Bengaluru (Bangalore) can rightly claim to be the birthplace of India’s booming IT industry. Back in the 1970s, an area of lush farmland was identified by the government as the possible location for an ‘electronic city’; by 1983 two fledgling tech startups – Infosys and Wipro – had established their headquarters in Bengaluru. More ambitious tech companies followed, growing their businesses around the rapidly expanding international outsourcing model.
Fast forward to 2018 and this city of 8.7 million has a GDP of approximately $45 billion, with a startup ecosystem valued at $19 billion. Multinationals like Amazon, Qualcomm and Cisco have also moved into Bengaluru, driving innovation and leveraging their experience to set up startup accelerators that are, in turn, pushing the boundaries of technological advancement.
Bengaluru has evolved into an exciting technology hub
Named by the World Economic Forum (WEF) in 2017 as the world’s most dynamic city, Bengaluru was also recently flagged as the number one tech choice in the Colliers International research report ‘Top Locations in Asia: Technology sector’, thanks to its impressive talent pool, low staffing costs and affordable rents. The report predicts that Bengaluru will become the fastest-growing city in Asia over the next five-to-ten years.
The tech sector in India now employs around 10 million people and accounts for almost $85bn worth of exports every year – almost 40 percent of the country’s IT industry is situated in Bengaluru. The city’s greatest strength undoubtedly lies in its skilled workforce. Indian engineers are highly sought after all over the world; many travel abroad to gain experience in tech hubs like Silicon Valley before returning home to apply their expertise in grass-roots startups.
Currently, the bulk of tech companies are still generating big revenues from back-office and outsourcing services. But, that too is changing as firms inch up the value chain, reframing their proposition as they go and evolving the ideas and talent needed to tempt global research and development organisations to settle here.
Startups have the support and development eco-systems they need to thrive
Bengaluru’s growing dominance as an innovation hub has helped it to shake off its earlier reputation as a cut-price software factory. For sure, the availability of a low-cost, highly skilled workforce still draws international investment but home-grown startups are also now attracting inward investment.
The majority of startups in India – 28 percent – are based in Bengaluru, thanks in part to its historical ties with Silicon Valley. The city has been the origin of some of the biggest and most successful Indian startups of the past decade, including online marketplace Flipkart and ride-sharing app Ola. Bengaluru-based logistics app, Dunzo, is a great example of Indian entrepreneurialism: it started life as a WhatsApp group and has recently attracted a multi-million-dollar investment from Google.
A number of government initiatives exist to support Bengaluru’s tech scene. Narendra Modi’s Startup India scheme offers seed funding and tax breaks for new businesses, while not-for-profit programme 10,000 Startups focuses on matching startups with funders, incubators and mentors, with the stated aim of building 10,000 new businesses in the city by 2024.
What does the future hold for Bengaluru?
It’s clear to see that not only is technology flourishing in India but that it’s being boosted by massive inward investment. With its vast market, South Asia is a key part of the expansion strategy of tech giants like Apple and Google – Walmart has already committed $16bn to acquiring a major stake in Amazon rival Flipkart.
Bengaluru is well placed to ride the entrepreneurial wave – it may lack the baked-in expertise of some of the more established tech hubs but it’s gaining ground, especially in emerging technologies and Big Data. The oft-maligned tech infrastructure is also gradually being upgraded – thanks in part to India’s richest citizen, Mukesh Ambani, who invested tens of billions of dollars in a super-fast nationwide 4G network.
There are hurdles to overcome, though. The city’s physical infrastructure – roads, water and power supplies – hasn’t kept pace with its rapid population growth and its green spaces are being eroded. Bengaluru’s tech scene also struggles with gender equality; a mere 2% of all equity funding raised in 2017 went to startups with a female founder. But some of these challenges are prompting innovative solutions: for instance, a thousand teams were involved in last year’s ‘hackathon’ to create new responses to the city’s traffic problems.
Bengaluru currently ranks 19th on the global list of the top 25 high-tech cities in the world. If it capitalises on its potential, it could well climb to the very top.