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Sunday, Oct. 26, 2003

IT star shines over 'Silicon Valley'


Staff writer

BANGALORE -- Weatherwise, Bangalore tends to be cooler than most cities in India, but businesswise it's the hottest destination.

At an altitude of 920 meters, the capital of the southern state of Karnataka enjoys a year-round, humidity-free temperature of around 30 degrees.

Its mild weather and rich greenery earned Bangalore the epithet "the garden city," but these days it is becoming even better known both at home and abroad as "the Silicon Valley of India."

With a population topping 6 million, India's fifth-largest city now hosts many branches and subsidiaries of world-famous companies in the information technology sector, along with their Indian competitors. In fact, local officials say that IT firms, both large and small, homegrown and foreign-based, are springing up like mushrooms every week.

Bangalore's transformation is part of a larger shift in the Indian economy that has occurred over the past decade due to the country's liberalization of its economic regulations coinciding with the global IT boom.

According to the National Association of Software and Service Companies, an Indian industry group, from 1998 to 2002 alone the country's IT market -- including areas such as software, service and business-process outsourcing -- nearly tripled in value, from $6.1 billion to $16.5 billion. As a result, it now accounts for about 3 percent of India's gross domestic product and is a promising growth area.

That growth is largely driven by exports. NASSCOM says that as of March 2003, 71 percent of exports went to the Americas (mostly the United States and Canada), 14 percent to the United Kingdom, 9 percent to the other European countries, and the remaining 6 percent to the rest of the world.

No effort is being spared to strengthen the nation's IT sector. In 1991, the Ministry of Information Technology launched a project called the Software Technology Parks of India to boost IT exports. Several STPI-run facilities to accommodate dot-com firms have been established around the country, with offering firms tax exemptions and telecoms infrastructure for their software business. STPI Bangalore alone now involves nearly 950 companies.

However, Karnataka is also the first Indian state to launch an IT policy of its own, providing companies with incentives and concessions and creating IT parks with the private sector to accommodate foreign enterprises as well.

But why is it Bangalore, of all India's cities, that has evolved as its IT capital?

According to A. Ravindra, former chief secretary of Karnataka State Government, technological industries have long flourished in the area. Before independence in 1947, the city was a major British army center. Afterward it became the Southern Headquarters of India's defense forces. Because of this history, munitions manufacturers were built in the area, and other industries such as electronics, machine tools, textiles and auto components followed.

In addition to this industrial background, though, Ravindra -- who played a key role in planning Karnataka's IT strategy, and is currently an adviser to the state -- stressed that the largest contributor of all was the area's resource pool of scientifically trained personnel.

"The state of Karnataka has encouraged professional education for the last 30 to 40 years," Ravindra explained. "And there are many educational institutions with strong engineering, medical, science and technology departments." Indeed, he said that several of Bangalore's university engineering departments are credited with being among the nation's most important for nurturing high-tech skills.

In general, too, IT investment in Bangalore and India also benefits from the time difference with the United States, which allows companies to operate round-the-clock by relaying -- not to mention lower set-up and personnel costs as well.

Additionally, India's elite graduates have been seeking jobs in the U.S. and other western countries simply because they couldn't use their skills at home. Now, though, according to Jawaid Akhtar, Karnataka's director of IT & biotechnology, they are coming back in droves. This has especially been the case since Sept. 11, 2001, following new U.S. restrictions on working visas for foreign engineers, and amid complaints that Indian workers have been taking large numbers of jobs.

That such people are in high demand at home is apparent even from a cursory glance at the number of jobs in Bangalore advertised in The Times of India. Thanks to both Indian and foreign investments, companies in the city seeking IT recruits included IBM, Siemens, Honeywell, Accenture, Ernst & Young and Wipro, one of India's IT giants.

But Bangalore hasn't got the market completely stitched up, and other cities in Karnataka, such as Mysore some 140 km to the south, are doing their best to follow in its IT and dot-com footsteps.

To extend its computer-savvy human-resource pool, in 2001 the venerable University of Mysore opened an institute focusing on IT education. The Centre for Information Science and Technology now educates not only university students but also local citizens and IT workers sent to learn everything from basic skills to high-powered software development.

Local resident Hema Kumali is one such potential engineer. In August, the 22-year-old University of Mysore science graduate began learning computer skills, which she wants to master so that, she says, "my chances of getting a good job will be much greater." Whether Mysore likes it or not, though, Kumali is considering going job-hunting in Bangalore when she finishes her course.

However, though its IT star is undoubtedly rising, Bangalore still has problems to contend with -- not least bad roads and power cuts that deter some investors. While many companies have back-up generators, it's an extra cost and worry they wouldn't encounter in the original Silicon Valley in California.

But the Indian IT capital is confident of its position. Though Ravindra admitted some companies had occasionally complained, he had little fear of potential rivals for IT investment, such as China.

"Infrastructure can be made, but making human resources is not so easy," he said. "Especially as we speak English, this is an additional advantage for us.

"We intend to make China a role model for hardware, and they may be a competitor in the software field, but we will be leading for a while," Ravindra said as the city prepares for Bangalore IT.COM 2003, a major international IT exhibition running from Nov. 1-5.

Although Japanese now seem to be obsessed about doing business in booming China, it would surely pay them to keep a close eye on India's vigorous IT industry as well.



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