Monday, October 25, 2004

Bangalore: Tech Eden No More?

First it was the local newpapers, then national magazines, now, not a day passes without the state of Bangalore's infrastructure finding a mention in an international publication.

Bangalore: Tech Eden No More?
India's IT center has exploded -- and so have its infrastructure problems
Business Week

Rajish Nambiar, a 20-year resident of Bangalore, is steamed. The managing director of Southern Chips & Circuits Ltd., an electronics-assembly firm on the city's outskirts, spends an hour in heavy morning traffic getting to his factory, just four miles from home. A year and a half ago it took him 20 minutes. The commute back is worse: He can get stuck for as long as 90 minutes. "No Bangalorean deserves such a life," he fumes, arriving a half-hour late for an interview.

India's fast-growth high-tech industry has to worry about many things: high staff turnover; competition from China; and backlash from U.S. voters. But maybe what India should be focusing on is potholes and narrow roads. The fact is, Bangalore's growth explosion could cause the city serious trouble.

Execs like Nambiar would certainly agree. Just a year ago, Bangalore enjoyed a reputation not only as India's Silicon Valley but also as a pleasant, tranquil place to live, with a salubrious climate and tree-lined streets. But high-tech's Eden has proved a powerful lure. More than 1,300 software and outsourcing companies -- 450 of them multinationals -- have set up sprawling campuses, employing 170,000 workers. The influx, which has helped increase Bangalore's population by a third since 1995, to 6.5 million, has resulted in choked roads, power outages, an erratic water supply, and poor sanitation. A $1.1 billion metro system, long seen as a solution to Bangalore's transport headaches, is far behind schedule. Industry worries that a long-overdue new airport, due to begin operations in 2010, may also be delayed. "The city is collapsing," says Bob Hoekstra, chief executive of the Philips Software Center.

The crowded roads mean tech workers arrive at work spent and frustrated, and they're less productive. Industry insiders say some companies have begun to build more man-days into project budgets because of commuter crawl. Others are looking elsewhere. Wipro Ltd. (WIT ) and rival Infosys Technologies Ltd. (INFY ), two of the city's largest employers, are setting up operations in Madras and even in communist-run Calcutta, both of which are keen to welcome Bangalore's deserters. "We will grow at a faster rate outside Bangalore," Wipro Chairman Azim H. Premji told reporters on Oct. 15.

Companies and citizen groups blame a nonresponsive Karnataka state government for Bangalore's worries. Within weeks after a new coalition state government took office in May, work on urban development projects -- $40 million worth of roads and overpasses, and a sewage works -- ground to a near-halt. That's partly because the Congress Party-led government in the state has rushed to fulfill promises to make improvements in rural areas and neglected the cities.

Tech companies have petitioned new state Chief Minister Dharam Singh for change. "There is zero focus, no hand at the wheel," says Infosys Chief Executive Nandan M. Nilekani. Upset, 15 top tech outfits, led by Royal Philips Electronics (PHG ) and Hewlett-Packard (HPQ ), plan to boycott state-led events such as the prestigious tech conference, held annually in November to highlight the city's prowess. A road blockade planned for Oct. 15 by the tech execs was canceled after pleas by officials wary of bad press in a week when Google Inc. (GOOG ) founders Sergey Brin and Larry Page were visiting.

The state government denies any anti-Bangalore bias. M.K. Shankarlinge Gowda, the senior bureaucrat in the state's information-technology department, thinks the troubles "affect only pockets" in south Bangalore. Congestion, he says, will soon be eased when work begins on various road and other transportation projects. But business leaders are skeptical. The alarm bells have not started ringing as yet, says Sunil Mehta, vice-president of Nasscom, India's IT trade group, but the chaos in Bangalore could soon have "an adverse impact on the local economy." Given that the city contributes a third of the country's software exports, a crisis in Bangalore could turn into a traffic jam India can do without.

By Josey Puliyenthuruthel


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