Bangalore Faces Tough Questions

Software City Bangalore Faces Tough Questions: Andy Mukherjee
Bloomberg Online

Jan. 20 (Bloomberg) -- In the middle-class neighborhood of Koramangala, five miles from Bangalore's fabled Electronic City, the hub of India's hugely successful software industry, Suresh Balakrishnan looks out of his office window at a cowshed across the road where mud-soaked buffaloes graze.

``We have to ponder Bangalore's urban challenge in this rural setting,'' Balakrishnan, executive director of Public Affairs Centre, a Ford Foundation-supported advocacy group, says over the incessant honking of horns by cars and motorcycles crawling on the potholed road below.

A cowshed in a busy residential area is only one of Bangalore's many incongruities; a potholed road in what is now one of India's richest cities just one of its many paradoxes.

To anyone who last visited Bangalore 20 years ago, it would appear that town planners went into slumber just when the sleepy army cantonment town was waking up to become an important city on the global business map.

As a result, a city that contains pulsating economic possibilities is being choked by increasingly evident perils of bad or no planning and inadequate infrastructure. ``The city has probably been stretched to its limits,'' says Balakrishnan, a Bangalore resident for nine years.

Bangalore has one of Intel Corp.'s largest software development centers outside of the U.S. and SAP AG's biggest unit outside of Germany. Santa Clara, California-based Intel has invested $40 million in Bangalore since 2003 and is planning to double its investment over the next two years.

Urban Agglomeration

Intel has 2,400 workers in India and is constructing a new building in Bangalore that can hold another 1,200. SAP, the world's largest maker of business-management software, plans to hire 1,000 more engineers in India this year, for total of 3,000. SAP pays an average 8,000 euros ($10,384) a year to an engineer in Bangalore, compared with 40,000 euros in Germany.

Then there are Indian companies that have a much bigger presence in Bangalore than multinationals. Homegrown Wipro Ltd.'s unit in Electronic City employs more than 8,000 workers.

Just like Silicon Valley and Hollywood in the U.S., Bangalore, India's fifth largest city with a population of 5 million, is now a case study in ``agglomeration economics,'' a branch of the dismal science that says that emergence of a cluster of similar firms lowers costs for everyone.

Fear of Expansion

Unless Bangalore gets serious about managing its explosive growth, there may come a time when residents will want to put an end to the expansion. And if Bangalore were to shut its doors to the talent that's streaming in from across India, and increasingly also from overseas, it will be disastrous for the city and for the cluster of software firms operating there.

The engineers who join Infosys Technologies Ltd., India's second-biggest software exporter that has almost a third of its people in Bangalore's Electronic City, go over to Koramangala in search of a place to live. Thanks to buoyant demand for housing, condominiums are replacing old, British-style bungalows.

``You can imagine what happens when you take a residential area and put up a 12-storied complex by demolishing four bungalows,'' says Balakrishnan. ``The water is not adequate -- the lines are not capable to support the extra demand -- connecting roads are not good enough. A whole range of things have taken place without adequate infrastructure.''

Nightmare Traffic

After water scarcity, Bangalore's second-biggest problem is traffic congestion. It isn't surprising that Infosys is building a 500-room guest house inside its campus so that visiting clients don't first shell out $400 a night for hotel rooms in downtown Bangalore -- they would be lucky to get rooms at short notice even at those exorbitant rates -- only to miss their appointments with company officers because of traffic jams.

Amid all the gloom, the good news is that organizations like Public Affairs are making citizens aware of their rights and responsibilities. School students are counting potholes in their neighborhoods, and their findings are being presented to the bureaucrats who run the city.

Janaagraha, a citizens' effort spearheaded by Ramesh Ramanathan, a former Citibank N.A. employee who used to sell derivatives in Europe, now coaches people on, among other things, how to read municipal financial statements.

``Russian Bangalores''

Five years ago, the government of the southern Indian Karnataka province set up a task force of several eminent residents of Bangalore. The objective of the Bangalore Agenda Task Force was to make the state's capital a world-class city.

Nandan Nilekani, the chief executive of Infosys, heads the task force, which has prevailed on the government to begin work on a six-mile, $100 million expressway that would ease the traffic snarls for vehicles going into Electronic City.

Russian President Vladimir Putin went back from his recent trip to Bangalore so impressed with the city's prowess in software that he wants to create several ``Russian Bangalores,'' the Times of India reported this week, citing a state-owned Russian television station.

For Putin's visit to Electronic City, traffic was stopped. I wasn't so lucky. The 12-mile journey from downtown took an hour and seven minutes in the morning. I was told it gets worse in the evening. How worse? I didn't stick around to find out.