Saturday, 29 February 2020

Bangalore Retrospect And Prospects

Updated: January 29, 2011 2:49 pm

Think hi-tech India and you think Bangalore. If Mumbai is India’s New York and New Delhi its Washington DC, Bangalore is its Los Angeles. Bustling, sprawling, low-density, full of cars, it is also full of green spaces. Full of immigrants too. And it is a city of suburbs, for though it has a pleasant, leafy centre thronged with Indian yuppies, the real action takes place in the technology parks on the periphery. Like Los Angeles there is hi-tech manufacturing and like LA, too, a single ‘people’ business has catapulted the city to global fame. In LA it was entertainment in all its forms; in Bangalore it has been computer software services, and now far beyond that.

                With a population of some 6.5 million in 2009, it has become India’s third-largest city as well as its fastest-growing and one of its richest. By any measure it is a huge success story. But its success is a tale of triumph over adversity. And this is the strange paradox that makes Bangalore so fascinating: it has found a way not just to prosper but to prosper in the face of serious headwinds.

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The first thing to appreciate about Bangalore is its location. It is 200 miles from the nearest seaport, Chennai, and until 2008 it had only a tiny, congested airport, a former Second World War military base, with few international flights. So it had no obvious way to export its output—unless that output could be exported electronically. It was the first large city in the world to build an export business in virtual products and services.

                The second thing to understand is that it has not been very well run, even by Indian standards. People there complain bitterly about the corruption, about the non-existence of many public services, about the congestion and about the damage that its growth has been allowed to do to the environment.

                And the third thing to appreciate is that has an abundance of talented, well-educated, energetic young people—indeed it has arguably the highest quality of human capital in India. Somehow these wonderful people have coped with the most daunting practical difficulties and so ensured the city’s success. Why? Well, Bangalore has one thing on its side: it is a place where clever people choose to live. Some 40,000 of its residents have a PhD.

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Bangalore’s history goes back to the ninth century, but it really turned into a substantial city when it became the British military’s southern headquarters, chosen partly because of its central location, partly because it was healthy. Since it is 3,000 feet above sea level, although only 800 miles north of the equator, the nights are cool and the days not too baking. When the British forces left at Independence in 1947, the Indian military naturally took over their huge parade grounds in the centre and the training grounds and parklands on the surrounding plain. At the time it only had a population of about 500,000, but because armed forces everywhere like to hang onto their land, it still has large tracts of woodland and parkland near the centre—unusually for an Indian city. It calls itself ‘the Garden City’ and in a way it still is.

                After Independence, the fact it was a military centre made it the natural place to develop the main Indian defence industries. It was put to me, only slightly mischievously, that India wanted to make sure its defence research was located as far as possible from China in case the country were invaded. Thus India’s space and nuclear programmes were both developed from Bangalore.

                The key educational establishment has been the Indian Institute of Science, popularly known as the Tata Institute because the industrialist JN Tata was the key mover in founding it in 1909. It is now one of only two Indian higher-education establishments in the world top 500, as ranked by the Shanghai Jiao Tong University.

                In addition, the old airport moved on from being a wartime servicing and repair centre for military aircraft to become the main aircraft manufacturing centre, which it still is.

                Put all this together and by the I980s Bangalore had become India’s main hub for high-tech industry, research and education.

                Then the internet came along.

                The communications revolution hit Bangalore in a number of waves. During the I980s it was mostly large US companies, such as General Electric and Citibank, that tapped into the mass of well educated but not too expensive Indian graduates to write basic software codes for them. Home-grown companies, such as Infosys, Wipro and Tara Consulting, grew on the back of foreign software contracts. Then, during the I990S, came a wave of call centres and back-office services such as accounting. Next, after the Millennium, Bangalore started to move further up the skills chain, with companies including Intel, Oracle and Microsoft building up genuine R&D capacity. The latest wave has been biotechnology.

                Part of the workforce comprises the huge output of Indian software and computer engineering graduates. Bangalore itself produces some 25,000 a year, almost as many as the whole of the USA put together. But the most recent phenomenon has been US-based staff, mostly of Indian origin, coming to Bangalore to do their work. As a result, there are clusters of gated communities between the city and the science parks that look just like the communities in Silicon Valley. We looked round a mini California called Palm Meadows, with its clubhouse, sports centre, library, supermarket and so on. Aside from the density—the homes were crammed together much more closely than they would be in the States—you could think you were in the USA. In a strange way, these new Bangalore residents are creating an Indian version of the American lifestyle, separate from those of the rest of India—in much the same way the British had created for themselves an Indian version of the British lifestyle 100 years earlier.

                Any city that goes from half a million to six million in sixty years becomes a city of immigrants. In the case of Bangalore, it is mostly immigrants from the rest of India rather than the rest of the world. This has worked remarkably well, giving it a cosmopolitan and tolerant flavour. On the one hand there has been a willingness to accept inward migration, and on the other a willingness of the immigrants to pitch in and do their bit for the community.

                I suppose there is an element of chance in almost every success story—the combination of a set of circumstances, the right institutions, a group of like-minded people and so on. But there is still a puzzle to Bangalore’s success. Why this city and why not other, better established ones?

                To try to calibrate the importance of the various elements of the story, I askeda group of leading residents gathered by my friends. Among them there were a famous author and journalist, a transport consultant, the founder of a hi-tech business and a yoga teacher. We sat round the table of a Mediterranean-style restaurant, packed with the young, stylish professionals who abound in Bangalore, having a champagne brunch.

                The first point of agreement was its diversity. Bangalore happened to be on the boundary of three main language areas: Telugu, Tamil and Kannada. There was a comfortable relationship between the religions, with mosques, temples and churches side by side. There had not been a riot, or indeed any war, for the past 200 years. There was something of the coastal trading culture of south India, so although it was not on the coast, it was a natural place for people to do business.

                The next element was education. The Tara Institute, of course, has been crucial, but there was also the wider point that this has been a place where the state has invested in science, by making it the largest single complex in India for government-funded scientific activity.

                The third was physical location—the weather, though the nights are not as cool as they were a generation ago, but also the availability of land and, so far at least, adequate water supplies. It is a shame to lose good farmland but for the time being Bangalore can sprawl outwards in every direction. As for water, you do have to insert a caveat, for the main supply is pumped up 1,000 feet from the Kaveri River, and that may become a serious constraint on growth in the future.

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The huge question is whether India’s extraordinary economic growth run, to which Bangalore has contributed significantly, can continue……. Talking with our friends in that restaurant, three main problems kept coming to the fore.

                The first was infrastructure—obvious but unrelenting. Pressure on the city will mount as growth continues and the question seems to me to be whether, by sprawling yet further, Bangalore can become, like Los Angeles, a true multi-centre city. But it has to be one where, unlike LA, people do not have to travel from one end to the other from work to home. Imagine LA without the freeways; people would cope because they would have to, but their lifestyles would be quite different. If other cities offered similar employment prospects and a better quality of life, then businesses would move.

                This leads to the second challenge—that from other cities. A number of places are making a credible attack, chief among them Hyderabad, Pune, Chennai and even Kolkata. None has the unique combination of qualities that has propelled Bangalore to stardom, but each has particular advantages. Thus Hyderabad is almost as large a city as Bangalore, is cosmopolitan in the sense that it is a meeting point between north and south, and has a pleasant climate and much better infrastructure. It also has ambition: it is constructing the tallest building in India and its airport has the longest runway. Pune benefits from being part of the wider Mumbai commercial complex, is an education centre, has a good climate—and is now pushing five million in population. Chennai, the former Madras, has history, scale and already is the second largest exporter of software in India, after Bangalore. And then there is Kolkata, the former Calcutta, until 1911 the capital of British India and, until the 1980s, still the largest urban conurbation in India. It is at last recovering from the period of economic decline from the 1960s onwards and, while it has struggled to attract much foreign inward investment, its revival since the 1990S has in fact been led by the IT sector. It is not to be written off.

                Industries do not move easily but these other cities can and probably will chip away at Bangalore’s lead in IT. They have in a way been inspired by Bangalore but there is also a certain jealousy: if it, why not us? And they can offer lower costs, which, as the industry matures, will become a more and more important advantage.

                The third potential problem is that Bangalore might miss the next hi-tech industry that comes along behind IT. We cannot know what this will be. Maybe biotechnology—that would be the obvious candidate and it is certainly being talked about as the next boom. Some biotech firms will undoubtedly be located there, and in 2009 the signs were encouraging. But it may not become the key centre—that role is still to play for—and other cities such as Pune may have the edge.

(Excerpts from author’s Success in Stressful Times: What Works, Harper Press, London, 2010)

By Hamish McRae

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