The creation of India’s newest state, Telangana, marks the end of a decades-long quest for self-governance in the country’s south, and was greeted with celebration on the streets of Hyderabad, the state’s new capital city.
But the ruling Congress party’s vote to approve the state’s creation Tuesday night may also usher in an era of uncertainty for dozens of multinational companies with major operations in Hyderabad.
If it was a stand-alone country, Telangana, with a population estimated at 36 million people, would be more populous than Canada, Saudi Arabia, Taiwan or Australia. At 44,300 square miles, Telangana will be about the same size as the US state of Kentucky.
Most importantly for global business, Telangana will share Hyderabad, the south Indian information technology metropolis, with Andhra Pradesh, the state is it separating from, for the next ten years. After that, the city will go to Telangana, whose leaders may have scant business experience, particularly with global corporations.
The city houses the information technology operations of some of the world’s biggest companies, including the largest Microsoft IT center outside of its Redmond, Wash. headquarters. Microsoft’s website calls the Hyderabad center the “backbone” of the company’s IT operations and says it handles IT for more than 1.3 million devices and 194,000 end-users in over 108 countries as well as managing Microsoft’s global data centers and corporate network.
Thousands of employees from other multinational companies including Accenture, Bank of America, Dell, Novartis, JP Morgan, Google, and Facebook also work in Hyderabad’s sprawling business parks.
The Times of India reported that Wednesday “Brand Hyderabad is set to shine once more and brighter at that,” with the Telangana decision made. But Telangana’s independence movement has been tainted by violence, and Tuesday night’s announcement does not seem to have put an end to that. Businesses, schools, and public transportation were shut Wednesday as rock-throwing protestors vented their anger over the decision to give Hyderabad to the new state.