Cyber City or Silicon Slum?

Cyber City or Silicon Slum?
Subir Roy, Raghuvir Badrinath & R Raghavendra
Business Standard, August 11, 2004 .

The best businesses in the world look out for early warnings and send out some themselves. They do not wait for a full blown crisis before starting to make a noise about it.

Bangalore, flagship location of Indian information technology (IT), business process outsourcing (BPO) and research and development services, is in the throes of a noisy public debate which is turning out to be a loud early warning.

The debate was initiated by Wipro boss Azim Premji, who said that his company was looking for other locations to expand because of the city’s inadequate infrastructure.

Others have joined in and the new Karnataka government is clearly on the defensive. It has transferred out two star officers – Jaykar Jerome, commissioner, Bangalore Development Authority, and M R Srinivas Murthy, commissioner, Bangalore Mahanagara Palike – where they were seen to be delivering superbly.

It has not made its case any better by also failing to invite Bangalore Agenda Task Force (BATF), a unique nationally admired public-private partnership to improve the quality of life in the city, to carry on with its good work. This is important because BATF was very much an S M Krishna government phenomenon. It was a public forum at which the major utilities and service providers in the city came together to announce a yearly agenda and give a progress report on their previous year’s promises. Above all, it enhanced public accountability. Such a forum, at which entities like the police (the state), Bharat Sanchar Nigam Ltd, the central government-owned company, and the municipal corporation (local government) come together, cannot function without ownership from the top.

Ice World polled a cross section of the knowledge industry in Bangalore – large and small multinationals as well as Indian IT and BPO companies – to gauge their perception of the city’s infrastructure. And the overall message to the arbiters of the city’s destiny is blunt and clear – set your house in order or else people will start looking elsewhere when they consider a location for their next round of investment. Nobody is packing up bag and baggage and leaving. But that should be the least reason for complacency. The city has unique pluses which still make it the preferred number one destination, but the minuses are rapidly piling up.

Of the 14 companies that responded to our questionnaire, just one (MphasiS BFL) came up with an overall positive rating of the city’s infrastructure by saying it is “not that bad.” Not a single company straightforwardly described the city’s infrastructure as “good” (the first rung in our scale of four). Of the remaining 13, six rated it “inadequate” (the third rung in our scale), three rated it “average” (the second rung), three rated it “between average and inadequate” and one (Progeon, the BPO subsidiary of Infosys Technologies) rated it “poor and not getting any better” which comes closest to our last rung “terrible.”

So there is a clear cluster, of 12 of the 14 companies, in the middle of the scale comprising “average” and “inadequate,” with the balance tilting in favour of “inadequate.” The overall sentiment is most clearly articulated by Subroto Bagchi, COO of MindTreee Consulting, the rare successful start up from the dotcom era: “Bangalore has not yet lost its edge. However, if the situation deteriorates, it could lose businesses to smaller towns and cities, where lower population levels provide more room for growth. Moreover, other state governments have begun promoting their locations by putting in place better infrastructure facilities.”

What is it about Bangalore’s infrastructure that bugs so many of its distinctive companies and ardent admirers? An overwhelming number of complaints are accounted for by the condition of roads, traffic congestion, state of public transport, pollution, parking problems and commuting time, all of which are interrelated.

Of the 14 companies, 13 zeroed in on this group of problems, giving them a score of 28 out of 50 reasons cited. (Every reason cited is given a score of one, so “roads” scoring a hit of 12 means as many companies cited “roads” as a problem.) Infenion Technologies India describes Bangalore’s roads as simply “miserable” and Philips Software says “bad roads are now the bane.” In the last few months when the city has been getting excessive rain, the potholes have multiplied but it is the traffic jams and the quality of “commuting experience” that is the key issue.

In such a situation, companies that need to ferry large numbers of employees round the clock are having to devise their own solutions. Says Akshaya Bhargava, managing director of Progeon: “Each BPO company runs a mini transport company. This is not our core competence.” Next highest on most people’s grouse list is power, water supply, sanitation and drainage, all scoring three each. Next comes waste disposal (garbage), and concern over dwindling greenery (scoring two each), although the parks in the city have been extensively revived over the last few years.

A couple of companies have also expressed concern over the dwindling walkways and danger posed by loose electrical connections, that is, the plight of pedestrians. The responsibility for two other complaints does not actually rest with the city or the state administration. One is the terrible shortage of hotel rooms, though the quality of rooms, when they are available, is considered acceptable. As a result, meetings have had to be cancelled and holding conventions has become very difficult. The other complaint is the inadequacy of air connections with the city. The feeling is that these should be far more and that is something which should not have to wait for the new international airport to be commissioned.

Our survey also asked respondents what they thought was great about Bangalore. The clear winner, far ahead of all the others, was the talent pool available in the city. It scored nine points out of 30. This was seen to be the result of the social and educational infrastructure existing in the city. Then comes the silver medalist, the weather, which scores five. One respondent describes it as “unbeatable.” The bronze medalist is the city’s civic mindedness (score of three) which enables it to take public initiatives like BATF.

Then come three attributes with equal scores of two each – the cosmopolitan character of the city in which outsiders feel comfortable, the scope and facilities for leisure and entertainment and the acceptable quality of telecom infrastructure.

Individual respondents have cited a whole lot of other pluses for the city and its ethos which do not score high but, taken together, give an idea of what is there in it that is so appealing.

Aditi Technologies lays store by the political stability of the city, which it contrasts with the psyche of other leading cities like Mumbai and Kolkata. Philips Software finds the scientific temper of the city and the ecosystem created by a large number of R&D shops to be great pluses. One respondent even finds
government agencies to be responsive!

If these are the pluses and minuses, what is the final balance? None of the 14 companies has lost any business so far because of infrastructure problems but only four say this unequivocally, with one (LogicaCMG offshore services) pointing to the fact that it is actually expanding operations in the city.

The predominant mood among the rest is: no losses yet, not so far, but … MindTree, Philips, 24/7Customer and Tyco Electronics India fear that this may happen if things don’t change for the better. Borland India admits that the problems have resulted in a loss of productivity and Infenion finds it is becoming more challenging to sell the city.

So if things don’t change, who will shift out? MindTree will. Unisys, which has a five-year $ 180 million expansion plan, will think of expanding elsewhere and Borland and Tyco ask, why not, if the apathy continues. LogicaCMG is much more tolerant, seeing the problems as the pains of growing up. However, AMD Far East Ltd (India) and Tavant Technologies have no intentions of shifting out, the latter considering the city to be “ideal.” Philips also sees no chance of shifting out its R&D work as the knowledge people are all in Bangalore.

The responses to the query as to whether Bangalore has lost its edge are along similar lines. Only one company flatly says “yes.” The predominant sentiment is “not yet, but others are catching up, with different state governments promoting their destinations by seeking to improve their infrastructure.”

So there will be trouble for the city if it does not change its ways. There are of course a few, led by MphasiS BFL, that remain total loyalists. Their logic is that every city has its quota of problems. Also, absolutely nobody regrets that they chose Bangalore over Chennai or Hyderabad or another city in the first place.

In the final analysis, it is realised that many of the problems are those of growing up too fast. Says Bob Hoekstra, CEO, Philips Software: “It is just in the last year that the speed of development of the industry has been picking up, while the infrastructure projects seem to slow down. The new airport, metro, parking garages and flyovers seem to be delayed.”

Satyen Parikh, Managing Director, Indian subcontinent, Borland, sees it all as the city “coming to terms with becoming a full fledged metro, rather than coming to terms with being known as ‘India’s Silicon Valley’.” What the city needs is a master plan or a development plan. Says Hoekstra: “It requires a sense of urgency in all the players, and a passion to make Bangalore reach its potential. Using the word Bangalore is not politically incorrect in the US and in India, but we need to do something about it. This will benefit the city as well as the rural areas. The rural areas need to be ‘Bangalored’ too and provided the opportunity to grow in prosperity, using the dynamics of Bangalore.”

He reflects a universal sentiment in the city when he adds that it has “so many good things that we should be able to pull up our infrastructure socks, put on running shoes and just get going.”

The questions posed

1. How do you regard the city’s infrastructure overall? Good/average/inadequate/terrible/any other
2. Please list what in your opinion are the main infrastructure problems of the city
3. Have you lost business owing to the state of the infrastructure?
4. Would you consider shifting from Bangalore because of infrastructure problems?
5. In your opinion, has Bangalore lost its edge because of this?
6. Do you regret having set yourselves up in Bangalore instead of Hyderabad/ Chennai/ Pune/any other?
7. Please list the city’s infrastructure pluses, if any?

Traversing this road is hell

Bangalore’s Bannerghatta Road is a classic example of how the state government has reacted or failed to react to the infrastructure requirements of the IT sector. Even two years ago it was dusty, overcrowded and encroached upon. Today, traversing it is near hell. Ever since the IT sector bloomed in Bangalore, IT companies dotted the entire five km stretch of this road and the IT crowd moved into the localities around the road. Result – heavy traffic and terrible mismanagement.

Several IT companies located on this road first asked the government to upgrade it and then offered to even pay for it. The government, after doing nothing to improve the entire stretch, decided to build two flyovers. Work on the flyovers seems stalled since the April elections and the mess is worse than ever before.

Only in the last 2-3 months did the government finalise a Public Private Partnership for the development of the road. M R Srinivas Murthy, till recently the commissioner of Bangalore Mahanagara Palike, attributes the delay in the construction and upgradation of this road entirely to very heavy traffic. But he himself cites another reason – a bureaucratic impasse.

“A stretch of Bannerghatta Road uptil the Ring Road comes under the Bangalore City Corporation. The remaining stretch comes under the Bommanahalli Municipality. The Public Works Department has done a good job in maintaining the stretch uptil the Ring Road, but the Bommanahalli Municipality has not done much.”

Why is the road so important to IT? It is here that Infosys began its first full-fledged working facility in Bangalore. Other important companies now located here include Oracle, IBM, Honeywell, AirTel, Convergys, Accenture, HSBC. Such a road should be a showpiece. But it is the opposite.

Companies have devised their own solutions. Honeywell makes it a point to get its foreign visitors in before 7 a.m., not because Americans start work early but because after that the traffic becomes near impossible.

– R Raghavendra