Among many other incentives, even the candidates’ process trainings for the two companies are funded by the government while tenancy progress at the tech park hasn’t improved a bit
Save for the existing two at the Thimphu TechPark Private Limited (TTPL), an uncomfortably good period has passed without any other international information technology (IT) companies willing to rent space. This has put the government in a desperate situation as the Tech dream falls short of miles to bring in promised dreams.
While the government’s effort to rope in major multinationals have not yet paid off and is still underway, two comparatively smaller US registered companies, Scan Cafe and Shaun Communications have rented space at the IT Park.
The government has already provided a host of incentives from providing a telecom subsidy to slashing the internet rates for the IT Park to even furnishing the commercial space of the IT Park for the two companies. At one time TTPL have even lowered rental rates. Fiscal incentives like tax holidays have also been provided.
Experts and business observers said Bhutan could be the only country where the government funds process trainings for BPO employees and allows substantial incentives.
Shaun Communications, a business processes outsourcing (BPO) limited liability company (LLC), registered in the US but operating as an independent company in Bhutan under the name, Shaun Communications Bhutan Private Limited (SCBPL) has leased 10,000 SFT at the IT Park for a period of a year and Scan Café, which operates in the US, Switzerland, and India specializes in digitalizing and editing older formats of photography and video leased another 10,000 SFT for three years.
Employment incentive program
In order to encourage and promote the tenants, the labor ministry (MoLHR) is also supporting their human capacity development requirement through an employment incentive program.
TTPL tenants also enjoy ‘grade A’ infrastructure and amenities with power available at under 30% of the cost in other parts of the region.
Moreover, one of the key reasons why the two companies rented space at the TTPL is also because of the eligibility criteria included in the terms of reference for the employment incentive program. The first provision in the criteria requires any company who wishes to avail incentives from MoLHR to have signed the tenancy agreement with TTPL to locate their business at the park.
The criterion also entails each company to have signed a lease agreement of 12 months or more.
A provision of Scan Cafe’s contract with MoLHR signed on February 8, 2013 states the ministry shall pay to the company, an employment incentive of Nu 11,000 for each candidate trained and employed within the third week of this month. The ministry, under this program shall support employment of 500 candidates with a minimum qualification of XII standard, the cost of which amounts to Nu 5.5mn for Scan Cafe alone.
SCBPL’s operations manager of Prodipto Mukherjee said the company is currently enrolling candidates for process trainings. The training expenses such as candidate stipend will be shared equally by SCBPL and MoLHR. “It’s been agreed on 50-50 basis and now we will be able to give them longer and proper trainings,” he said.
Shaun communication’s BPO, ITES director Nabamita Chakraborty said each trainees are eligible for a Nu 8,000 stipend per month of which Nu 4,000 will be deposited into the respective trainee’s accounts by MoLHR upon submission of their attendance sheet on a monthly basis. She said the training period is for four months depending on the performance of each candidate.
If a trainee choose to phase out during the course of the training, he or she is liable to refund double the amount of what MoLHR has incurred till the time.
MoLHR has agreed to share the cost of training 200 recruits with SCBPL which amounts to Nu 3.2mn if all trainees attend the full course of the four-month training.
When asked about the current trainee’s job security and viability of the project, Prodipto said the company had learnt from its past mistakes and has placed stern policies in place to recruit potential candidates. “Earlier, the company had stopped operations due to poor performance by local recruits,” he said. The company restarted operations with over 20 agents last month.
Prodipto also cited internet connectivity problems at the tech park. “The lack of a backup line to maintain redundancy affects production,” he said.
He also said human resource was one of the primary issues.
However, program officer of MoLHR’s human resource development division Tenzin Choden, who is also the ministry’s coordinator of this particular program said ever since the TTPL was at the infrastructure developing stage, MoLHR as early as 2009 has been training youths under the private sector development project (PSDP) aimed at meeting the human resource requirements of the tech park. Till date, 1,034 candidates have been trained of which 898 are employed with BPOs and other institutions inside and outside the country. The ministry incurred expenses to the tune of USD 1mn.
Tenzin Choden said “the students completed their trainings and were ready to join the tech park as planned but then the tech park wasn’t in a position to hire them immediately either because of incomplete construction or lack of tenants. So the trained people had to look out for other jobs.”
Government to furnish space
Besides MoLHR’s assistance, as a promoter of the park, the Department of Information Technology & Telecom (DITT) under the information ministry has agreed to fit out or furnish the commercial space of the tech park for the two tenants.
Initially with high hopes of giant multinational occupants, only the ‘warm shell’ stage of the park was developed, which means while the overall infrastructure and essential utilities are provided, the interiors would be fitted out by the occupiers themselves, according to their own standards and design requirements.
The government has had to step in to bear the expenses of the fitting out for both the companies at the tech park.
DITT director Phuntsho Tobgay said “the warm shell, which means providing false ceiling, flooring, walling and wiring among others has been provided but not all companies can avail the fit out services or the plug and play environment.”
To qualify for this component, World Bank requirements also have to be met like having a minimum annual turnover of USD 0.5mn. “It’s only Scan Café that is getting it,” the director said.
As a start, DITT will shell out Nu 5.4mn and the space will be ready for occupancy and operations by mid June this year.
TTPL’s Chief Operating Officer, Tshering Cigay Dorji said once the fit out for both these companies are completed it will allow more room for the Bhutan Innovation and Technology Centre (BITC) to facilitate private businesses.
ScanCafe plans to scale up to 285 workstations in the immediate future while SCBPL has plans to employee 200 Bhutanese by the end of the year.
The DITT director also said it takes a lot of time for tech parks to start generating returns. “It is actually part of a larger ICT vision and strategy for the government. There are new challenges and we must address it as and when it arises and we cannot say that those challenges are the reasons to give up.”
He said it is premature for anyone to make a judgment call on the future of the tech park.
However, despite extra expenses pumped in by the government, the future of the Nu 285mn worth TTPL still looks bleak as it has failed to attract big companies from outside and domestic business houses to rent space at the park.
The mega IT Park has also realized that Bhutan lacks the economies of scale and skills that giant companies seek and domestic companies cannot afford the facility or is least bothered about it.
The first phase of the project which became operational from May 2012 comprises 50,000 SFT of IT office and data centre space. The government has also leased from TTPL 10,000 SFT of warm shell space for 90 years at US $ 2mn to house Bhutan Innovation and Technology Centre (BITC) within the IT Park.
A Data Service Centre (DCS) at the tech park jointly developed by a local IT firm, New Edge Technologies Private Limited and Burland Technology Solutions Limited (BTSL), a UK based IT company was expected to make up for increased overhead expenses.
However, the data center that initially boasted of world-class design and multi-tier 2 facilities up to 10,000 SFT support space and 8,000 SFT server room hasn’t caught up yet as it is the first of its kind in the country. “There are some companies who have shown interest and we hope this will materialize soon,” Tshering Cigay Dorji said.
TTPL is the country’s first IT Park and is promoted by the DITT, Ministry of Information & Communications (MoIC), Royal Government of Bhutan. It is supported by the World Bank and developed by TTPL which is a joint venture between Assetz Property Group (APG) of Singapore and Druk Holdings & Investments (DHI).The Public sector is represented by the DITT, MoIC and the Private party is represented by TTPL.