Companies rebel over Bangalore's sad state

Companies rebel over Bangalore's sad state
The New York Times

BANGALORE, India Citing signs of slowing investment in Bangalore, companies are confronting the state government over the decrepit infrastructure here, saying it is threatening the city's position as a primary global destination for investment from overseas.

The Bangalore Chamber of Industry and Commerce says it is tired of the government's inability to deal with problems like traffic congestion, power shortages and inadequate airport facilities. To make its point, the group says it will boycott a government-sponsored information technology fair scheduled for November.

The absence of the group's 450 members - including the Indian units of multinational corporations like International Business Machines, Texas Instruments, Motorola and Oracle as well as influential domestic companies like Infosys Technologies and Wipro - probably would sink the annual technology fair, known as BangaloreIT.in.

Executives are concerned about what they maintain is a decline in Bangalore's attractiveness as a destination for investment. The chamber said that only 30 new companies set up operations in Bangalore in the year ending in March, compared with 52 the previous year.

"We are asking the government to wake up," said Anant Koppar, president of the Bangalore chamber, "and take note of the traffic jams, potholed roads, power breakdowns and nonexistent public transport system and international-scale airport."

Koppar is president of Mphasis, a Mumbai-based outsourcing company that has 8,500 employees and clients including Federal Express, Citibank and Hewlett-Packard.

The confrontation is a test case for the infrastructure problems of several Indian cities, executives said.

"Bangalore has been a model for Indian cities; its reputation goes beyond India," said Kiran Mazumdar-Shaw, chairman and managing director of the biggest Indian biotechnology company, Biocon, which has 2,000 employees and plans to double that number in two years. "If successful, the city's struggle against bad governance will inspire citizens and companies in other cities."

P.G.R. Sindhia, finance minister of Karnataka, the state where Bangalore is located, said Monday that the government had been investing in the city.

For more than a decade now, global companies have taken advantage of India's large, educated, English-speaking, low-cost work force by sending work to the country in the practice commonly known as outsourcing.

Particularly in Bangalore, the trend in recent years has led to a growth spiral - a construction boom for buildings for outsourcing workers to live and work in, more cars and buses to ferry them to work and an increasing strain on the energy supply and airport infrastructure.

"A big part of Bangalore's problem is that growth has exceeded everybody's wildest expectations," said Nandan Nilekani, chief executive of Infosys Technologies. Infosys employs almost 40,000 workers, and a third of them are based in Bangalore, where the company has its headquarters.

Infosys and companies like it have their own bus services to bring employees to their suburban campuses and run independent generating units to make up for power shortages. Infosys and its top competitor, Wipro, run their own hotels to house employees and visitors.

Recently stung by accusations that outsourcing companies were creating facilities only for their own use, some companies have come forward to help finance a $100 million elevated public expressway leading from the city to the suburbs where many of them are located.

Now, company executives are starting to fear that India's cost competitiveness and Indian companies' growth are being constrained by the added expense of dealing with poor infrastructure.

According to a recent survey by the consultancy McKinsey, 60 percent of 537 executives polled in India described infrastructure as a "significant constraint on growth," compared with 23 percent of their peers in other countries.

"India is a huge opportunity, but the foreign investment is only trickling in," said Andrew Holland, the Mumbai-based executive vice president of DSP Merrill Lynch.

Total foreign investment in India from the European Union in the past 14 years came to just $7 billion, Holland said, adding that that sum was disappointing.

While the collision between companies and the government has drawn attention to the sorry state of Bangalore's infrastructure, other Indian cities are facing a similar breakdown in civic facilities.

In Mumbai, the financial and entertainment capital formerly called Bombay, heavy rains flooded the streets a few weeks ago and brought the public transport system to a standstill. Local newspapers were full of stories of chief executives who had to wade home in chest-deep water.


Making life difficult for cities is the fact that political parties at the federal and state level are often at loggerheads over liberalization and infrastructure spending. For instance, the privatization and modernization plans of the Mumbai and Delhi airports have been delayed because the Communist parties supporting the Congress Party-led federal government are forcefully opposing the move.

In Bangalore, the administration is in a logjam, as the Congress Party and its coalition partner, Janata Dal (Secular), appear to fundamentally disagree on government spending on urban infrastructure.

At the heart of the divergent agenda is the fact that political leaders are mainly elected by people in rural areas and feel disinclined and defensive about supporting the demands of urban areas.

Last year, too, Bangalore's companies called for a boycott of the government's information technology show but backed off after Dharam Singh, the chief minister of Karnataka, promised to look into the objections. But a year on, overpasses are still in half-finished disarray, a mass transit system is still in the planning stage, and the much-awaited international airport is nowhere near reality.

Company executives said that they were fed up and would not go back on their plans to boycott the government IT show in early November.

"We are really serious and will not be taken for another ride by the government," Mazumdar-Shaw of Biocon said.


BANGALORE, India Citing signs of slowing investment in Bangalore, companies are confronting the state government over the decrepit infrastructure here, saying it is threatening the city's position as a primary global destination for investment from overseas.

The Bangalore Chamber of Industry and Commerce says it is tired of the government's inability to deal with problems like traffic congestion, power shortages and inadequate airport facilities. To make its point, the group says it will boycott a government-sponsored information technology fair scheduled for November.

The absence of the group's 450 members - including the Indian units of multinational corporations like International Business Machines, Texas Instruments, Motorola and Oracle as well as influential domestic companies like Infosys Technologies and Wipro - probably would sink the annual technology fair, known as BangaloreIT.in.

Executives are concerned about what they maintain is a decline in Bangalore's attractiveness as a destination for investment. The chamber said that only 30 new companies set up operations in Bangalore in the year ending in March, compared with 52 the previous year.

"We are asking the government to wake up," said Anant Koppar, president of the Bangalore chamber, "and take note of the traffic jams, potholed roads, power breakdowns and nonexistent public transport system and international-scale airport."

Koppar is president of Mphasis, a Mumbai-based outsourcing company that has 8,500 employees and clients including Federal Express, Citibank and Hewlett-Packard.

The confrontation is a test case for the infrastructure problems of several Indian cities, executives said.

"Bangalore has been a model for Indian cities; its reputation goes beyond India," said Kiran Mazumdar-Shaw, chairman and managing director of the biggest Indian biotechnology company, Biocon, which has 2,000 employees and plans to double that number in two years. "If successful, the city's struggle against bad governance will inspire citizens and companies in other cities."

P.G.R. Sindhia, finance minister of Karnataka, the state where Bangalore is located, said Monday that the government had been investing in the city.

For more than a decade now, global companies have taken advantage of India's large, educated, English-speaking, low-cost work force by sending work to the country in the practice commonly known as outsourcing.

Particularly in Bangalore, the trend in recent years has led to a growth spiral - a construction boom for buildings for outsourcing workers to live and work in, more cars and buses to ferry them to work and an increasing strain on the energy supply and airport infrastructure.

"A big part of Bangalore's problem is that growth has exceeded everybody's wildest expectations," said Nandan Nilekani, chief executive of Infosys Technologies. Infosys employs almost 40,000 workers, and a third of them are based in Bangalore, where the company has its headquarters.

Infosys and companies like it have their own bus services to bring employees to their suburban campuses and run independent generating units to make up for power shortages. Infosys and its top competitor, Wipro, run their own hotels to house employees and visitors.

Recently stung by accusations that outsourcing companies were creating facilities only for their own use, some companies have come forward to help finance a $100 million elevated public expressway leading from the city to the suburbs where many of them are located.

Now, company executives are starting to fear that India's cost competitiveness and Indian companies' growth are being constrained by the added expense of dealing with poor infrastructure.

According to a recent survey by the consultancy McKinsey, 60 percent of 537 executives polled in India described infrastructure as a "significant constraint on growth," compared with 23 percent of their peers in other countries.

"India is a huge opportunity, but the foreign investment is only trickling in," said Andrew Holland, the Mumbai-based executive vice president of DSP Merrill Lynch.

Total foreign investment in India from the European Union in the past 14 years came to just $7 billion, Holland said, adding that that sum was disappointing.

While the collision between companies and the government has drawn attention to the sorry state of Bangalore's infrastructure, other Indian cities are facing a similar breakdown in civic facilities.

In Mumbai, the financial and entertainment capital formerly called Bombay, heavy rains flooded the streets a few weeks ago and brought the public transport system to a standstill. Local newspapers were full of stories of chief executives who had to wade home in chest-deep water.


Making life difficult for cities is the fact that political parties at the federal and state level are often at loggerheads over liberalization and infrastructure spending. For instance, the privatization and modernization plans of the Mumbai and Delhi airports have been delayed because the Communist parties supporting the Congress Party-led federal government are forcefully opposing the move.

In Bangalore, the administration is in a logjam, as the Congress Party and its coalition partner, Janata Dal (Secular), appear to fundamentally disagree on government spending on urban infrastructure.

At the heart of the divergent agenda is the fact that political leaders are mainly elected by people in rural areas and feel disinclined and defensive about supporting the demands of urban areas.

Last year, too, Bangalore's companies called for a boycott of the government's information technology show but backed off after Dharam Singh, the chief minister of Karnataka, promised to look into the objections. But a year on, overpasses are still in half-finished disarray, a mass transit system is still in the planning stage, and the much-awaited international airport is nowhere near reality.

Company executives said that they were fed up and would not go back on their plans to boycott the government IT show in early November.

"We are really serious and will not be taken for another ride by the government," Mazumdar-Shaw of Biocon said.