PALINI R. SWAMY writes from Bangalore: Will Infosys and IBM and Cisco have shifted out of Bangalore to Madras and Hyderabad by the year 2025?
That’s the worst-case scenario painted at a World Economic Forum (WEF) event held at Stanford University last week to debate how high-tech clusters will evolve in the coming decades.
Two teams were formed to envision the future of Bangalore by unfolding two contrasting scenarios. By projecting themselves into 2025, both teams were asked to look back and identify the driving forces—i.e., crucial business/policy decisions (or lack thereof!) made over the past 17 years (2008-2025)—behind their respective scenarios.
The optimists, led by Indian-born French national Navi Radjou, a vice-president at Forrester Research, saw Bangalore as a global innovation hub not only in IT, but also in clean energy, bioengineering and medical devices, and even space technology.
They saw Bangalore’s policy makers betting big on non-IT technologies, the rise of a new generation of pragmatic politicians who invested massively in education and infrastructure, and to the return of thousands of US-educated PhDs and MBAs to launch startups and research institutions, thus accelerating the inflow of scientific knowledge, business acumen and venture capital.
The pessimists, on the other hand, said Bangalore would become a backwater of the global innovation markets. How come?
“Having placed all its development eggs in the IT basket, the city had become an IT services sweatshop that peddles its white-collar services to the highest Western bidder. There is no real innovation happening in Bangalore as high cost of housing combined with nightmarish traffic congestions had kept both prospective investors and PhD-armed scientists at bay.
“Starting in 2008, political leaders who formed the successive coalition governments spent more time jockeying for power than investing in vocational education and reforming universities to promote industry-academy cooperation. The result? By 2020, Indian IT vendors like Infosys and multinationals like IBM and Cisco had relocated their headquarters and R&D operations to business-friendly Indian cities like Chennai and Hyderabad.”
Irrespective of what scenario unfolds, Radjou writes on Harvard Business Publishing, there are three hard truths that policy-makers in Bangalore must face (and react to):
1) Human infrastructure will become more critical than physical infrastructure.
2) Competition from Chennai and Hyderabad will heat up.
3) The software industry alone won’t create enough employment.
Whose vision do you think will come good in 2025, the optimists or the pessimists?
Photograph: courtesy Infosys Technologies
Read the full story: Bangalore in 2025
Bengaluru cannot sustain Infosys anymore. Lot of the land in Bengaluru has been occupied by Infosys.
Land Bank in Bengaluru must need the needs of Human resources rather than Corporates.
Rather Infosys can move to place like Dharwar,Hubli,Shimoga,Chickmangalur,Hasan,Madikeri and create equitable jobs for all native resources. Now the need of the hour is to grow in Tier 2,Tier 3 and Tier 4 cities.
Any more growth of Infosys in Bengaluru will only create conflict between society and corporates.
Any more Urban growth of Bengaluru is not sustainable.
There is Water,Transport and Energy requirements which are sky rocketing for a city like Bengaluru
The recent difficulties in the Euro zone and the consequent rise of Dollar has lulled the Indian IT industry into a false sense of security. But make not mistake, the collapse of the USD is not a matter of ‘if’. It is a matter of ‘when’.
Over reliance on English makes Indians incapable of thinking originally. They can’t understand the needs of the society they live in as English cuts them off from their society and its needs. And that is one major disadvantage for the Indian Engineer. Taiwan stands number two in global semiconductor business. They did this without abandoning Mandarin. Intel’s Haifa center in Israel designed the Centrino and Core2 Duo processors. Israel has not plans to abandon its language. Nor do the Koreans nor Japanese.
On a side note, Infy trying to form a consortium of land-grabbers and threatening West Bengal govt of a pullout along with the Tatas was hilarious. Bankrupt of innovative ideas, they rely on their land holdings as a safe bet.
Seems that they have covered two out of three options. The third option being it just plods along in the middle of the pack.
It shouldn’t take Harvard to say that the status of something in the future is better, worse or the same as it is now.
Imagine that… No more blogs cribbing about Murthy Angadi. No skyhigh rent for rapacious landlords. No more real estate selling political parties.
Why 2025?? If you see the quarterly financial results published by Infosys, it is very clear that Pune Infy will be equal to Bangalore Infy (in terms of headcount) in just about an year or so. And then it will beat Bangalore also.
Sometime back in TOI, there was a news article which said that based on current growth projections Chennai will have more IT professionals than Bangalore by 2010.
Of course Churumuri and its writers can rejoice !! All Bangalore’s problems will vanish once it is no more the premier IT city.
The optimists will win. Long live Bangalore!!!
Let me see a silver lining on the clouds. because the infrastructure was bad PhD armed scientists stayed away and hence no innovation took place. Because no innovation took place no productivity improvements happened. Because no productivity improvement happened, returns on capital employed was less, because the returns were less no capital came and hence there was no demand for Rupee vis a vis Dollar. Rupee kept depreciating against dollar. And more the rupee depreciation , more cheap was infosys labor and more was the demand for Infosys. Infosys expanded and put further constrains on the infrastructure. Thus a self sustaining runaway growth trajectory was created and infosys kept growing.
In 2008, Infosys closed its offices in Kolkatta after Mamatadi’s stir and moved operations to Bangalore. This further constrained the infrastructure and very soon dollar rate touched 45 rupees even in the period when US economy was not doing well. This convinced Infosys to close offices in Chennai after after Ram sethu stir in 2010 and close offices in Hyderabad in 2012 after Telangana stir. All the offices were shifted to Bangalore and life was made worse from bad. So all the intelligent people left India and that further weakened Rupee.
Since Infosys had become a cheap labor shop there was no need to hire engineers. It had always been difficult to hire brainy engineers and since many of them left because of infrastructure Infosys first experimented with hiring BSc graduates. Since body shop business runs on body count rather than innovation , Infosys discovered that BSc graduates too can be passed off to unsuspecting client as computer experts. Encouraged by this Infosys went on to hire SSLC pass. This opened the doors for unprivileged and every one joined Infosys. By 2018 whole Bangalore became Infosys. Soon Ramanagarm joined infosys and then after some time all the adjoining towns that were on Bangalore Mysore Infrastructure Corridor once joined Infosys. The new corridor was called Brihat Maha Infosys Corridor. One end of Corridor was Infosys electronic city campus, the other end of the corridor was house built by Narayana murthy on top of a hill. It was believed that hill was constructed using the money saved by Murthy by avoiding paying taxes!!!!
Enjoy.. rest will appear later
Actually this is the whole problem. People feel that IT=Infosys and therefore IT=’sweat shop’. No one seems to know that we have GE JFWTC in Bangalore, Oracle DB kernel R&D work in Bangalore, Google GIS research in Bangalore, etc. etc.
Unfortunately we don’t have world class Indian software product companies yet, but the sad thing is that Infosys has so much mindshare in Banaglore’s janata, I have an auto-driver asking me, “Yaake, Infosys nalli sikkillavaa kelsa?”
@Narayana
Mr. Narayana Murthy not evaded taxes. I think Infosys was considered transparent company according to some magazine, I read few years ago.
Our criticism should be fair.
My contention: They occupied(bought) lands at very very nominal rate and they occupied too much of lands. Wipro etc manage with 50 acres of land. Infosys have more than 800 acres of land. and should have given more jobs to local people. But they employed more people from outside the state. That’s all.
“Infosys has so much mindshare in Banaglore’s janata”…
1. Exactly. Good point. So much mindshare that people forget the fact that Infy does NOT even operate out of WB. Mohandas Pai was making a point about FUTURE plan of Infy in WB, and ppl simply assumed that Infy works out of WB. Read their quarterly fact sheet:
http://www.infosys.com/investors/reports-filings/quarterly-results/2008-2009/Q1/fact-sheet.pdf
2. Ironically, TCS which works a lot out of WB, are not threatening to move out !!
by the looks of it , location no longer matters, it will be work from home …who cares if its blore, chennai
To talk about 2025 is sacrilege in India today mired with problems of 2008. “Stanford” & “Schools of Higher Learning” take great pleasure in such futuristic discussions.
Give or take, it is such events and discussion that work perennially elsewhere deciding how business is (and should be) steered in India. Depending on these decisions, carried forward by intellectual NRIs, necessary steps are taken in Indian business environs.
Given a positive set up anything can be worked to achieve positive results. But my understanding is that every issue, challenge, problem, solution has two different set of people approaching it–the Pollyanna (P) & the Cassandra (C).
Bangalore growth is very tied to these P & Cs. Simply put it is the number of people wanting Bangalore to grow versus number of people who DO NOT want Bangalore to grow. And, of course, their games (mind) to achieve their goals!
Property of a place is the main criterion for success. Chennai, Hyderabad & Bangalore all have its own property, but yet Bangalore was the front runner amongst all. Though we see loads of software professional from AP & TN, they all still today chose Bangalore as a place to work from than their own.
Call it people, government, forward-thinking, climate, adaptability or whatever, it would be the same property of Bangalore that would keep pushing it ahead. (The same property which also makes us less fanatic than our peer capital cities’ people)
@TFF
This fanaticism could help them to unite under one roof, speak their mother tongues and add to a lot of research! The ones which might be hard to comprehend in an all-in-all English speaking, coolness-personified place called Bangalore.
BUT, my belief is there is more to this property of a place theory–requires a lot of anthropology. And it will go a long way in pushing Bangalore to be the prima donna!
Dr Sree Reddy,
The facts for you to make your own conclusion
1) Companies in US like Oracle or Microsoft pay around 10 to 15 % of their profit in corporate taxes
2) Companies like Reliance in India pay around 10 to 15% of their profit in corporate tax
3) Infy pays zero corporate tax in US because it has structured offices in US as branch office of India.
4) Infy paid zero tax in india till year 2008 and now wants that freebie to continue forever. Let me tell you the real reason for Infy to move from Kolkata to Bangalore. Infy has got some new SEZs and want to move its operations into those SEZs to avoid paying taxes for next ten years. They were just waiting for some one to make noise and Mamata di was just a pretext. Infy always wanted to move into tax shelters.
5) I am all for honest employees of Infy who pay income tax. Narayana Murthy has retired from Infy and hence has no income to pay income tax!!!. What he gets now is dividend income which incidentally is exempt from income tax!!. Even when he was working for Infy Narayan Murthy had artificially kept his salary below that of some of his employees!!! again to avoid paying income tax
6) In year 2004 some middle level managers in Bangalore paid more tax than Narayana Murthy, whereas Narayan Murthy tried to take credit for taxes being paid by Infy employees as though the sole existence of employee was his creation. This was in a meeting with ryots he had shouted why do you object to Infy getting cheap land.. look at the amount of tax Infy employees pay!!!
What Narayan Murthy does is representation without taxation and then grand standing now and then on how much tax Infy employee pay!!! Does he think that he is their slave master?
Narayana,
“Let me tell you the real reason for Infy to move from Kolkata to Bangalore”… Not a FACT. Infy does NOT have ANY operations in Kolkata. the comment by M Pai was about FUTURE plans in Kolkatta. See their June 08 quarterly results (link given above).
Vinay,
Years back it used to be: yaake BEL nalli sikklikva kelasa?
BTW by acquiring land by hook or crook, some clever people have insulated themselves from most eventualities…
Goldstar,
Thanks for pointing that out. There were news reports in 2004 on Infy getting some land in Kolkata. May be they could not get SEZ status there. Last year Infy produced 96% of its work in tax shelters and this year probably they want to continue that trend.. I am just guessing that Infy has a vested interest in moving into SEZs which it has manipulated to get in Karnataka.
Those who still feel for his holiness NRNM can read narayana charita at http://www.kamalsinha.com
@Goldstar, Narayana, Dr. Reddy
Infy has an MOU with the West Bengal government for setting up their sweat shops in Kolkata. They want large amounts of land at cheaper rates which the WB government (in their role as land brokers after grabbing the land from farmers at throw-away prices) had not agreed upon till very recently. The problem was solved about three months back when another realtor, Vedic Village, offered some 400 acres back to WB government free, for onward offering to Infy. The price ,such reduced, has still not prompted Infy to set up shop in Kolkata. Probably they want further reduction in land prices.
Infy’s campus in Hosur , imho, is a monstrous piece of architecture gobbling up huge amounts of land with scant regard for efficient space utilisation.
Indian industrialists’ unbridled hunger for land at dirt-cheap rates has often been cited by analyst as a hedging activity. Not only such land ensure better deal in a mortgage , what’s more that if the business sinks after 20 years; acres & acres of land holdings will ensure the business houses can exit with profit.
The land-fracas at Singur in West Bengal or Navi Mumbai in Maharstra has to seen in that light. Land grabbing by government, industrialists, realtors & mafia will increasingly face stiffer resistance from collectives of farmers & land owners in rural India ; who will now demand a larger share of the
profit that urban business houses intend to make from buying the ancestral land , the farmers are displaced from.
The migration of “new-age” investment capital & highly skilled labour will continue to occur in existing cities (Bangalore , Hyderabad) which has an established ecosystem supporting such investment till other cities (Chennai, Pune & Kolkata) develop their own. The premium on land will demand better space utilisation from the investors and hopefully a stop to the culture of wanton luxurious waste of space that Infy seems to have pioneered with their ugly glass-clad buildings built on “gifted” land.
Indian industrialists’ unbridled hunger for land at dirt-cheap rates has often been cited by analyst as a hedging activity. Not only such land ensure better deal in a mortgage , what’s more that if the business sinks after 20 years; acres & acres of land holdings will ensure the business houses can exit with profit.
Young Man looking for rented house meets old lady who shows him the house which he liked. She asks him where he works
Young Man (proudly) : ” INFOSYS”
Old Lady : ” Oh the bus company”