No, we haven't lost IT

No, we haven't lost IT
Cassandras may have written off Bangalore, with its crumbling infrastructure, as the nation's IT hotspot. But facts and figures paint a bright picture, reports BHUMIKA K.

The Hindu

WIPRO CHAIRMAN Azim Premji rocked Bangalore, Bangaloreans, and the Karnataka Government out of complacency with blunt statements on the condition of Sarjapur Road. And said that his company would have to look at other Indian cities for expansion.

There were panic meetings and newspaper headlines screaming mismatch between the city's industrial growth and infrastructure. Three months have passed since then.

Some potholes were filled in a hurry, and a new deadline set for completion of flyovers. Two years ago too, Mr. Premji's annoyance over the bad roads and power supply in the city, created a buzz in government circles, but nothing really changed.

In the meanwhile, a few IT companies threatened to boycott Bangalore's mascot event IT.COM 2004. But, when it took off this Monday, the IT bigwigs are gloating that more companies than ever are participating in the seventh edition of the extravaganza: 290 companies and delegates from over 15 countries. Chief Minister Dharam Singh even promised at the inauguration: "Work on important roads to the IT corridor area such as Bannerghatta Road, Sarjapur Road, Varthur Road and Airport Road will be completed on a priority basis."

Bearing the brunt?

Mr. Premji was merely voicing what other chieftains of the IT industry probably wanted to, but didn't. The big questions are: can IT hotspot Bangalore, with its branding and tagging as the Silicon Valley of the country and with promise of a massive talent pool, afford to lose IT companies and MNC investment because of bad roads and high living costs? Will Bangalore be "Bangalored" by its real image?

B.V. Naidu, Director, Software Technology Parks of India (STPI): "There is no doubt that infrastructure is stressed and there is a lot of pressure on it, creating inconvenience to the IT industry." He attributes it to a combination of three factors — the sudden spurt of growth in the IT industry in the last one year, the heavy rains that created the pothole-ridden roads, and the transition in government that delayed certain infrastructure projects and slowed down the beginning of many others. What Mr. Premji has created with his reproach of the government is "a consciousness, which is good," he says. "But nobody is withdrawing investment from Bangalore because of this."

Not just infrastructure

Apart from infrastructural bottlenecks, IT companies are worried about higher costs of operation, higher attrition levels with the coming in of MNCs that pay at least 20 per cent higher salaries, thus pushing up salary costs. Bangalore is also said to have the highest attrition rates in the IT sector in the country — around 18 per cent.

M. K. Shankarlinge Gowda, IT Secretary, says that the Government is clear on one issue — that the city is being developed for everybody, not just the IT sector. He insists Bangalore has its strengths over other cities that can't be taken away from it. "Bangalore's strength is its intellectual content, good housing and eco-system, no hassles from bureaucracy, everyday water supply, over 13 international schools, and to top it all, evening life is good. The social factor also plays a very big factor in locating an industry."

But at the same time, at this edition of the IT.COM, Mr. Gowda is also putting out as bait other cities such as Mysore and Mangalore, which have the same USP Bangalore once did — cheaper land, lower living expenses, and lower hiring costs. The cities are well connected to Bangalore and have large employable talent pools.

Expansion beyond

"Companies do look at alternative sites for expansion," admits Mr. Naidu. Global opportunities are large and every city can get its share of the IT pie. "Having over 10,000 to 15,000 people in one location is not possible. But this expansion is not happening at the cost of Bangalore." Wipro alone, for example, already has around 11,000 employees. In the last six months, 92 IT companies have registered anew and set up operations in Bangalore. Of these, 56 are MNCs. "The total investment in STPI (by IT companies) this year has already touched Rs. 1,400 crore," Mr. Naidu explains. In terms of the number of companies — Indian and foreign — and the investment, Bangalore has seen a growth of 34 per cent in the IT industry compared to last year.

So a confident Shankarlinge Gowda, says: "Who's preventing anyone from going away? No company can confine itself to one place. But all those who say they'll go away can't afford to, because the brand equity will be gone. A company has to be in Bangalore to attract business. No one is folding up."

Competitive neighbours

Neighbouring states and far-off ones are pitching in their bit to attract companies that are full up in Bangalore. Pune, Chennai, Kolkata, Hyderabad, Delhi and pockets in Kerala such as Kochi are the new picks. Chennai, for instance, is following the Bangalore fast-tracking model by attracting companies such as Infosys, TCS, HCL Technologies, MNC giants Cognizant, Covansys, Ford Information Technology and Xansa. TCS will start its biggest development centre at Chennai, employing 8,000 software professionals, riding over its Mumbai centre. And Infosys is planning to establish the world's largest software development centre which will eventually hire 25,000 professionals.

Meanwhile, Bangalore has not been doing badly for itself. During the last one year alone, 168 new IT companies, including 110 with foreign equity, set up their base here with an investment of Rs. 2,400 crore. Currently, over 1,400 IT and BPO companies operate here, employing more than 2,00,000 people, earning over Rs. 18,000 crore in exports.

Moreover, the setting up of operations of international bigwigs such as Reuters, Yahoo and Google this year alone is definitely sending out a strong message to the knowledge industry, says Mr. Naidu. While he wouldn't disclose any particular company names, he says there are more MNCs waiting to set up their research centres in Bangalore.