Saturday, June 21, 2008

Does Bangalore still deserve the crown 'technology capital of India'?

Does Bangalore still deserve the crown 'technology capital of India'? Karnataka and its capital Bangalore have fallen way behind rival neighboring states in the pace of growth in software exports. During 2007-08, software exports from the state - the bulk of it from Bangalore - grew by just 11 percent even as Andhra Pradesh galloped at 41 percent and Tamil Nadu at 37 percent. The weak performance of the state is attributed to a long negligence by the state government to the industry, reports The Economic Times.

During 2007-08, the national average growth rate was 29 percent, far eclipsing the state's growth rate. Karnataka exported software worth Rs 54,000 crore in the 12 months to March 2008 and Rs 48,600 crore in the year-ago period, when the growth rate was 36 percent.

"I fear for the future of the IT industry in Karnataka," remarked TV Mohandas Pai, director (human resources), Infosys Technologies, India's second largest software company and the biggest in the state.

Even after taking into account the 11 per appreciation in the value of the rupee against the U.S. dollar last year, the dismal growth does not justify the size of the industry in Karnataka, especially Bangalore, industry experts reckon. Some others argue that since the base is so large, it may not be possible to sustain high rates of growth.

The Indian software services industry has been recording annual growth of between 28 percent and 35 percent in the last few years. If Nasscom estimates are anything to go by, while IT services exports grew by 28 percent to $23 billion in 2007-08, revenues from business process outsourcing (BPO) were close to $11 billion, an increase of 30 percent. Total revenue from the IT and IT-enabled services sectors, including hardware, is estimated to have grown by a third to about $64 billion in 2007-08.

The main reason for Bangalore's dismal show could be its woeful infrastructure. For about five years, the IT industry has been crying itself hoarse on the subject but to little avail even as competing cities such as Chennai, Pune and Hyderabad and the IT-savvy leaders lured investors awayKarnataka's former IT secretary Vivek Kulkarni, who served during what were perhaps Bangalore's best years between 2000 and 2004, says: "Problems in the city are well known. Costs have gone up and productivity has gone down because people are constantly on the road," he said, referring Bangalore's now-fabled traffic jams.

While telecom connectivity is in place, the road to office has become longer and more arduous. Karnataka's new BJP government says its agenda includes revitalising Bangalore and the IT sector. It says it will pay serious attention to problems like traffic management, invite investments in areas such as semiconductors and hardware to broaden the IT basket.

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Gopal M S said...

We should know in about a year's time if it is the general trend.