Hit By Floods, Chennai’s IT Sector Rethinks Expansion

December 1st 2015 – the day when floods struck Chennai city, leaving thousands homeless and throwing life off-track. Power supply to the city was affected with several IT firms being left in the dark for days. Major business hubs such as Mahindra World City, Olympia Tech Park and DLF IT Park were closed while companies scrambled to maintain operations. “Companies immediately identified their BCP (Business Continuity Planning) teams and relocated to those centers to ensure that their work was restored at the earliest. Some companies had centers in Bengaluru and Hyderabad. Some were innovative enough to book hotels in the city in places where it wasn’t flooded and they got their employees working with whatever equipment they had” recalls Balaji AJ, executive director at Olympia Tech Park.

Floods leave IT Hubs in the Dark
While operations are back to normal today, IT firms are estimated to have incurred Rs 20-25 crores in losses due to the floods. But what’s worse is that many IT firms who were planning to setup base in Chennai are now thinking twice. Sources say many IT & ITES firms have put their expansion plans in Chennai on hold, and are considering shifting base to other areas. This decision is also being influenced by employees who have lost their homes and belongings in the floods. “My area was completely flooded and since I ride my bike every day, I couldn’t get to my office. We only had limited access to computers, electricity, yet we managed. Some of us had to stay back at work just to escape the floods” says Senthamizh Selvam, a software developer working at Olympia Tech Park.

Desperate to avoid any further disasters, many employees are requesting for transfers to Bengaluru or Hyderabad. Considering that the IT industry in Chennai contributes to 80 to 85 % of commercial real estate growth, such a move will be a major setback.

IT Corridors in Flood-Prone Areas?
Making matters worse is the fact that the Chennai Metropolitan Development Authority (CMDA) has no expert in place to ensure that haphazard development doesn’t take place. Experts are now calling for the government to be more vigilant about the matter “’If you look at pockets like Siruseri which is a government-developed IT park, it hasn’t witnessed as much damage as other locations in the IT corridor because it is well planned, and a lot of the infrastructure is already in place. The government will need to address this issue in a major way and they must include urban planners as part of the approval process for that to happen”, says VS Sridhar, MD – Chennai of Cushman & Wakefield.

This is all the more important if you consider that the Guindy Central Business District and the city’s IT corridor have been built along the banks of the Adyar River and the Chembrambakkam Lake, blocking the free passage of water and leaving the area prone to further floods.

Will Chennai Remain an IT Favourite?
Experts are hoping that the large talent pool and the availability of cheap real estate will be enough to prevent Chennai from losing its charm as an IT destination. However the threat of future floods are sure to deter further investments, unless the government takes immediate and concrete steps to reassure investors and repair the impact of unplanned development.

Smitha TK, Reporter, NDTV


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