IT And Bangalore : Made For Each Other

From the ‘Garden City of
India’ to the ‘Silicon Valley
of India’, it has been a long way, on a short road, for Bangalore, the Information Technology (IT) capital of India. Such a description certainly invites a lot of criticisms and contradictions from the other cities. But let the facts speak for themselves.

From a mere 13 software units registered with the Software Technology Park of India in Bangalore in 1991-92 to 295 exporting units, at the end of July 1999; from a mere Rs1.5-crore exports in 1991-92 to Rs3,200-crore exports in 1998-99 along with a target of Rs5,000 crore worth of exports to cross, in this fiscal. It doesn’t make one think twice, before naming it, as the Silicon Valley and the IT capital of the country.

As Nandan M Nilekani, President, Chief Operating Officer and Managing Director of Infosys, puts it: “Bangalore got the nickname of Silicon Valley of India and that is not going to go away. Even in the US, there is only one Silicon Valley and there are other IT business concentrated centers, in places like Highway 128 Corridor in Boston, Seattle, among others. In a large country like India, there will be many cities where IT business will flourish; in fact we need more such cities.” According to Sanjoy Das Gupta, Secretary IT, Government of Karnataka, “Bangalore accounts for 20 percent of national electronic production and 32.2 percent of IT software. It has a growth rate of 58 percent in the IT sector, which is the highest for any state in the country. There is no doubt that
Bangalore is the IT capital of the country.”

What makes Bangalore tick?

With the neighboring cities like Hyderabad and Chennai along with Noida and Maharashtra vying for a place of honour on the software exports map of the country, Bangalore has certainly made a headstart. In fact it still enjoys the pre-eminent position. The unanimous view expressed by a cross-section of the industry and the government sector, relates to the historical nature, in which the city positioned itself. The excellent weather, the talent pool, educational and training infrastructure, cosmopolition nature of the city and ancillary services for hi-tech industries have all contributed in attracting investments. The first 100 percent export-oriented software development unit in the private sector was set by Texas Instruments way back in the early eighties.

The establishment of premier educational institutions and hi-tech public sector and defense establishments in the fifties and sixties have laid down the vital thrust for Bangalore, to embark on the IT scene.
As N Vishwanathan, Principal Secretary, Commerce and Industries, Government of Karnataka, says: “The strength has been built over a period of more than four decades. The establishment of a number of strategic and technology-oriented public sector enterprises and a host of other internationally acclaimed research and development institutes, among others, gave a tremendous impetus toward absorption, development and utilization of high technologies in key industrial sectors.”

However, all this would not have been possible without the initiatives taken by the successive governments in the state. According to Nilekani, IT got an impetus with the large-scale computerization of the developed world economies and further accelerated with the liberalization process initiated by our country.

Government initiatives

The state government has always had a progressive mentality toward developing the industrial scenario in general and the IT sector in particular. There were many firsts to its credit, which helped the state sustain its own growth path. Karnataka was the first to formulate and announce the State-level Industrial Policy in 1983. It was also the first to establish an exclusive Electronics City for hi-tech industries. Further, it has released a policy exclusively, for the IT sector in 1997, with other states taking the cue and following its model. A range of fiscal incentives have been offered, such as exemption from payment of entry tax and purchase tax on certain hardware components, during implementation for over a period of five years. Sales tax exemption for a period of 10 years or deferment for a period of 12 years, subject to a ceiling of 200 percent of the value of the fixed assets. Financial assistance by way of equity contribution in small and medium enterprises, reduced interest rates and venture capital assistance have been the other hallmarks of the state government’s policies to boost the IT sector in the State and the city in particular.
As Das Gupta says, “Most of the salient features of the IT policy have already been implemented, while the others are in the pipeline.

The Indian Institute of Information Technology-Bangalore (IIIT-B), has begun functioning and it would begin its academic courses this year onwards. The syllabus of the Computer Science Engineering stream has been revised to match the current industry demands and computer education has been initiated in all the schools in the state.” Though the government claims that infrastructure and power, the two bottlenecks yet to be solved, have been handled dexterously; the industry presents a contradicting view. The basic area, that the city of Bangalore lacks in is in the deployment of basic telecommunication, power and transportation.
R Mohan, Director, BFL Software Ltd, says, “The state government has not been able to adopt IT in day-to-day administration and make lives of people easier. Areas such as land records, road transportation, police, power, other utilities and the City Corporation should definitely use IT in a meaningful way.

There has been purchase of computer systems but visible applications to the public are very few and far between.”
But the government officials have a different story to tell. Vishwanathan says, “The state government has set up a high-level task force to effectively introduce e-governance. Some of the field departments like the commercial taxes, industry/commerce and road transport corporation, have already built both local area and wide area networks for their transactions, both within the department and with the public.” However, except for the Karnataka Road Transport Corporation reservation system, the other fields have not been able to make its benefits available to the public.
Das Gupta, on the other hand, reels off a list of initiatives taken by the government for e-governance. Right from C-COMS packages for elected representatives to computerization of treasury operations, regional transport office, commercial tax offices, corporations and municipalities in six cities and towns, including revenue collection facilities by KUIDFC; to linking up ticketing, depot management, operations applications to positioning GIS/GPS for BMTC vehicles; the list is long and promising. “The C-COMS package for elected representatives provides the database and maps of all existing infrastructure and ongoing developmental activities taken by the different departments. It also generates MIS and customized reports and returns,” says Das Gupta. But knowing our elected representatives, how many of them use it, is the twenty million-dollar question.

But the feather in the cap for the state has been the beginning of Bangalore IT.Com, the first of its kind in the country. Initiated by the Government of Karnataka, the event which began last year, despite all the chaos and confusion,, had been a major hit. The horde of general public, including schoolchildren who thronged the stalls did fructify in creating the much-needed IT awareness. It was a trendsetter in a way and this year we see Pune trying to ape it. From Bangalore IT Declaration to the announcement of the Internet Policy of India, it was a phenomenal debut for the event. This year, too, carrying on the tradition, with the emphasis on making Bangalore the IT capital of India, Bangalore IT.Com ’99 is being held from November 1-5. If in 1998 ‘it made history’, this year ‘it makes perfect business’.

Talent pool

We can call it the ‘neighbor’s envy, owner’s pride’. For, the well-educated talent pool available in the city is unmatched in the country. From far off North-East to Down South, cutting across cultural and linguistic barriers, the IT professionals outnumber any other professionals in the city. With approximately 40,000 professionals engaged in the IT sector in the state and nearly 1.5 lakh in the service sector, considering the employment in the industry, including training institutions, professionalism is certainly of the highest order. Moreover, tens of thousands of computer professionals descend on the city from premier engineering colleges, from all over the country.

“The city has a good number of professionals who are contributing to the growth of the IT industry. Karnataka in general, and Bangalore in particular, are known to be the hubs of research and technical institutions, due to which, one can source skilled manpower easily,” says Uday Birje, Country Manager, India and SAARC, Cabletron Systems. Som Mittal, President and Chief Executive Officer, Digital Equipment (India) Ltd, is also of a similar opinion, “The levels of IT professionalism have definitely improved in recent years. This has been primarily, due to increased competition both from private companies as well as other state governments who rightly see IT as the industry for the future. The IIIT-B is another pioneering step in the deployment of IT in the state,” he says. Adds Mohan, “The private sector has witnessed tremendous growth in professionalism. This is borne by the fact that several large companies have moved their corporate offices to

IT investment and software exports

The total IT investment in the state including both the Foreign Direct Investments (FDIs) and Indian investments have been to the tune of Rs2,000 crore. During the last three years, the total investments made in the state have been approximately Rs225 crore, with FDIs being approximately Rs100 crore. In Bangalore alone, while in 1997-98 the FDI was Rs32.05 crore, in 1998-99 it was Rs47crore and in the first quarter of 1999-2000 it was Rs15 crore. On the other hand, the Indian investments in 1997-98 were Rs85.41 crore, which drastically came down by 59 percent to only Rs35 crore in 1998-99. In the first quarter of this fiscal, however, the investment was around Rs10 crore. With most of the software big-wigs having already established their base and infrastructure, it will not be surprising if the Indian investment comes down again this year. But the interesting fact is that FDIs have been picking up over the years and with more and more multinational companies setting up their base in Bangalore, the trend is clearly towards the FDIs going up over the years. It augurs well for the state as well as the country, as the foreign exchange that it brings along with it, will certainly do a lot for improving the economy.

The software exports units have been growing at a steady pace and the count at the end of July stood at 295 units. As far as the revenue from the software exports are concerned, while it was Rs1,700 crore in 1997-98, in 1998-99 it was Rs3,200 crore and this fiscal, Bangalore is expected to cross the $1 billion-mark with nearly Rs5,000 crore expected from software exports. The presence of big software houses like Wipro, Infosys, IBM, CITIL, IMRglobal, BFL and Sonata, among others, have definitely put it head and shoulders above the rest of the cities. With the exports in the first quarter of this fiscal being Rs510 crore, the city is well into its way of reaching its target of Rs5,000 crore. However, despite having at least 1,000 software companies in the domestic market, the total revenue estimated from these companies is only Rs450 crore. The trend for the software exports dominating the IT industry becomes clear when we look at the Bangalore scenario alone.

All said and done, the air-conditioned city of Bangalore with its salubrious climate and cosmopolitan culture, is on the threshold of another milestone-breaking the $1 billion-mark in software exports. If laurels have been showered, it has received brickbats, too. Lack of basic infrastructures like roads, power and transportation have been the bane of the city. Charity begins at home and the government has to see that its departments and personnel have the will and the power to go for computerization and adapt to the world of high technology. The changing scenario of net banking, ecommerce and web-enabled services have made it inevitable that technology will be the key factor in changing lifestyles and creating global villages in the next millennium. The time is ripe, the resources are all in place and there is no dearth of talent. The only thing that Bangalore has to do is to have a focused approach, do away with the loopholes and embark on the journey to glory.


No. of Units
1997-98 1998-99 1999-2000 (July-end)
Bangalore 207 267 295
Hyderabad 107 191 224
Chennai 69 97 129
Noida 192 220 260
(Source: STPI Bangalore)

Exports (In Rs Crore)
1997-98 1998-99 1999-2000
(First Quarter)
Bangalore 1,700 3,200 510
Hyderabad 274 573 24
Chennai 394 1,200 93
Noida 429 1,100 –
(Source: STPI Bangalor

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