Thursday, October 28, 2004

IT companies continue to pour in to city

B'lore, choke-a-bloc with IT cos
The six-month period spanning April to September, as many as 92 companies have set up shop in India's tech Mecca, will the city be able to take the weight?
Cyber Media

BANGALORE: It is a case of an embarrassment of riches in a city that seems to be weighing under the tremendous strain of its poor and inadequate infrastructure. Strange as it may sound, Bangalore is witnessing a relentless march of IT companies coming in to set up their presence.

In the six month period spanning April to September this year, as many as 92 companies set up shop in India's tech Mecca and what is being slowly acknowledged as the world's IT outsourcing capital.

According to Software Technology Parks of India (STPI) director, BV Naidu, "Out of these 92 companies, 56 are 100 percent foreign equity companies while 20 are BPOs. In addition, a 34 percent jump in exports was recorded in the first six months of this year over the corresponding period last year."

The total amount of investment that came into the state during this time was Rs 1,125 crore, and this is well before the beginning of the festive season. Compare this to last year's 168 outfits, which included 110 companies with 100 percent foreign equity that brought in investment of Rs 1,970 crore into the state.
Even as this article goes to print, around 15 million sq feet area of commercial space for IT companies, is under construction in Bangalore.
With so much growth waiting to happen this year, the state government faces a delicate tightrope act of calming fiery tempers by providing the requisite infrastructure while still sustaining the steady flow of future investment into the IT industry's El Dorado.
The city seems to have become a victim of its own success. Sound bytes on the crippling infrastructure and traffic woes have come from no less than the Prime Minister Manmohan Singh and Rahul Gandhi to visiting venture capitalists, captains of the IT industry and Kiran Karnik of Nasscom. The IT industry's ire over the state government's inaction forced them to get on to the offensive and threaten blocking the traffic on Hosur Road and pulling out of the state's showpiece event BangaloreIT.COM.
Realizing this, the Karnataka government promised to get into action mode with ministers and government officials initiating meetings with IT company heads, civic departments and the Bangalore Development Authority. Chief Minister Dharam Singh has assured that the ides of November (when hopefully, the rain gods relent) will witness development work including road repairs, construction and other activities. Also tabled is a plan to decongest the choked Hosur road by building an elevated highway.
Besides these, companies especially start-ups also contend with associated problems of prosperity such as rising real estate prices, startling staff turnover rates, rising wages and lack of tax relief.

What is it about Bangalore that continues to attract companies? For one, it's the Bangalore brand that has acquired brand equity and recognition internationally. Many in the industry affirm that if Bangalore's image takes a beating, companies would just look for alternative countries to offshore their projects and not alternative cities in India.

Companies are also attracted to the existing ecosystem of IT companies, technology infrastructure and connectivity. The abundant pool of engineering talent is another plus. Venture capitalists and start-up companies are often advised to set up their development centers in Bangalore than any other Indian city. This is because companies can choose hires depending on the depth and breadth of their skill sets and experience.

In some instances, it is at the client's behest. Rama Rao C, who heads Cap Gemini's newly inaugurated development center in Bangalore admitted, "Some of our global customers told us that for offshore projects, it would have to be Bangalore."

The Garden city also scores brownie points for pleasant weather, a lively ex-pat community and good schools and universities. As for the traffic and non-existent roads, well, grin and bear with it. And pray that it gets better soon.


Post a Comment

<< Home