far: – – – – –

Issue of certificates Land records certificates Land records management Petition Monitoring Payroll

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6. Review

CARD (Computer-aided Administration of Registration Department)

• An end-to-end IT solution for registration of deeds • Transparency in valuation of properties • Customized document management system – Documents are scanned & archived to CD

• Project running for 24 months at 214 sites • Over 15,00,000 documents registered under CARD • Registration in 1 hour – All other services – Encumbrance Certificates, Valuation of property to estimate stamp duty, etc. – in 15 minutes

• Inhouse implementation - Facilities management through private sector – HCL and ECIL

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TWINS Redefining Service

• Pilot project in Banjara Hills operational since December 1999 • 19 citizen services offered across the same counter • Open from 9 am to 8 pm • Electronic queuing system • Fully air-conditioned • 3-tier architecture • Replication in 18 addl. locations by May 2001 on BOO basis PortalPlayer

Services available now • Utility Bill / Tax Payments • Water, Electricity, Property Tax

• Licenses • • • •

Learner’s License, Driving License Registration of new vehicles Change of address / owner of vehicle Trade license

• Certificates • Birth, Death certificates • Encumbrance Certificates • Valuation Certificates PortalPlayer

Services planned • • • • • •

Telephone bills Filing of applications for passports Booking of bus, train tickets Reservation of services at TTD Filing of various forms, applications Private (B2C) services – – – –

Insurance & financial services Education & healthcare Share transactions Cellular phone bill payments..

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IT for SMART Governance • IT for high quality citizen services • CARD, MPHS, TWINS, FAST, AP Portal

• IT for high internal efficiencies • SKIMS, APDMS, C2K, Treasuries, CMIS

• IT for better enforcement of law • COMPACT, Police, Excise, Courts

• IT for human resource development • MSIT, Ku Band • Computer Literacy in Schools • PHC project

• IT for Promotion • Industries, IT, Welfare, Agricultural Extension PortalPlayer

The 6-C model for e-Governance

• • • • • •

Content Competencies Connectivity Cyber-laws Citizen interface Capital

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Human Resource Development

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Human Resources Development in AP • 104 engineering colleges – 24,135 seats – 7500 in IT – Another 61 colleges to be established

• 158 MCA colleges – > 5,000 seats

• 99 MBA colleges – 4,280 seats

• 414 BCA colleges – 16,520 seats

• 103 Polytechnics – 17,100 seats PortalPlayer

Institutions of Excellence • Indian Institute of Information Technology • Centre of Excellence in IT Education & Research • Joint endeavour of IT industry and Government • IBM, Oracle,PSI-Net, Satyam & Motorola Schools

• MSIT Program • Consortium of Universities including Carnegie Mellon University

• Indian School of Business • Wharton & Kellogg Schools

• Centre for Good Governance • DFID • Kennedy School of Government

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Emerging Knowledge Corridor • • • • • • • •

Indian Institute of Information Technology Indian School of Business University of Hyderabad Dr. B R Ambedkar Open University & KU Band Earth Stn. Army Institute of Information Technology MCR Institute of HRD & Centre for Good Governance CMC’s National R&D Centre RBI’s Institute for Development & Research in Banking Technology (IDRBT) … PortalPlayer

Emerging Knowledge Corridor

• • • • • •

HiTec City Proposed HySEA technology park Infosys campus Wipro campus Engineering Staff College of India Environment Protection, Training & Research Institute (EPTRI) • Jawaharlal Nehru Institute of Development PortalPlayer Banking

IT Promotion

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Incentives Policy • • • • • •

Software industry exempted from zoning regulations Self – certification under 7 Acts Rebate on Cost of land @ Rs 20,000 per job created Exemption from Pollution Control Act 70 % rebate on stamp duty & registration charges Software exempted from Sales Tax

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Incentives Policy (contd) • Investment subsidy of 20 % (cap Rs 2 mil) • Software exempted from Sales Tax • Special packages for Mega projects(> US$ 24 mil) • Policy Frameworks in the offing – Special Hardware Policy – Public Private Partnership in e-Governance PortalPlayer

A World of Opportunity

• • • •

Software Development Centres Creation of IT infrastructure Data Centres Implementation of E-Governance projects – On BOO & BOOT basis

• • • •

Call Centres Back Office Community Internet Infrastructure Hardware Manufacturing Facilities PortalPlayer

Catalyzing Essential Infrastructure

• • • • • •

Hitec city for IT companies Biotechnology park Hardware park International airport International convention centre IT parks in regional hubs

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Power

!

Highest PLF in the country 92%

!

Power sector reforms taken up • •

•

!

Electricity Regulatory Commission Separation of generation from transmission/distribution Privatisation of distribution

Adding 3000 MW over the next three years

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Roads 10,300 kilometres of high density traffic corridors identified for improvement ! Significant improvements over last five years !

• • • •

8500 kms of new roads 1250 kms improved US $ 0.78 billion spent US $ 1.05 billion to be spent over the next four years PortalPlayer

Airports

!

Hyderabad ! !

!

Existing runway extension New international airport at Shamshabad

Improved airports in ! ! ! !

Visakhapatnam Vijayawada Tirupati Puttaparthi

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Connecting People • 22,000 route kms of fibre optic laid by BSNL • High speed digital backbone being set up by Reliance • Data speeds in the terabit range • 7500 kiosks across the state

• Ku band Satellite network for • Distance education in schools & colleges • Telemedicine • Self-help groups • e-governance PortalPlayer

Networking the State State Statelevel level Districts 23

Divisions Divisions 78 78

Phase I Fibre optic

Phase II Networking

Mandals Mandals 1125 1125 Villages Villagesand andTowns Towns

The Future: Internet based citizen services PortalPlayer

Hyderabad, Secunderabad…and

Cyberabad

CMC R&D

Univ of Hyd

NAC

Financial District

Sports Village

IIIT Shilparamam Wipro campus

Infosys campus

Green Business Centre

Hitec City

JNIDB

ISB

EPTRI Golf course & International Convention Centre

NIFT

HySEA Tech Park

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Any Questions?

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