The making of IT

The last few decades have seen a seachange in the economy of Karnataka and the information technology (IT) and bio technology (BT) sectors have had a great deal to do with it.

The rise of the IT sector has seen an exponential growth of Bangalore and conversely it has also strained the fragile infrastructure. The coming of IT companies in and around Bangalore have led to a sharp rise in rentals, resulted in influx of people into Bangalore from all over the world, led to severe housing shortage and also transformed Bangalore into one of the costliest cities of the world.

The software exports from Karnataka has been steadily rising over the years and Bangalore has been the main engine of this growth. No wonder, Karnataka stands first  among all the States of India in terms of revenue generated from software exports.

Software exports from Karnataka amounted to excess of Rs. 48,700 crores ($11.6 billion) during 2006-2007 and Bangalore had a major share in this pie. This achievement has earned Bangalore the well-deserved sobriquet of Silicon Valley of India.

Apart from the rising exports, the presence of major software companies in Bangalore, the research and development in IT has all contributed towards making Bangalore the Silicon Valley.

Though most software companies are located in Bangalore, other centres such as Hubli-Dharwad, Mangalore, Mysore and Belgaum are fast emerging.

Karnataka today has about 40 per cent share of software exports from India and the State has set for itself  an ambitious export target of Rs. 4 trillion (Rs. 4 lakh crore) by 2020.

The export during 2011-12 was Rs. 135,000 crore and it has so far provided employment to eight lakhs people. The State aims to ensure that at least two million people get employment in the IT sector by 2020.

The growth of the IT sector in Bangalore can be directly linked to the coming up of Electronics City on Hosur road in Bangalore. The concept of Electronics City was the brainchild of  R K Baliga, the first Chairman and Managing Director of Karnataka State Electronics Development Corporation.
Baliga proposed the concept of developing the Electronics City in the 1970s. The agency purchased 335 acres (1.36 km2) of land 18 km south of Bangalore for its Electronics City project.

KEONICS even today claims that the title of Silicon Valley of India belonged to the city's Electronics City campus. Its Electronics City concept took off and gave Bangalore the much needed impetus over other cities.

Then came the 1980s when local firms such as Wipro of Azim Premji and Infosys promoted by Narayana and Sudha Murthy, Nandan Nilekani and others set shop in Bangalore. These firms along with others concentrated on IT and soon put Bangalore on the international map.

Bangalore’s computer companies began going online from 1987 onwards and they also began offering transnational services at a fraction of the cost in the West and Europe. The quality of services was of course world class.

Today, the role of  Videsh Sanchar Nigam Limited (VSNL),  Indian Space Research Organisation (ISRO) and Software Technology Park of India (STPI) in putting Bangalore on the world IT map is almost forgotten.

Bangalore’s already existing scientific workforce, its name as Science city, the host of public sector units, large number of engineering graduates and salubrious climate, industrious work force and no strong trade unionism set the tone for IT to take over the City and make it into the Silicon Valley of India.  

By the way, it was Don Hoefler who in 1971, in a series of articles that he wrote for ELECTRONIC NEWS, a weekly tabloid, first used the phrase SiliconValley to describe the electronics firms mushrooming in Santa Clara county in the United State.

In India, the first IT firm was set up in Bombay in 1967 by Tata Group which partnered Burroughs, Since then, Bangalore has overtaken all other cities and led the IT sector to contribute to higher GDP.

The IT–ITES sector has increased its contribution to India's GDP from 1.2 per cent  in 2998 to 7.5 per cent  in 2012. According to NASSCOM, the IT–BPO sector in India aggregated revenues of US$100 billion in 2012, where export and domestic revenue stood at US $ 69.1 billion and US $ 31.7 billion respectively, growing by over 9 per cent.

The major cities in India that accounted for nearly 90 per cent of this sectors exports are Bangalore, Hyderabad, Chennai, Delhi  and Mumbai.

Bangalore today contributes about 77% of the total industry revenue. Though the IT–ITES sector is export driven, the domestic market is also significant with a robust revenue growth. The industry’s share of total Indian exports (merchandise plus services) increased from less than 4 per cent in 1998 to about 25 per cent  in 2012.

According to Gartnet, the Top Five Indian IT Services Providers are TCS, Infosys, Cognizant, Wipro and HCL and all of them have offices in Bangalore. IT firms in Bangalore employ about 35 per cent of India's pool of over a million million IT professionals and account for the highest IT-related exports in the country.

Karnataka's IT exports zoomed nearly 50 per cent to touch Rs 1.3 lakh crore in 2011-12. In the previous year-2010-11- Karnataka had recorded IT exports of Rs 87,000 crore.

Eighty per cent of global IT companies have based their India operations and R & D centers in Bangalore which is also the fourth  largest technology cluster in the world after Silicon Valley, Boston, and London.

Bangalore also has the highest number of R&D centers in India and Bangalore apart from other parts of Karnataka has  47 IT/ITeS SEZs; three software technology parks with 2,160 units.

With a third of India's software technology park units, the state is the country's largest software technology hub. Bangalore’s 2100 IT companies constitute over 20 per cent  of the IT companies in the country.

Fifty per cent of the world's SEI CMM Level 5 certified companies are located in Bangalore.

No wonder, apart from occasional speed breakers, the IT sector in Bangalore has always been fairly healthy.