Struggling to keep up

Struggling to keep up
Bangalore's infrastructure tries to meet needs of its technology industry

San Francisco Chronicle

Bangalore, India -- Three years ago, Shwetal Mehta moved from Cary, N.C., to lead the expansion of a small software services company into this sprawling, low-slung city in southern India, famous as the back office to the world.

The managing director of Cyberwerx, who is Indian-born and U.S.-bred, does not regret coming here. But the drawbacks are considerable.

For one, the power at his downtown office goes out at least twice a day, necessitating a costly backup generator. And because of Bangalore's choked, narrow roads, he says, his 3-mile commute to work, which used to take 10 minutes, now pushes an hour each way.

Mehta is in many ways emblematic of the information technology sector in Bangalore. As an Indian, he's proud of the city's emergence as a global power. But as an executive, he's fed up with its growing pains and with the government's seeming inability to deal with them.

Bangalore's jam-packed streets, rolling power outages, rising salaries and deteriorating quality of life -- and the emergence of smaller, cheaper Indian cities competing aggressively for investment -- mean that the city that has claimed so many Bay Area tech jobs is now in danger of becoming a victim of its own success.

When Cyberwerx expands within the year, Mehta said, "We'll look outside of Bangalore," probably north to Pune or Hyderabad.

As recently as the late 1980s, Bangalore was known primarily as a "pensioner's paradise," a quiet hillside city in southern India blessed with lush greenery.

But it also had a large state-run industrial technology sector, a cluster of the country's leading scientific research institutes and a pool of highly qualified technical manpower.

When India opened its then-protectionist economy to foreign investment 15 years ago, Bangalore, with these advantages and its mild climate, was ready to plug into the world economy.

Today, it is home to more than 1,700 software companies, employing about 310,000 people who last year earned more than $4 billion in salary, according to an official tally. Five years ago, a U.N. Human Development Report ranked Bangalore as the only city among the top 10 centers of technological innovation to be located in a developing country.

But Bangalore's global ambitions are threatened by its crumbling infrastructure.

Twenty years ago, Bangalore's population hovered at about 3 million, and there were 300,000 vehicles on the road. Today, according to city data, Bangalore's nearly 7 million residents drive 2.3 million vehicles, registering new ones at a rate of about 700 a day. Yet, says Bangalore's traffic commissioner M.N. Reddi, only in the last few years have the authorities addressed the overwhelming congestion on the city's streets.

And while a long-awaited road ringing the city was completed in 2003, it failed to alleviate downtown traffic. Three more such roads are planned, including one that stalled after the contractor quit and another that has yet to break ground.

A proposed metro rail system, which was supposed to take three years to build and be finished this year, is still on the drawing board and mired in controversy. The same goes for a new international airport, a long-standing dream of the tech sector.

Another concern is the city's overtaxed power grid. While officials say the power supply is adequate, every IT company has a generator for when power goes out, says Pradeep Kar, chairman and founder of Microland, a software services company with about 1,200 employees.

"We can't get caught in a situation where we can't provide service to the customer," Kar said.

To make matters worse, the city's storm drains were overwhelmed by last year's severe monsoon season, leading to heavy flooding throughout the city. While money has been allocated in the municipal budget for new drains, the Deccan Herald, a local newspaper, recently pointed out that similar funding appeared in the budget in 2003 but, like "a huge number of projects ... remained only on paper."

"We've been promised a lot ever since I've been here," Cyberwerx's Mehta said, referring to public works projects that have yet to materialize. "It's almost become pie in the sky."

Mehta is far from alone in his complaints. The demand for better infrastructure, which in recent months has pitted the IT sector against the state government, is led by Infosys and Wipro, two of India's three largest technology companies, both of which have recently branched out from their Bangalore headquarters into other cities in India.

Another blow to Bangalore came in February, when officials revealed that a $3 billion semiconductor plant, known as Fab City, would be built in rival Hyderabad. The plant is expected to house more than 200 companies and employ 1.5 million people, and will be the first modern semiconductor plant in India. The decision to build in Hyderabad was widely attributed to Bangalore's infrastructure shortcomings.

Also in February, Siemens, one of the first multinational companies to set up shop in Bangalore, canceled its planned expansion here. Jürgen Schubert, head of the company's India operations, told the local press the decision was due to the city's roads and power supply, which he said were "in total chaos."

In April, Honeywell, which also has had a long presence in Bangalore, added its name to the list of companies investing elsewhere: Its next research and development center will be built in Hyderabad, company officials said.

And while Infosys won government approval last month to buy 845 acres of land on the outskirts of Bangalore for a new office complex and residential area, the company's development plans are an endorsement of Bangalore with an implicit critique. By building what amounts to a small city, Infosys would shelter its employees from many of the inconveniences of Bangalore life.

But while business leaders continue to complain -- and invest elsewhere -- some in government question the connection between infrastructure and the flight of capital from Bangalore.

V.D. Naidu, head of the government-run Software Technology Parks of India, said companies continue to come to Bangalore despite concerns about infrastructure. Last year, he said, more than 200 companies moved here.

Business expansion into smaller cities is a natural trend that is good for India, he said. It is a second migration, the first being the return of Indian workers from the United States to major cities in India at the outset of the country's IT boom.

"Nobody is expanding at other locations at the cost of Bangalore," he said.

K. Jothiramalingam, chairman of the municipal government, a frequent target of criticism for its perceived inaction on infrastructure problems, said that fixing the city is a priority, but not just because of pressure from business.

"There is excellent infrastructure in San Francisco and San Jose," he said. "But companies have opted to shift their base to India and Bangalore. Why? Because doing business is less expensive here. Infrastructure was not the key.

"Tomorrow, if Microsoft finds doing business is less expensive on the moon, Bill Gates will shift his business to the moon."

To many of Bangalore's poorer residents, these debates could well be taking place on another planet. Kalappa Govindraj, 25, lives in a slum in the northwestern Bangalore neighborhood of Malleshwaram, where most of the dingy one-room shacks can barely fit a twin bed. The day laborer makes between $2 and $3 on days when he finds work.

Because Govindraj and those like him do not speak English and have no education beyond elementary school, working in an IT business or even in a restaurant catering to its workers is out of the question.

"The IT industry has not helped me in any way," he said.

Official and nongovernmental data vary, but between 25 and 40 percent of the city's population live in slums. Most live below the poverty line of about $40 per month for a family of five.

The infrastructure in the slums of Bangalore, which has changed little during the IT boom, helps explain the resentment directed at the city's technical elite and their demands. In the slums, water runs in shared taps every other day, stagnant water results in frequent infections and drainage is so poor that one heavy rain can flood homes.

While businessmen like Mehta decry government officials dragging their feet and predict a possible flight of capital, slum-dwellers like Govindraj and their sympathizers do not dread the possibility of Bangalore's star on the world stage falling.

As Solomon Benjamin, an urban studies expert and advocate for Bangalore's poor, points out, the IT industry accounts for less than 10 percent of the city's employment. If IT does go elsewhere, Benjamin said, "it would be a blip in Bangalore's history. A significant blip, perhaps. But a blip."
Bangalore by the numbers

-- 1,700 software companies

-- 310,000 IT workers

-- Almost 7 million residents

-- $4 billion of salary paid in 2005

-- 2.3 million vehicles

-- 700 new vehicles registered every day

Source: Chronicle research