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5 Initiatives That Transformed Bangalore’s IT Ecosystem

Planning out the architectural sketches for an innovation hub is not a job done overnight. A myriad of initiatives, changes and sheer serendipities compile in criss-cross patterns until a system is in place and the natural breeding of ideas can commence.

Bangalore is one of those places. The city has fostered the macro forces that in return created opportunities for innovation, entrepreneurship and digitalisation to blossom.

1. The Indian Institute of Science and the IITs

Swami Vivekananda and Jamsedji N. Tata’s commitment to advancing scientific capabilities in India was cemented in the erection of Indian Institute of Science in 1909, which set the tone for engineering in the century to follow.

The institution has hailed significant contributions within the spheres of advanced computing, space and nuclear technologies and became the first to introduce a master’s degree in engineering. Alongside its more than 40 PhD programmes, the institute’s education centers for climate change, neuroscience, and engineering have opened the tap full stream on interdisciplinary research.

This academic diligence has manifested an ambitious impulse for technical advancement and has disseminated the educational impetus to other institutions.

That Bangalore has the highest number of engineering colleges in the world allows us a telling glimpse of the vigour behind Bangalore’s technical prosperity. To simply accommodate the explosive demand for technical talent on a global scale, India has seen an eight fold increase in the number of engineering institutions over the past decade and they continue to grow at 20 per cent every year.

Allocating the source of unicorns in educational contexts introduced the world to India’s Institutes of Technology featuring alongside Stanford, Harvard and University of California. Among its alumni, the IITs, a cluster of 23 universities, managed to produce 12 unicorns, a fact that has put India in the driver’s seat of digital endeavours and aided the country’s rise to entrepreneurial stardom.

2. Computer and Software Policies

In the decade between 1980-1990, we witnessed the incremental building blocks of an IT hub take shape. The new computer policy in 1984 and the Software Policy of 1986 dismantled rigid policy restrictions and conveniently made IT companies eligible for the bank loans they had previously been denied.
India gave import tariffs on software imports and exports the boot and with the sudden access to startup capital, many companies managed to leap over the strangling political quagmire.
Prior to 1984, exports constituted a mere 30% of software revenue in India as opposed to the staggering 85% today.

With Infosys and Wipro setting up camp in 1983, the city was already ascending as the cradle of India’s high-tech sector. In 1991, The Indian Ministry of Communications and Information Technology’s STPI Scheme (Software Technology Parks of India) annihilated many of the remaining impediments to the acceleration of software as an export.
The STP bolster internal engineering resources to deliver consulting, training and implementation services in various areas. Not unlike SEZ (Special Economic Zones), the STPI meant that companies within these units enjoyed generous tax benefits but exclusively applied to software as a way of promoting and boosting exports in this industry.

It is no coincidence that the year of the STP occurred the same year as India’s economic liberalisation (addressed below), being a manifestation of the country’s new approach to global economic forces.

3. Economic Liberalisation

Although not technical in nature, economic liberalisation has no doubt been the single most important factor in India’s explosive growth rates and innovative dynamism.

1991 became the year where India set forward a brand new economic agenda. IMF and the World Bank were the architects behind the New Economic Policy that opened the lid on the neoliberal project.
In line with the Washington Consensus, India agreed to let the market forces run their course and opened the doors to privatisation and FDI (Foreign Direct Investment). The government shed the stringent controls on imports and exports which had crippled business for decades, making software companies more cost-effective.

In the 26 years that ensued, India has become the world’s fastest growing economy and overtook the UK in size in 2016. McKinsey&Company further elaborated how India’s potential for growth compared favourably to other emerging markets.

The economic victories signalled that India was ready to overtake the world without warning. The country sowed the seeds for and intelligently reaped the benefits of rapid urbanisation, a young booming middle class, and increasing consumer spending. These are factors that cement a path of long-term viability and with a demographic composition that promises the youngest population in the world by 2020, the economic sprint remains far from the finish line.

4. Startup India

Flipkart, Snapdeal, Ola, InMobi, Hike, MuSigma, Paytm, Zomato, and Quikr are all part of the unicorn club, an exclusive cluster Startup India is busy exapnding.

Startup India was PM Narendra Modi’s deliberate attempt to infuse the ecosystem with larger portions of entrepreneurship and innovation. There has been a sense of activism attached to the initiative with the empowerment of startups at the forefront.

To this end, the Startup India Hub has mentored more than 400 startups since its inception in June 2016. As an example, any startup incorporated after April 2016 enjoys 100% tax exemption for initially three years, later extended to seven years.
Incubation centres and tinkering labs have extended a helping hand to the young startups who have simultaneously benefitted from online learning and development modules.

The government initiative has also worked to bridge the tech industry and academia, a crucial step in the solidification and maturation of the ecosystem.

Initiatives like Startup India are the forces behind India’s shift from the world’s IT back office to a nation at the forefront of innovation. It shoulders the ideas that might otherwise have fallen into oblivion.

In this way, Modi’s reforms incorporated in the Startup India initiative have trimmed the tech industry even further. As a result, top-tier talents abroad are starting to return home to participate in this lavish tech boom, slowly reversing the much lamented brain drain.

The industry now employs roughly 10 million people across India and accounts for nearly $85 billion in exports every year- 40% of which is concentrated in Bangalore. $9 billion were invested in startups in India in 2015 alone. Startups stand shoulder to shoulder with conglomerates, being the catalyst for pioneering dynamism.

5. Nasscom’s 10,000 Startup Initiative

Half of all startup activity happens in Bangalore and much of that is explained by forums like NASSCOM.

It is a not-for-profit industry association which supports the IT BPM industry with the purpose of making it an “indispensable powerhouse”. It is a holistic approach to advancing India’s role in global IT by cultivating a healthier business environment, streamlining procedures and policies and buttressing the talent pool. The organisation as a whole helps us understand that bolstering an ecosystem is an extremely complex endeavour.

The NASSCOM initiative 10.000 Startups assists product-ready startups gain a foothold among investors, mentors and corporates helping them to scale.
The Startup Warehouse incubates startups and provides them with the toolkits to climb the ladder of their respective industries. Included in the package are event spaces, meeting rooms, desks and the like.
The NIPP program facilitates cooperation between small Indian tech companies and established corporates in a fashion that is beneficial to both, as it opens a stream of ideas, methods and structures.

The multi-faceted approach employed by NASSCOM has sparked a series of other initiatives and fosters a support system that can send waves through the ecosystem for years to come. It has managed to incorporate the interests and benefits of all layers of the community and thereby democratises the opportunities available to its participants.

In a non-chronological and interdependent fashion, these policies and initiatives, among others, have transformed Bangalore from retirement paradise to innovative powerhouse. Providing entrepreneurs with mentorship, networking opportunities, education, and funding is the tactic now employed by virtually every startup, IT and corporate initiative born in Bangalore and has helped foster an wide sense of cooperation and community.

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