Nandini Vaidyanathan shares her take on how Bangalore earned the tag of ‘Silicon Valley of India’
The first time I left Bangalore was in the early ‘80s. I went to Delhi School of Economics to do my Masters in Sociology. At that time, Bangalore was an old man’s soul, euphemistically called ‘pensioner’s paradise’. The weather, for a large part contributed to the lugubrious pace, lack of ambition and a chokehold of contentment with the non-life that one lived. I vowed I would never return.
The next time I came back to Bangalore, it was in the late ‘90s. It was a very brief and very unhappy visit but the first thing that struck me and stayed with me was that one heard Hindi more than Kannada. The internet revolution had reached the ramparts of Bangalore and experiences like online shopping (indiaplaza.com) were being bandied about. Suddenly you saw young people on the streets, with a distinct spring in their step. And conversations were no longer about the weather!
In one decade what brought on this demographic and cultural metamorphoses? What made Bangalore a technology hub like none other?
The very first volitional act was liberalising export-import of computer hardware and software by the government in 1984. Two companies saw a huge opportunity as a result of the new policy. One was Wipro and the other was Infosys. Wipro, up until then, had no business in information technology, but Infosys was familiar with the potential, what with founders having learnt their ropes in DCM Data Products. They set up shop in Bangalore and started hiring computer programmers in seriously large numbers.
Partnerships were forged with US companies to develop software for them. India’s advantage was obviously the demographic dividend. Our talent pool was huge, educated and quick on the uptake; we only needed to be trained in American systems, hardware and basic software requirements. We were an enviably quick understudy and the first US Company that saw value in setting up its development center was Texas Instruments in 1985. The location was Bangalore. It wasn’t long before a small office became a sprawling campus, a self-sufficient city in itself. It also became evident that India offered a huge cost arbitrage. Companies had the leeway now to set aside larger budgets for product innovation and development that they had saved on operational costs. Other MNCs soon followed, seeing merit in this.
Why did they all choose Bangalore over other cities? I suspect and there is evidence to lend weight to my suspicion that there were four primary reasons. Inexorably, the first was the famed Bangalore weather. Just as it had seduced the locals into complacence bordering on laziness, it magnetised US companies to make Bangalore their business homes.
Second, equally inexorably, is the fact that prime real estate was available in verdant settings. Up until then, an office was a concrete building in the central business district. In Bangalore they could build resorts in the midst of lush green forests and call them offices!
Thirdly, Karnataka always had a stable progressive government. Ramakrishna Hegde who was the CM between 1983 and 1988 was a hardnosed politician whose developmental politics was to give a distinct edge to Karnataka, unlike other states at that time which were too busy focusing on containing poverty at the grassroot level.
In the last decade alone, Bangalore has accounted for over 35 percent of the GICs (global in-house centers) set up in India with an R&D value of over $50 billion
Also, the fact that South Indian culture emphasised acquiring education over amassing wealth. Who you are because of your education was given primacy over who you became on account of your wealth.
So Bangalore became home to companies that were serious about innovation and development. In the last decade alone, Bangalore has accounted for over 35 percent of the GICs (global in-house centers) set up in India with an R&D value of over $50 billion.
Companies such as Amazon, Microsoft, IBM, Tesco, Nokia and Siemens invested hugely in building a workforce which was not only technically competent but was multi-skilled.
It was around this time that our engineers got bitten by the bug of entrepreneurship. The thinking largely was, if Wipro and Infosys could do it, so can I. If an American MNC can laugh all the way to the bank setting up online shopping, so can we in India at a fragment of the cost and three times the market size!
Then came the big Black Friday in internet businesses. The bubble burst. Entrepreneurs were left gasping by the roadside. Capital that was sunk into businesses sank further, caught in the vicious whirlpool of too much easy money chasing too few good ideas. The reason was that all tech startups in India were cut-paste models, whose product idea and implementation were migrated from the US with hardly any customisation to Indian conditions. This kind of course correction had to happen and it lasted till 2008.
But the first decade of the 21st century transformed the sky-line of Bangalore. The scale of operations both in terms of real estate as well as head count of IT companies was mind-boggling. Young talent was hired from all over India and once people got the taste of the signature lifestyle in Bangalore, there was no going back. The credit card culture was here to stay.
Once the course-correction in the startup space happened, newer business models emerged. Flipkart set the trend for online shopping in India (sadly, Indiaplaza were not nimble enough to meet the change, head-on). For an American Uber that entered India, there was a local Ola ready to challenge.
It is very interesting that engineering and MBA colleges in Bangalore were the first to set up incubators within their campuses to encourage entrepreneurship. The incubators offered workstations from where the teams could ideate and build seed capital which could be used for developing the Most Valuable Player (MVP) and taking the product to market, and mentorship of industry professionals to guide them into building businesses around their products.
From being a pensioner’s paradise Bangalore was well on its way to becoming the Silicon valley of India. As a prime mover, Bangalore has been an inspiration to cities not just in India but world over. Governments vie with each other to draw a blueprint for making their cities another Bangalore. But I do believe that it is a big ask because Bangalore is unique not just in its weather but in its embracing culture, whose have money-will splurge hedonistic attitude is not in-your-face (and I sincerely hope it retains this character in the years to come).
As on date, nearly 40 percent of India’s IT exports comes from Bangalore. The city has a GDP of $110 billion. It has several Special Economic Zones (SEZ) and Standard Temperature and Pressure (STPs) where it provides unrestricted 24-hour access to power and internet. It is estimated that very soon, there will be over 80 lakh IT professionals working in Bangalore. Home-grown companies such as Ola, Inmobi, Zoomcar, Swiggy, Zomato, Razorpay, Flipkart and Myntra, all started out from here. The vibe of Bangalore is now of a future-ready city. I am so glad I returned to Bangalore in time to infuse this vibe into my life.