Bangalore:Tech Eden No More?

DQI Bureau
New Update

Rajish Nambiar, a 20-year resident of Bangalore, is steamed. The managing

director of Southern Chips & Circuits, an electronics-assembly firm on the

city's outskirts, spends an hour in heavy morning traffic getting to his

factory, just four miles from home. A year and a half ago it took him 20

minutes. The commute back is worse: He can get stuck for as long as 90 minutes.

"No Bangalorean deserves such a life," he fumes, arriving a half-hour

late for an interview.


India's fast-growth high-tech industry has to worry about many things: high

staff turnover; competition from China; and backlash from U.S. voters. But maybe

what India should be focusing on is potholes and narrow roads.

Execs like Nambiar would certainly agree. Just a year ago, Bangalore enjoyed

a reputation not only as India's Silicon Valley but also as a pleasant,

tranquil place to live, with a salubrious climate and tree-lined streets. But

high-tech's Eden has proved a powerful lure. More than 1,300 software and

outsourcing companies-450 of them multinationals - have set up sprawling

campuses, employing 170,000 workers. The influx, which has helped increase

Bangalore's population by a third since 1995, to 6.5 million, has resulted in

choked roads, power outages, an erratic water supply, and poor sanitation. A

$1.1 billion metro system, long seen as a solution to Bangalore's transport

headaches, is far behind schedule. Industry worries that a long-overdue new

airport, due to begin operations in 2010, may also be delayed. "The city is

collapsing," says Bob Hoekstra, chief executive of the Philips Software


JAMUP The city's population has exploded


The crowded roads mean tech workers arrive at work spent and frustrated, and

they're less productive. Industry insiders say some companies have begun to

build more man-days into project budgets because of commuter crawl. Others are

looking elsewhere. Wipro and rival Infosys Technologies, two of the city's

largest employers, are setting up operations in Madras and even in communist-run

Calcutta, both of which are keen to welcome Bangalore's deserters. "We

will grow at a faster rate outside Bangalore," Wipro Chairman Azim H.

Premji told reporters on October 15.

Companies and citizen groups blame a nonresponsive Karnataka state government

for Bangalore's worries. Within weeks after a new coalition state government

took office in May, work on urban development projects-$40 million worth of

roads and overpasses, and a sewage works-ground to a near-halt.

Tech companies have petitioned new state Chief Minister Dharam Singh for

change. "There is zero focus, no hand at the wheel," says Infosys

Chief Executive Nandan M. Nilekani. Upset, 15 top tech outfits, led by Royal

Philips Electronics and Hewlett-Packard , plan to boycott state-led events such

as the prestigious tech conference, held annually in November to

highlight the city's prowess. A road blockade planned for October 15 by the

tech execs was canceled after pleas by officials wary of bad press in a week

when Google founders Sergey Brin and Larry Page were visiting.

The state government denies any anti-Bangalore bias. M.K. Shankarlinge Gowda,

the senior bureaucrat in the state's information-technology department, thinks

the troubles "affect only pockets" in south Bangalore. Congestion, he

says, will soon be eased when work begins on various road and other

transportation projects. But business leaders are skeptical. The alarm bells

have not started ringing as yet, says Sunil Mehta, vice-president of Nasscom,

India's IT trade group, but the chaos in Bangalore could soon have "an

adverse impact on the local economy." Given that the city contributes a

third of the country's software exports, a crisis in Bangalore could turn into

a traffic jam India can do without.

By Josey Puliyenthuruthel

in BusinessWeek. Copyright 2004 by The McGraw-Hill Companies, Inc