Conventional business wisdom regards most government officials and bureaucrats as obstacles who get in the way of market forces. But a politician and his lieutenant get much of the credit for making the Indian city of Hyderabad a major global center of business process outsourcing (BPO) -- the booming practice whereby companies farm out tasks such as call-center operations, billing and claims processing.
As the chief minister of the Indian state of Andhra Pradesh, N. Chandrababu Naidu has pushed hard to modernize the largely rural region of 76 million people through information technology and business-style government practices. About a year and a half ago, Naidu -- the equivalent of a U.S. governor -- established an agency specifically charged with nurturing the BPO industry. He named one of his special secretaries, Randeep Sudan, as its "CEO."
Their efforts have resulted in a curious blend of socialism and capitalism in Andhra Pradesh (AP). Even as state officials continue a significant rice subsidy for the poor and invest public land in office park developments, they have pared back labor regulations to lure businesses. But the blend of free market reforms and government interventions is paying off in the form of a fast-growing BPO industry. Revenue for BPO firms in the state soared more than 300% in the nine months ended December 2002, to $247 million. The industry employs about 15,000 workers in Andhra Pradesh, mostly in Hyderabad.
Hyderabad and its public leaders are not perfect. Nasscom said the city’s BPO operations do not span all industries and suggested Hyderabad’s public transportation system be improved. Other problems include the local accent, lack of an international airport and environmental challenges despite beautification efforts. "The pollution in AP is not as bad as other major (Indian) cities, but is still extremely bad," says Anne Rockey, country manager in India for professional services company Deloitte Consulting.
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