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How Bangalore Became Asia’s Silicon Valley

You don’t have to make it much past 8 am before Bangalore’s notorious traffic jams become too dense to escape. There is a pressing impatience as auto-rickshaws, motorbikes and Uber cabs pile together, and the restless horn honking creates a chaotic sense of urgency.

Ties were built with American companies offering advanced systems which Indian software companies hugely benefited from. In return, the Americans started extracting the many perks of large talent pools and low costs by erecting software facilities and innovation centres on Indian soil, thereby sowing the seeds of an offshore relationship between East and West. In 1985, Texas Instruments Inc. became the first MNC to set up a development centre in Bangalore.

But the perennial hunt for bang for the buck developers and infinitely trimming costs backfired and left India with a low-quality software label that has tainted the reputation of the country’s IT industry to this day. In January, an article by the The Economist lamented the role of the rusty business models of Indian IT outsourcing firms which seemed hell bent on being stuck in the previous millennium. The argument was that while the world of information technology was undergoing tremendous change, these companies were failing to streamline their structures and mindsets, making them organisationally obsolete. Truth be told, The Economist had a point.

 

From back office to R&D hotspot

However, what lied beyond the natural scope of The Economist’s article was the profound changes that were transforming India’s innovative and entrepreneurial set-up. Graduates dreaming of a job at Google were becoming fewer, and instead, aspired to create the next unicorn. Today, these are the people behind the steering wheels of India’s most successful start-ups. Ola, for instance, managed to overtake its global competitor Uber in India while Amazon-competitor, Flipkart reached a net market value of $5.54 billion and managed to create a workforce of more than 30.000 people, all in less than 10 years. Both companies originated in Bangalore.

Out of the 12 million people who call the city their home nearly one million are developers. The number of IT colleges has long surpassed 50 and the start-up mania is ubiquitous. Accelerators and incubators are accompanied by numerous initiatives and events for startups and small enterprises, all carving deeper into the ecosystem- and the effects are magnetic.

The IT industry employs roughly 10 million people across India and accounts for nearly $85 billion of exports every year- 40% of which is generated in Bangalore. In 2015, $9 billion were invested in startups in India.
But economy alone cannot explain the rise of this IT utopia; the build-up of technical expertise and the multi-skilled labour force have been instrumental in the heavy concentration of R&D centres in Bangalore counting names like Amazon, IBM, Microsoft, Tesco, Nokia and Siemens. These centers balloon the innovation that gives rise to high-tech innovations as well as the masterminds of new billion dollar businesses.

This technical centrifuge has halted Bangalore’s role as passive recipient of menial software tasks and instead made it an epicentre of entrepreneurship. It hosts a young population of digital natives who possess the business acumen and innovative vigour that constitutes the insulin of the world’s tech industry. And in this whirlwind of entrepreneurial upheaval, AI, machine learning and IoT are saturating the market and bulking up the ecosystem.

 

Government and Tech- hand in hand

In recent years, there has been an aggressive clampdown on the strangling effects of India’s red tape and bureaucracy with tax incentives and laws facilitating setting up a business. Reforms and digital plans carved out in Prime Minister, Narendra Modi’s “Startup India” and “Digital India” initiatives have trimmed the tech industry even further. As a result, top-tier talents abroad are starting to return home to participate in Bangalore’s tech boom, slowly reversing the much bemoaned brain drain.

In fierce competition with China, India’s economic growth has skyrocketed. The government’s financial policies and FDI reform have unlocked the possibilities of mobilising resources to create outstanding things. And as luck (or logic) would have it, innovation is used creatively to solve the social and infrastructural issues the government is sometimes struggling to curb.

A culture of openness

However, the raw statistics alone hardly reveal the curious ways in which Bangalore is emerging as a world city, and it is a dynamism that is tricky to capture in definite terms or stock phrases.

Only 41% of Bangalore’s population is native to the city and the resulting multiculturalism has had a fascinating impact on its social interior. Whole neighbourhoods are flooded with luxurious boutique-style shops and extravagant living arrangements.

Bangalore also started appearing in high level research across the globe. The city featured as the world’s second fastest growing IT ecosystem in 2015, and, teeming with life, World Economic Forum named Bangalore the world’s most dynamic city in 2017.

This might partly be explained by Bangalore’s more than 3000 pubs and bars, a fact which has scored the city the title as India’s “Pub Capital”.

Manu Chandra, who is behind the chic hangout, Toast & Tonic, explained that due to Bangaloreans’ experimental openness and fondness of trying new things, the city has become India’s best market for piloting fresh concepts.

Aggravated, these trends are testimony to a booming and solidifying middle class whose cultural habits are increasingly discernible in the urban landscape. This departure from the familiar replaced with a taste for the new encapsulates the culture of Bangalore and has kicked off a course of permanent change.

But at the end of the myriad of examples lies the most uplifting realisation; that as opposed to many other markets, the most fruitful years lie ahead rather than behind us. The city holds abundances of untapped potential of burgeoning revenue and growth for decades to come.

 

These indispensable factors have cemented Bangalore as an IT hub and earned the city the well-deserved sobriquet of Asia’s Silicon Valley. Planning policies and the huge influx of investments have overhauled a city that used to be more popular among retirees than anyone else and instead created a space for unprecedented levels of technological creativity and disruptive innovations.

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