What a difference a decade makes!

Priya Padmanabhan






BANGALORE: It has been a little over 11 years since Bangalore made its presence felt as an IT powerhouse. A favorable alchemy of various factors made Bangalore's transformation from a sleepy pensioners' paradise into India's Silicon Valley happen. 





The city's meteoric rise can be attributed to its strong academic network of institutions, R&D and defence organizations, industry friendly policies and an existing nascent base of both hardware services providers and a few software companies. 





Before the glorious 1990s kicked in the IT boom, the fledgling industry in the city bore the brunt of heavy customs duties, which posed a hurdle to what little coding and testing export jobs came its way. Weak telecom links were another downer. Texas Instruments was the only MNC, which took a bold step in 1984 to set up a center in Bangalore. 





When the company set up the first earth station in Bangalore in 1986, the process involved removing or breaking 25 different government rules. Others like HP and Digital also entered India. 





This trickle of companies became a slow but steady stream with the economic liberalization of 1991, when the government ushered in an era of fiscal reforms to pump in industrial growth and activity. Thereafter, things quickly fell into place in Bangalore, to provide a good ecosystem for industry to flourish. 





The Department of Electronics (DoE) started the Software Technology Parks (STP) scheme wherein the Government assured the necessary administrative and infrastructure support for companies within a software exports zone. 





The STP in Bangalore, proved invaluable to new companies. Rather than having to deal with endless bureaucratic red tape, potential companies found to their surprise that STPs actually speeded initial formalities. A decentralized single window clearance policy was set up and facilities included 64 Kbps data-lines and Internet access.





Companies in the STP were also free from duty and import licenses on imported equipment. The STPs provide a decentralized, single window clearance mechanism for applications from potential investors. 





On the talent side, IBM's exit from India in the late 1970s proved a blessing in disguise in a strange way. India was unable to develop a commercially viable computer following IBM's exit, which meant that Indians had no access to proprietary technology, and had to rely on older systems. 





Programmers were thus exposed to various of platforms-especially UNIX, which proved helpful in acquiring contracts for the maintenance of various legacy systems. This proved timely in the 1990s, when UNIX became the standard for PCs and workstations, which meant Indian Unix programmers were in big demand. 





Companies like TCS, Tata Infotech, Infosys and Microland slowly began to make their presence felt in the changed market environment. In the 1990s, the charismatic NASSCOM chief Dewang Mehta proved to be IT services evangelist not just for India but also for Bangalore. Another boost to the industry came in the form of Karnataka announcing the country's first IT policy. 





By the middle of the decade, the trend of bodyshopping took root with hiring agencies offering job contracts for software jobs in the US. From then on, there was no looking back for Bangalore and the industry. 





In 1994-95, software exports stood at Rs 200 crore. The following year saw two-fold growth with exports touching Rs 480 crore in Bangalore. Bangalore was seen as a fertile ground for code crunching and programming. 





In 1997, Karnataka became the first state in India when the JH Patel-led state government introduced an IT policy that promised land and concessions to investors. In 2000, the Millennium IT policy was released which was improvement on the earlier policy, that clearly specified provisions and also created scope for e-governance projects like Khajane. 





The government also took some proactive steps such as establishing the Board for IT Standards (BITES) and establishing training centers across the state. 





Another significant step was the establishment of the Karnataka Udyoga Mithra, a nodal agency, which would provide assistance and guidance to entrepreneurs. To promote Brand Bangalore, the state government also started an event-BangaloreIT.COM that would showcase Bangalore's companies.





By the late 90s, Indian companies like Infosys, Wipro and Satyam saw huge demand from American firms who wanted the cheap and quality services of India's code-jocks to race against time and solve the ticking Y2K bomb. If there was an inflection point that firmly locked in the city's IT position, it was the Y2K opportunity. It inflated the bottomlines as well as the reputation of Bangalore-based companies.





It also led to the mushrooming of several start-ups in Bangalore. The number of companies STPI registered companies grew from 200 companies in 1995 to 782 in 2000. The end of the millennium also saw software exports from Bangalore nearly touch the $1 billion mark. 





The 9/11 incident and the industry melt-down that followed in US and India, resulted in casting away the dregs of the industry. Industry consolidation and an increase in offshore outsourcing work to Bangalore were the fall-outs of the period. Business Process Outsourcing and Offshoring was the only option for global companies, which had to retrench employees on a mass scale and employ low-cost skilled labor in India for their businesses to stay afloat. 





The rise in offshoring over the last ten years can be gauged from a look at Wipro's balance-sheet. The company's income has skyrocketed from $22 million in fiscal 1994 to over $2 billion in fiscal 2005. Today, Bangalore's IT companies span the gamut of technology work right from coding and programming to design, R&D in software, chips, embedded systems, core systems, and ownership of entire product lifecycles. 





Today Brand Bangalore has good mindshare globally and continues to beckon global companies. The IT and BPO sector employ around 200,000 professionals in Bangalore and the city accounts for one-third of India's total IT exports. Some market surveys estimate that Bangalore could overtake the number of IT professionals who work in California's Silicon Valley.





So important is IT in the city, that global heads of state have given Delhi a miss and instead make a beeline to Bangalore while state politics are fought with leading parties accusing another of a perceived pro-IT industry slant.





Agitations and outcry against the city's inadequate infrastructure, not withstanding, no company can deny the potent match of IT and Bangalore. 

Courtesy: STPI Bangalore












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