India Infosys Technologies has said it may choose Hyderabad, India, as the site of its biggest center, as government delays cost its hometown of Bangalore 14,000 jobs.

The company is in talks with the government of Andhra Pradesh state for about 600 acres, or about 243 hectares, of land in Hyderabad, the company's chief financial officer, T.V. Mohandas Pai, said in a recent interview. Five years of talks between Infosys and the government of Karnataka state have been unsuccessful, he said. Bangalore is the capital of Karnataka.

Delays resulting from political infighting and poor infrastructure in Karnataka may prompt other investors to leave the state, whose software exports are projected to rise by a third to $8.2 billion in 2007.

Hyderabad, which Microsoft picked for its largest non-U.S. software center two years ago, is wooing companies with faster approvals, fewer regulatory hurdles and more tax breaks.

"It'll be a big loss for Bangalore because this is the time for expansion," said Hemlata Rao, professor of economics at the Institute for Social and Economic Change in Bangalore. "We need a stable government" that can make decisions quickly, she said.

Infosys expects to decide on the Hyderabad site by the end of March, Pai said. He declined to say how many people would be employed at the new campus to manage computer networks and to customize business software for clients. Infosys is developing another center in the city that will house at least 6,500 workers.

"I would estimate that because of the delay, Karnataka would lose at least 12,000 to 14,000 jobs that we could have created," Pai said.

Other companies are choosing Hyderabad over Bangalore. A $3 billion chip-making factory, India's first, will be set up in Hyderabad by the closely held SemIndia. Andhra Pradesh offered uninterrupted power and water for the plant, Communications Minister Dayanidhi Maran of India said this month.

Infosys, which created more than 14,000 jobs last year, has been in talks with the government in Karnataka since 2000 for more land in Bangalore. Former administrations approved the company's expansion plans although the land was not allotted.

The company said in October that it was seeking to buy two plots of land in Bangalore. The company proposes to invest more than 15 billion rupees, or $336 million, in a software development center that would generate 25,000 jobs, as well as build a residential area with schools and hospitals for employees.

The previous 20-month-old coalition government, which collapsed last month amid allegations of bribes to lawmakers, cost the state 6,000 jobs that could have been created by Infosys last year, Pai said. More positions will go this year to cities including Pune and Madras, he said.

Pai declined to say whether the company would continue pursuing the proposed purchase in Bangalore if it acquired the land in Hyderabad.

"Wherever we have space, we'll invest faster," he said, adding that the company would need at least 12 months to begin operations and hire people after getting the land. "That means, for the whole of next year, a great majority of the jobs we create will go outside Karnataka."

The company's plan to acquire about 600 acres of land in Bangalore is being considered by Karnataka's land audit committee, Shankarlinge Gowda, the state's secretary for information technology and biotechnology, said. Four new companies on average are setting up operations in Karnataka each week, and the state will export more than $8.2 billion in software services in the year to March 31, 2007, according to Gowda.

Bangalore is home to the single largest pool of software engineers and scientists in the country. The city hosts two of India's three biggest software exporters, as well as the Indian Space Research Organization, Indian Institute of Science, the local unit of Intel and research divisions of Yahoo and Google.

Infosys said it has invested 17.4 billion rupees and created 22,000 jobs in Karnataka. It occupies about 80 acres in Bangalore with the capacity to house almost 20,000 employees. Mysore, Karnataka's second-biggest city, hosts an Infosys training center for 4,500 people on a 316-acre campus, the company's largest in India.

(www.iht.com)