Urban development and the information technology industry : a study of Bangalore, India
The focus of the study is the city of Bangalore, in India, which has over the years become a centre for high technology industries, and in the mid-i 990s was home to the largest number of Information Technology (IT) firms in India. This has earned it the title of the 'Silicon Valley of India'. The city's comparative advantage in the IT industry in India emanates from various factors, of which favourable government policy, high quality work force, and the availability of research laboratories are some of its crucial determinants. This research aims to understand the reasons for Bangalore's success in attracting both foreign and domestic IT industries (especially between the mid-i 980s, when the Indian economy showed the initial signs of opening up, and the mid-I 990s), and investigates the extent to which the city can continue to be the most preferred location for IT industry in the country. Three research hypotheses have been tested in this research study. The first is directed towards the global IT industry, and contends that the global IT industry's interest in India goes beyond mere price considerations alone. The second proposes that the success of Bangalore in attracting the IT industries is due to a synergy of factors, which include favourable government policies, availability of skilled professionals, and local presence of research institutes and laboratories. The third hypothesis is guided towards the industry-institution linkage, and argues that there exists a strong link between the IT industry and the research laboratories in Bangalore, which has helped underpin growth in the local IT industry. The empirical analysis was conducted at tm, levels. One at the national level of policy making, and another at the city level. The research is based on both secondary sources of data and primary data collection. The study relied on two types of field surveys, a firm-level survey and a policy makers survey. An understanding of the competitiveness of Bangalore is carried out using a set of indicators which include inter ella level of telecommunications infrastructure, government policies, availability of industrial/office space, skilled labour and specialised services. The study finds that initially the main reason for the industrial growth in Bangalore was to be found in the strong industrial tradition of the region, dating back to the earlier part of the twentieth century and later, by government owned electronics and telecommunication industries that were founded in the city immediately after the country's independence (in 1947). Electronics industries continued to base themselves during the 1 960s and through the I 980s in the city. However, when the Indian economic policy was hberalised from the mid-1980s and more perceptibly after 1991, it was the lnfomiation Technology industries that began to establish themselves in Bangalore primarily to tap the available professional skills, and to make use of the city's existing base as a prominent centre for high technology industries. The research also found that there are strong links between the research institutes and laboratories and the private IT companies in Bangalore especially in R&D related activities. While many of the interviewed companies felt that Bangalore would continue to be the preferred location for the IT industry in the country, they do not rule out the possibility that an impending infrastructure crisis in the city will undermine its competitiveness.