'AI disruption' sinks software project, Karnataka govt diverts allotted land for medical college

Bengaluru: Citing disruption from artificial intelligence, an investor has pulled out of a nearly two-decade-old software project in Bengaluru East, prompting the government to divert nine acres of allotted land for a medical college, documents show.

Mysore IT Solutions Pvt Ltd, with its registered office in Rajajinagar, received government approval for a software development and business process outsourcing (BPO) centre way back in 2006. This company belongs to businessman G Dayananda, who also runs the Sapthagiri brand of educational institutions.

The Karnataka Industrial Areas Development Board (KIADB) acquired 9.9 acres for this project -- 3.5 acres in 2007 and 6.4 acres in 2014 -- at Kadubeesanahalli in Varthur.

However, a prolonged litigation over land acquisition meant that the software company could not take off. By the time court cases were resolved, investing in a software company made no sense.

Dayananda approached the government with a new business plan: a “state-of-the-art institute of medical sciences and research centre along with a multidisciplinary institute of technology”. The government approved this and issued an order recently.

“Owing to significant changes in market dynamics, the Information Technology sector is presently witnessing a slowdown. Rapid advancements in automation and artificial intelligence are disrupting traditional IT and BPO operations,” the Mysore IT Solutions Pvt Ltd told the government in a filing. “Hiring in the sector has declined by approximately 7%, with notable job losses reported across major IT firms. Consequently, there is limited demand for the creation of additional IT and BPO infrastructure at this juncture,” the company said.

While permitting diversion of land, the government also approved an enhanced investment: from Rs 44.97 crore on the now-junked software project to Rs 410 crore for the medical college.

Litigation

In 2007, the KIADB executed a lease-cum-sale agreement for 3.5 acres in favour of Mysore IT Solutions Pvt Ltd. Land losers went to the High Court and Supreme Court challenging the land acquisition by KIADB. The writ petition was disposed of in 2017. The lease-cum-sale agreement for the remaining 6.4 acres has yet to see execution. Last year, the Supreme Court disposed of all other land acquisition cases.

Once litigation was out of the way, the Mysore IT Solutions Pvt Ltd approached the government for the change of activity.