Hyderabad must focus on local companies

Hyderabad is one of India's booming cities and numerous pharmaceutical, IT and outsourcing companies have located there. In Hitech City and Cyber City, there are buildings under construction everywhere and large campuses owned by giants such as Microsoft, CA, Wipro and Siemens.

There is a new airport and a sense that this is a city that is rapidly placing itself on the world stage.

I was there last week as a guest of Willie Walsh, the Chief Executive of British Airways, to celebrate the commencement of direct flights from London to Hyderabad, which will further link this Indian city to the rest of the world.

However, beneath the surface the city is unsettled. Hyderabad's residents are beginning to realise that the city's rapid growth and much of their prosperity is largely dependent on the fortunes of foreign companies. These firms are now struggling in the weakened global economy and outposts such as Hyderabad may not be able to attract the same level of investment in the future.

There is also pessimism about home-grown companies such as Satyam Computer Services, which is currently the subject of a government investigation into an alleged $1bn (Dh3.67bn) false accounting fraud. The scandal has shocked India and rocked Hyderabad. The city's middle class talks about almost nothing else and the implosion of a company as iconic as Satyam has severely damaged confidence. There is no shortage of talent in Hyderabad but the city's continued success will be dependent on ensuring that foreign companies remain and that local firm have foundations more solid than those laid at Satyam.

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