SPs see big opportunities in the government space

There are significant
business opportunities that lie with the government, and the
tendering process should be rationalized, so that local solution
providers can fit the bill. Joint ventures with large system
integrators like Wipro and HCL is desirable, and sub-contracting
should be allowed. These are some of the key points that have been
raised during the sixth DQ Channels SP Summit, 2011 held at
Kuala Lumpur. With a multitude of
initiative around National e-Governance Plan (NeGP), the Union
Government has taken a serious Internet approach in the ICT domain.
10 percent of tele-density contributes to one percent growth in
overall GDP of the country. As the government is apparently bullish
about e-Governance programs, that will cover 6,30,000 villages and
2,50,000 local elected government bodies, the role of regional
solution providers and local technology integrators have increased
manifold. The government has already come up with a commitment of Rs
14,000 crore for the optical fiber cable (OFC) deployment and 18 lakh
kilometers of route is to be covered throughout the nation.
e-Government project implementation is broadly based on outcome-based
framework, process-based activities, business process re-engineering,
change management, capacity building, identification of short-term
quick-strike projects, and long-term scaled-up roll out. e-District
pilot projects have been carried out in more than 40 districts that
include private end-to-end solution providers in 22 districts
covering nine states.

Ashis Sanyal, Former
Senior Director-Department of Information Technology, Ministry of
IT and Communications said that, the National e-Governance Plan
(NeGP) implementation is opening up significant opportunities for the
solution providers in India, and there is a larger scope for
providing end-to-end solution and service the government-driven
programs. “For sustainable inclusive growth, we see ICT as an
effective enabler for inclusive growth, deployment of ICT in all
walks of government business, massive application of electronic
governance, and there is a need to bring in citizen-centricity in
government activities,” he said. Presenting a rosy picture, Sanyal
said that, government is focusing on a multitude of application
features, that include standard-based, inter-operable, secured,
authenticated, vendor neutral and platform independent, as well as
amenable to tracking, monitoring and auditing. All projects using ICT
hardware and software abundantly, will give rise to significant
business opportunity for the next three to five years.

Sanyal is optimistic about
the potential business opportunities under NeGP for SPs, as it has
massive core infrastructure services like SWANs, SDCs, and CSCs
amongst others. "NeGP's vision is to make all government
services accessible to the common man in his locality through common
services. It ensures efficiency and transparency and features
centralized initiative but decentralized implementation," he
said. Sanyal suggested that, the technology integrators and solution
partners should not forget the mobile environment, as it provides an
extremely conducive ecosystem for them to grow exponentially. “With
rural mobile penetration and infrastructure soaring, SPs have still a
long way to go. NeGP involves public-private partnerships as the
preferred financial and operational model; centralized program
management; state-wise project level management; and PMU created in
almost all projects, wherein external consultancy is used.
Furthermore, government is moving from product procurement to
service, as it believes that asset creation is not the solution.
Today, most of the NeGP projects are deploying the PPP model, as
government is seeing value in PPP model for ICT infrastructure
deployments,” Sanyal said. With abundant
opportunities that lies with the Union Government's ambitious
e-Governance project, the role of regional technology implementers is
not well defined, and a big chunk of such solution providers are
apparently loosing the business opportunities. During the summit,
that hosted close to 100 noted SPs of India, the need of
policy-related reforms and participation of SPs in the
government-driven projects have been deeply pondered, and the need to
revamp the tendering process has been stressed upon by the eminent
SPs and SI partners. Sanyal is also expected to submit the key
recommendations to the Government of India so that the participation
of SPs in NeGP can be increased, and their role could be defined.

Anil Gupta of Artek
Enterprises said that, there should be an opportunity for solution
providers, as government is collecting funds through taxes with a
focus on e-learning projects. "Such projects are within the
scope of small SPs, and it ranges from Rs 1 crore to 10 crore, and
there is an apparent opportunity for all SPs, that should be tapped
with the government facilitation," added Gupta. Saket Kapur of
Green Vision believes that, the tendering process is age-old, and
needs to be reworked. "95 percent of SPs are not being able
enroll for government-driven projects. However, according to CVC
guidelines, three times turnover of the total cost of the tender is
required. Tendering process should be rationalized," said Kapur.

Set of recommendations
formulated by Ashis Sanyal to be submitted to the Government of
India, include:

• The Planning Commission of India,
  for the last few years, while deciding on the annual budget plan for
  States and UTs, as well as central ministries and departments, have
  been issuing soft advisory, that two to three percent of the allocation
  should be used for the deployment of ICT. But unfortunately the
  suggestion from the Planning Commission has not been taken seriously by
  the said organizations and departments under state and central
  government. It was suggested, that Planning Commission should set up a
  mechanism so that plan allocation indicate a specific allocation for IT
  deployment, which cannot be used for any other project actively. This
  may be similar in nature of the currently applicable 10 percent of the
  overall allocated fund for central departments and ministries.

• The right of way (ROW) issue has
  proved to be a roadblock for accelerated cable laying for telecom
  connectivity in rural areas. Telecom service providers are not going
  for rural expansion as they find ROW issues to be a deterring factor.
  It is therefore resolved, that the central government should take a
  serious view, and take a decision on unified ROW fee across the country
  and accelerate the mechanism to resolve the issue.

• Many government departments (both
  state and central) take out tender notice with eligibility criteria,
  which do not allow subcontracting and sometimes a joint venture or
  consortium. It is however recommended that government tenders should
  allow consortium and JVs, as well as may allow subcontracting, provided
  that the lead bidder/partner provides legal evidence on back-to-back
  legal obligations of various subcontracting agencies. The role and
  responsibilities of of all the stakeholders should be firmly defined
  within a legal framework and their interests should be protected.

• The government has been leveraging
  additional sections on income tax, specifically for the promotion of
  education. Also, National Knowledge Network (NKN) is being established,
  which would connect all the secondary schools and research institutions
  through a common network. Thousands of such schools need connectivity,
  as well as LAN for internal network. It is therefore felt that, there
  should be a reservation mechanism, so that local SPs can predominantly
  participate in the regional projects related to LAN in local schools.
  There are fair number of SPs and integrators available with good
  credentials. They should get a chance to act locally, so that they can
  deliver with low overhead/OPEX and reasonable margin.

• It is observed that only five
  percent of the total SPs nationwide work with the government. The
  exclusion can be attributed to the eligibility criteria and the
  tendering process, which is apparently not suitable for tier-2 and
  tier-3 SPs. It is observed that the government should review the
  tendering process, including the usual criteria for making it more
  rational and attractive to the significant volume of efficient SPs, for
  whom the business mechanism has not been conducive so far.

• The government should explore the
  possibility of reserving certain category of IT-related work for local
  entrepreneurs on a competitive bidding process only. Some of the states
  have followed this process. Central government while sanctioning funds
  to states/UTs should also issue a similar advisory, which may be
  followed by the state and UT government for centrally-sponsored
  projects.

• Directorate General of Supplies
  & Disposals (DGS&D) has some guidelines on procurement of
  goods, but it has not issued any detailed advisory on services to be
  provided, either directly or through agencies. In the wake of network
  communications and IT services penetrating fast in government arena, it
  is therefore required that an over-arching umbrella guidelines should
  be issued by DGS&D in consultation with the DIT and the Department
  of Administrative Reforms and Public Grievances (DAR&PG). This
  would help in clearing the doubts from the mind of many prospective ICT
  project developers in both the government and private sectors.