- 10 minutes ago
Category
🗞
NewsTranscript
00:00This is a story about Babashitu, that is a word meaning future in Telugu, the language spoken here in Hyderabad.
00:06Hyderabad is racing to catch up with its rival of Bengaluru.
00:09It is known by some as Genome Valley in India because it is dominant in the life sciences.
00:15It also has attracted many multinational corporations from around the world, including American companies like Amazon and Meta and Apple.
00:22They occupy facilities such as these, which is Sattva Knowledge City.
00:28Bangalore is a bigger market. I mean, it's approaching 300 million square feet.
00:33Hyderabad is much smaller. It's like 160 million square feet.
00:36So, you know, much smaller. But, but, I mean, a decade ago, Hyderabad was probably 50.
00:43Shirish Gadvali is the CEO of Knowledge Realty Trust, India's largest office REIT.
00:50We met him at Sattva Knowledge City in Hyderabad, one of the developments financed by Blackstone.
00:55It's a sprawling, modern campus, housing tenants such as Apple, J.P. Morgan, and Microsoft.
01:03It's the crown jewel of the Knowledge Realty Trust portfolio.
01:07It's got 75,000 people working in all the buildings, in and out.
01:12Who are the tenants? What are all those people doing?
01:14Yeah. Good question. So a lot of them are what we call Global Capability Centers.
01:20So these are basically offices, divisions, if you want to call it, of foreign companies mainly.
01:27And they are providing technological support in a variety of ways for their worldwide employees, enterprises.
01:35I think part of what we did coming to India on the real estate side was, rather than the old
01:41model of build it as inexpensively as possible,
01:44let's create a great environment where you can bicycle around and you've got a bunch of little shops you can
01:51go to
01:51and there are actually parks and water, and it feels great to be there.
01:56And you make that incremental investment and the tenants and the people working there feel much better.
02:01And it's part of this overall improvement of India as a country.
02:05Explain the financing side of real estate, because I think there's only like six REITs in India,
02:11and Blackstone has been a sponsor of and the center of five of them.
02:14Yes.
02:15So how did that REITs develop?
02:18Steve Schwarzman talked to the prime minister at one point.
02:21We talked to the finance minister and different people in the government, and we said,
02:25look, if you look at all the countries around the world with major markets,
02:29to get more capital into their real estate markets, if you could create a real estate market, a REIT market,
02:35you could get more capital flowing that will drive down the cost of capital.
02:39You'll get more development.
02:40And the government studied it for a number of years, looked at it, had a whole process,
02:46and ultimately came up with REIT legislation.
02:49We as a major owner of real estate have utilized that to take our companies public
02:55and give public shareholders exposure to these great companies.
02:58The companies then raise capital and grow more quickly.
03:01And we've done it across a range of industries in real estate.
03:06And I think over time, you'll see this REIT market there grow to be quite substantial.
03:11But to me, it's another evolution of a country that before was really constrained with access to capital.
03:18And as India changes the rules and makes it more and more growth friendly, which they've done, I think, really
03:25effectively,
03:26you'll see investors like us and now public market investors deploying more capital there,
03:31and it will accelerate this growth.
03:34Hyderabad's growth is partly because of its proximity to a steady stream of domestic talent.
03:40And it is no coincidence that a short drive down the road from Sattva Knowledge City
03:45sits the Indian School of Business, one of the most prestigious institutions in the country.
03:50Deepa Mani is a professor of information systems at ISB.
03:54So if you look at the development of the tech ecosystem in Hyderabad,
04:00it was an outcome of very careful policy decisions by the government.
04:05And one of those policy decisions involved creating a cluster of institutions
04:10that would provide the capacity, both engineering and managerial,
04:16to serve the growing demand of this region.
04:19So we have IIIT, which is close by.
04:22We have ISB, which is right here.
04:24So these were institutes that were set up by the chief minister then, Mr. Chandra Babu Naidu,
04:29as a conscious policy choice.
04:31So this was cluster development, you know, which he engaged in
04:35to build the capacity that was needed of not just the MNCs that were coming in
04:42and the global captive centers that were coming in,
04:44but also growing domestic demand for technology talent.
04:47So this was a very conscious policy choice.
04:50Conscious policy decisions are one way Hyderabad hopes its growth might differ from Bengaluru's
04:55and avoid some of the challenges it faced.
04:58I think there were two things that Hyderabad learned.
05:02One was about human capacity development, right?
05:07Because some of these, like I said, the Indian Institute of Science being set up in Bangalore
05:12was perhaps, I wouldn't say an accident,
05:16but, you know, it wasn't as much a conscious policy intervention by the government, right?
05:21But they learned that human capacity development
05:23was going to play an important role in the development of the sector.
05:27The second was to reduce barriers of entry in the sector.
05:31But Hyderabad also needs to grow differently from Bengaluru.
05:35And one way it's doing that is by growing into different industries.
05:39Yes, tech and AI remain key,
05:43but the city has also emerged as the center of India's pharmaceuticals industry.
05:47Dr. Krishna Ella is the chairman of Bharat Biotech,
05:51India's second largest vaccine manufacturer,
05:54based in the outskirts of Hyderabad in what's known as Genome Valley.
05:59I think there was no Genome Valley when I came to India.
06:0296, 97, I came back to India.
06:04There was no road, nothing in this place, literally nothing,
06:07no electricity also.
06:10So today I know you see the transformation.
06:13So I want to create a, I'm a strong believer,
06:16India should not copying anymore.
06:18India should innovate.
06:20For that you need to create an ecosystem.
06:23So Genome Valley is becoming a brand for that,
06:25to create that ecosystem.
06:27What are the factors that came together
06:29to make India such an important player
06:32in biosciences, but particularly in vaccines?
06:35I think it's only entrepreneurs.
06:38See, you look at all the vaccine industries,
06:40all privately-wowned and family-wowned companies.
06:45It is not private equity or somebody controlling the company.
06:48It is all private-worn.
06:50No government involvement,
06:51zero role with the government investment,
06:54and all private-worners.
06:55So the private-worners means we can take a lot of risk
06:59and we can take a minimum profit and move on.
07:03There's Genome Valley that you really helped create here.
07:07How important is it to the economy of Hyderabad overall?
07:10I think this is the most,
07:12not only for Hyderabad, for the entire country.
07:14This is the largest cluster in the country,
07:17in India today.
07:18Thanks to the local government,
07:20the present chief minister, industry minister,
07:22both were very proactive.
07:25They're proactive.
07:26See, for us, you know,
07:28if they don't interfere,
07:29it's the greatest benefit.
07:31And they're more proactive.
07:33This is a good transition of the government
07:35and helping the industry to grow
07:37and the ecosystem to build.
07:39So I think still growing Genome Valley.
07:42And this is the largest cluster in the country itself.
07:45And this is a role model for the other states to follow.
07:49Yet, as Hyderabad continues as one of the fastest-growing cities in India,
07:54it also faces some of the biggest challenges.
07:57Its tech sector has attracted investment
07:59from some of the world's largest companies.
08:01But many of the jobs in the city have been back office jobs,
08:05call centers, and IT support,
08:07the roles squarely at risk from AI.
08:09A report from S&P found that tech services companies Infosys and Wipro
08:14had reduced staffing by around 5% to 6% from 2023 levels,
08:19with similar trends at other firms.
08:22So I think it's both a challenge and an opportunity.
08:26I think the challenge lies in the fact that India has had great strength
08:30in IT services and providing a lot of functions,
08:37white-collar services, at very attractive costs.
08:41Some of that will get replaced by AI.
08:44And so I think the India bears say,
08:47ah, that's going to happen.
08:49I think what they fail to recognize is that these companies will evolve.
08:55We own a large stake in a business called Emphasis, an IT services company,
08:59and they have pivoted their business to focus on AI deployment
09:04because changing companies utilizing AI
09:07is also going to require an enormous amount of manpower.
09:11I also think they underestimate the willingness of people in India
09:16to utilize the AI and what it will do there.
09:19The creation of new companies there, the creation of AI infrastructure.
09:24Those on the ground see AI as more of an opportunity.
09:28Tech Mahindra is a services and consultant company with offices across India,
09:32including in Hyderabad.
09:35Nitesh Agarwal is the company's chief strategy officer.
09:38It's the question of today's times, right?
09:40And the way I look at it is, I think AI requires a lot of reskilling, right?
09:45So what's obviously going to happen is the new alpha generation which comes in,
09:49probably they will live or they will be brought up in an AI native world.
09:53But a lot of us in some sense have to reskill ourselves, right?
09:56So I'm sure in your job or in my job,
09:59you know, there are cases where I need to now know
10:02how I need to run the strategy of my firm and how do I use AI in that.
10:07So it's not just about the economic opportunity that AI presents,
10:10but it's about how do I use AI in my role.
10:13And so I think it's not so much about the technology,
10:16but about the curiosity and the learning that talent at scale needs to provide.
10:22And there is where I would say,
10:23I would want to believe that India actually stands a very good chance,
10:27you know, because it has talent, it has talent at scale,
10:31but it has talent which is actually learning ready.
10:33And so they don't mind pivoting.
10:34Now, again, I'm not trying to say that every individual will pivot,
10:37but as long as that culture is there, the pivot happens,
10:41and then people will therefore acclimatize themselves to the AI-first way of working.
10:45The IT services sector employs about 6 million people in India
10:50and contributes about 7% of its GDP.
10:53So the ramifications of the AI rollout will stretch far beyond just Hyderabad.
10:59AI is moving so fast so that in 10 years,
11:03it's hard to, you know, really predict.
11:05But today, you'd be surprised, really,
11:08that in fact, we've had robust demand,
11:11and the demand seems very, very much there,
11:14at least for the foreseeable future.
11:16So what's happened is technology
11:18and the need for technology across the world
11:21has in fact meant that the demand for the GCCs has gone up even more.
11:25If I look back two decades ago, we were like a call center.
11:28That call center has gone to a back office.
11:31The back office went to a mid office.
11:33And the mid office now is literally a front office
11:37because tech is really part of the business, right?
11:40And that's why I feel despite AI, we're doing very well.
11:45The demand's very robust.
11:46And we look forward to a really strong rest of the decade.
Comments