Bangalore is known as the Silicon Valley of India but is it really up to speed?
Bangalore, home to six million people, is currently the third most populous city in India, and it continues to grow. Bangalore currently hosts more than 10,000 industrial units, of which a majority constitutes the Information and Technology (IT) sector. With much to boast of, the growing metropolis has earned a reputation as the Silicon Valley of India.
This new hub of technology however, did not erupt overnight. Its foundations were laid in the mid-70s when the Karnataka State Electronics Development Corporation envisioned Bangalore as the nation’s electronic city. Later in the early 90s, with an IT boom, mostly in the services sector, Bangalore became the most feasible vicinity to do business. Playing host to a plethora of multinationals and harboring a vibrant demographic composition, the city has transformed into a cultural and economic hub in India.
Although, the industry has not yet produced groundbreaking platforms such as Facebook, Twitter or Google, it does provide the best and most productive IT services like call centers, customer support and offshore software development to major companies worldwide. A pioneer in outsourcing, Bangalore’s IT industry guarantees billions of dollars in revenue every year. This is the leading reason why many Indians, as many as 85% according to some statistics, working in the U.S are returning home to find jobs or start their own ventures.
Ironically, during the global recession, the Indian IT industry benefitted immensely. Third world countries are famous for providing good resources at low rates. As a result, numerous developed countries performed costcutting techniques and outsourced their operations to a number of third world countries. With India serving as a major shareholder in the region, it of course reaped the most profits.
The magic behind the phenomenal growth of the Indian IT market is their Research & Development (R&D). Although the government hardly offers any substantial support, multinational companies like Microsoft, Yahoo and IBM have invested exorbitant amounts in developing this sector. Microsoft has set up its Research Center in India, which is the only such facility in any developing country. Similarly, other IT giants like Google, Intel and HP have also made huge investments. A core reason why India is able to attract diverse investment from the technical and service industry is due to the flexible business policies offered by its government. The approach towards investment has always remained positive and welcoming. Investment from the global services industry boosts employment at home and the Indian government continues to push corporations to form a system so that their own people can get more jobs or become entrepreneurs.
Although the Indian Silicon Valley shows rapid growth, critics argue that it can never become the Santa Clara Silicon Valley. The central argument is that all major companies in Silicon Valley were formed on the basis of innovation. All successful products were unique in their own time, from Windows to the Google search engine and from Orkut to Facebook. This element is unfortunately missing from the Indian IT world where markets are trapped in a never-ending cycle of catering to non-innovative and laborious services like call centers, customer support or Business Process Outsourcing. Critics argue that India will not be able to climb up the ladder in innovation and creative development and eventually the industry will stagnate until another country, perhaps China, is able to offer services at an even lower cost.
Despite criticism, India’s IT industry benefits from a competitive edge by offering resources at lower rates than anywhere in the world. This edge is so strong that it has compelled the world’s top IT giants to invest in India, which has resulted in more job creation and more support to entrepreneurs.