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Bangalore In 2025: Global Innovation Hub ...or Backwater?

10:58 AM Wednesday September 10, 2008

Tags:Global business, India, Innovation

Last week, I attended at Stanford University a fascinating event hosted by the World Economic Forum (WEF). WEF had invited me to join some of the world's foremost innovation experts to address crucial questions surrounding three key topics: geographical innovation clusters, innovation talent, and collaborative innovation. WEF plans to use our suggestions to help structure the discussion among global CEOs who will attend their annual Davos meeting in 2009.

Participants were asked to debate how high-tech clusters like Silicon Valley, Taiwan's Hsinchu Science Park, and Bangalore will evolve in coming decades. Two teams (for this post, I will name them "Pollyanna" and "Cassandra") were formed to envision the future of Bangalore by unfolding two contrasting scenarios: a positive scenario and a gloomier one. By projecting ourselves 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 our respective scenarios.

I led the Pollyanna team. We envisioned Bangalore in 2025 as a global innovation hub not only in IT, but also in clean energy, bioengineering and medical devices (e.g., next-gen pacemakers), and even space technology. We credited this superstardom enjoyed by Bangalore in 2025 to the diversification strategy of Bangalore's policy-makers who, in 2009, smartly decided to place big bets on emerging non-IT technologies like clean tech.

My optimistic team "recalled" the rise of a new-generation of pragmatic politicians during the 2010s who massively invested in education and infrastructure, thus swelling Bangalore's talent pool and making high-tech manufacturing finally viable in the region for multinationals. In addition to aggressively promoting India's "tech brand" abroad, these visionary politicians also partnered with MIT and Stanford to set up new multi-disciplinary research universities in Bangalore. These R&D institutions were allowed to spin off their cutting-edge technologies into startups.

We also gave much credit to the "returnees" - thousands of US-resident Indians with PhDs and MBAs who, from 2012 onward, returned en masse to Bangalore to launch startups and run research institutions. These New Argonauts, as Berkeley Professor AnnaLee Saxenian designates them, were instrumental in accelerating the inflow of scientific knowledge, business acumen, and VC capital from the US to Bangalore. These entrepreneurial professionals helped forge strong social networks both within India, as well as with their Western partners. By 2020, many of these returnees became billionaires in India by scaling up their clean tech and bioengineering startups into multinationals. By 2025, they had become India's Bill Gates and serve as new role models for the Indian youth.

After my team's dream session was over, we were asked to mingle with the Cassandra team and hear their version of Bangalore's future. They described a gloomier scenario whereby by 2025, Bangalore would become the 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.

Now, let's return to September 2008. As Yogi Berra put it well: "It's hard to make predictions, especially about the future." I personally can't forecast which scenario is more likely to play out for Bangalore in coming decades. Irrespective of what scenario unfolds, here are three hard truths that policy-makers in Bangalore must face (and hopefully react to):

1) Human infrastructure will become more critical than physical infrastructure. While building a world-class airport in Bangalore is important, it won't be frequented by investors if they can't find enough qualified talent in the city! And multi-lane highways and efficient ports are useless if they interconnect biotech campuses and clean tech factories that remain empty due to an acute skills shortage. To paraphrase Sam Pitroda, Chairman of the National Knowledge Commission, who also attended the WEF event, Bangalore's future success hinges on much it invests in blackboards as much as in roads.

2) Competition from Chennai and Hyderabad will heat up. While Bangalore steals the limelight as India's IT hub, other South Indian cities like Chennai and Hyderabad are quietly upping the ante by multiplying incentives for domestic and foreign tech investors. Take Chennai, for instance. Dubbed as the "intellectual capital" of India, Chennai boasts the largest number of engineering colleges in the country. Its progressive politicians exploit the region's above-par infrastructure to attract huge manufacturing investments from tech giants like Nokia. Watch out Bangalore: now Chennai aims to become India's nanotech R&D and manufacturing capital.

3) The software industry alone won't create enough employment. The Bangalore cluster is way too skewed towards the software and services sector, which can't absorb fast-enough the millions of young workers entering the labor market each year (the entire Indian software industry is expected to directly employ only 2.3 million workers by 2010). Bangalore has got to diversify and place bets on new technologies like clean tech and bioengineering, and beef up its manufacturing infrastructure. Otherwise, it will not only lose its innovation crown but will also face social unrest fueled by massive unemployment.

All right, enough with me. I want to hear your opinion:

  • How do you gauge Bangalore innovation potential when compared to other global tech hubs?
  • What do you envision the city to be like in 2025? 
  • If you were a politician, what are the three critical policy decisions you would enact in 2008 to secure Bangalore's innovation-led future growth?

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Comments

Chennai and Hyderabad and other major metros are also facing severe heat w.r.to infrastructure crisis. Its not only restricted to Bangalore. Even Chennai, Mumbai are having potholes, sanitary issue during heavy rains and Traffic God only knows how much time it takes in Chennai from one area to another. Of course Mumbai and calcutta are far worst than any cities. So certainly Bangalore has more advantage in the coming years than rest of indian cities.

- Posted by vishwanath 
September 11, 2008 11:08 PM

If we look at the strengths & opportunities , bangalore has been able to identify resources in the form of software talent & the business environment . Bangalore has emerged as one of the major software service provider to domestic as well as Global markets & this is going to continue in future. We forcee government & industry leaders comming closer & addressing issues related to infrastructure . In order to encash on opporunities government may redesign policies to attract other emerging sectors such as enegy & health care . I am optimistic about Bangalore's talent pool & expect to be a global hub for more than one sector .

However since business opportunities are shifting from atlantic to pacific , it is but for certain that Chennai & Hyderabad too will get beneffited out of this Global shift.

- Posted by Gunderao  
September 19, 2008 7:28 AM

Well, nice to know that such a discussion has taken place. It may please be recalled that Bangalore and Karnataka have been pioneers in many technological developments such as the first city to get electricity in the whole of Asia, the concept of electronics city, ITPL, various industrial estates (Peenya Industrial estate was the biggest in Asia at its introduction). Furhter, Bangalore is having major Public Sector units and research institutions besides various colleges producing engineers, doctors, writers, management graduates etc.,.

The favourable factors are:

1. The salubrious climate and the atmosphere in and around Bangalore encourages/provides opportunity for creative thinking, allows long hours of work (less fatigue),
2. Peace loving people.
3. Vision of some political leaders and administrators (like Mr. R.K. Hegde, Mr. S.M. Krishna, Mr. Baliga0
4. Pool of intellignet and sensible people.
5. Peace loving and accommodating nature of people.
6. Various colleges and institutions.
7. Presence Huge manufacturing and software firms, R&D institutions.
8. Vast tract of land available for future developments.

The traffic congestion is a sign of growth like you find in any other city such as Beijing, Shanghai, New York etc., These cities witnessed huge jams previously and now also. However, efforts were made to develop the infrastructure and ease the congestions. The same being done in Bangalore also. Further, Bangalore is being developed more now in the outskirts, where the people go to work/ business without coming inside the city to experience the traffic jams. Varioys satellite towns and Special Econominc Zones are being identified and development is going on.


Hence, these above factors along with many more would make Bangalore the top most tech city. The competition by other cities in India and aborad with Bangalore is a good sign of growth as they are emulating the Bangalore model and it should be encouraged with more innovative projects/ ideas.

The policy makers or the politicians should foucs on the other town near to Bangalore such as Tumkur, Bidadi, Ramnagar, Mysore etc., and provide the similar facilities to ease pressure on Bangalore. The Bangalore- Mysore express corridor (NICE road)to be coupled with SEZs, IT Parks and Industrial estates along with hotels, housing, transport and other related infrasture development needs urgent attention. The Govt. should regulate the education system so as to ensure that the lesser privilaged also gets equal opportunities. Tax administration to be simplified like a single window approach to various types of taxes and licences.

These measures would surely complement the favourable factors stated above and encourage the trade and industry to grow at a much better speed. We can definitely envision Bangalore as a truly world class city.

I think I have missed many more points to add, which can be complemented by others.

- Posted by Nagaraja Ranganathan 
September 23, 2008 11:57 PM

Mr Radjou,
I must say that i am quite impressed at your magnificent research work.The fact however is a little bit different.B`lore is way different from other states.
Let me assume by now that you have read the news of TATA`s project in Singur.India`s large time investment sector be it IT or clean industry, politics plays a major role.The TATA`s project is at stake because of political opposition.Chennai is not at all exempted from political turmoil.B`lore is the only hub as we can see and project which has no kind of political stiffness.Its only hardcore pot boiler of money and investments from MNC`s.
The second contradiction i would like to place is that B`lore has a large and more efficient mode of education than Chennai and B`lore.B`lore has students migrating from places like Africa and Saudi-Arabia.Moreover a down in IT cannot be predicted at this point of time when analysts are unaware of the American movement.If at all outsourcing is to be sealed it takes a different road if not then move along the highway.Analysts may have a fail of their theories without considering the American policies.70% of Indian IT jobs are Outsourcing related.

Let us hope sincerely Barack Obama takes the right steps catering to both his and our interest.
Its all an unpredictable game down here.the following 3years can pave the road to predictions, till then we have to watch the game ..

- Posted by Pramit Guha 
September 24, 2008 1:43 PM

Hai friends,
I appriciate each one of your opinion equally. My opinion is to look outside the box such as Delhi, Calcutta, Chandigarh, Baroda, Poona keeping in view that world is shrinking faster so is the development of technolgy. Since there are vast development in transportation such as bullet train and very light jet aircraft as well as technology other IT such as sustainable energy etc etc one can never say that future will be only bangalore/madras/hyderabad. I feel the greatest factor to influence might be the vast development of individual knowledge which in turn effects rest of his or her thinking ability. Suggestions are welcome-- regards==Joseph Elenjickal JJ.

- Posted by Joseph Elenjickal JJ 
September 24, 2008 2:30 PM

There seems to be an interesting discussion here and couldn't resist being part of it.
I'd second everybody's thoughts here. I'm a hard core Bangalorean and would speak for it, for sure. Many of us end up speaking as one and that's good. But now, lets be practical for a moment. We've seen drastic changes in Bangalore - its environment, social life, infrastructure (most loved subject!), political scenario, rift between have's and have not's, being cosmopolitan, advanced knowledge scenario and bits of brain drain too. I might have missed few but lets go with it for now. It is certainly a "decent" mix of portfolio and certainly not 'lot of eggs in a basket' scenario. Looking at a longer term, I see this as a good foundation to be an internationally recognized city from various perspectives, not just software/services.
My argument: Bangalore now needs a breathing place, needs a breather, needs some space to look back and chalkl-out plans for its good future. I see there are very few things in place for long term. This breathing place can be provided if it takes a break and stops the inflow of big projects to the city. This idle time should be then be spent on mending the flaws, recuperating from short-term fallouts etc.
Having said that, I consider this as a natural phase where the neighboring cities share the limelight for our own good. There will be certain balance in the region and helps reduce regional disparity too.
If I were to be an administrator of this city then would take this stop-gap issue as a golden opportunity to strengthen and prepare for much better things. Let this issue take its own pace but not loose the message of silver lining lying beneath it.
Thejendra

- Posted by Thejendra Kumar 
September 24, 2008 6:54 PM

I look at it this way:

- Whether its a team or a company or a city or a nation, there is 1 primary requirement for being globally there or locally nowhere....VISION.

- Irrespective whether the citizens of the city are talented or not, a bad leader will never take them closer to thier dreams.

- 1 horse leading a pack of donkeys is better than 1 donkey leading a army of horses.

- To be global innovation hub, each decision maker in the political, legal and corporate system has to think like an entreprenuer and realize that there lies a bigger promise of wealth and fame if they work in synergy. They have to give up thier scheming tactics for petty wins and look at the big wave.

Once this is in place, infrastructure, talent, competition from other cities etc will automatically see the solutions emerging.

Nothing is impossible once you put your heart to it....I'm not saying be honest, simple etc...be selfish very selfish....get a bunch of selfish guys like you who are willing to work togeather for the sole reason of making it big..I'm not taliking short term gains here....Bangalore unlike the silicon valley is a canvas that still has a lot more space left to paint one's dreams..

The people and city will benefit automatically once the right leaders get togeather.

- Posted by TANMAYE PAL 
September 25, 2008 12:49 AM

I recently document from one of the Government departments, which supports Karnataka Government for rapid industrial growth -

 Establishing Skill Development Centres or Knowledge hubs consisting of schools, colleges, vocational institutes, engineering/technical institutes etc. Encouraging Private sector in skill development.

 Encouraging Private power producers - conventional and non conventional.

 Developing Bangalore as aerospace hub of the country and encouraging MRO and aircraft related industries adjacent to all airports.

 Strengthening connectivity between Production centres, Market and ports. Ring roads and by passes in all tier – 2 cities. Express ways and dedicated freight corridors connecting all district head quarters with Bangalore (International Airport) and Mangalore (Port).

 Encouraging Auto industries in Hubli Dharwad Region.

 Encouraging Steel industries to utilise available iron ore which results in value addition

 Bellary, Gadag, Haveri, Hospet, Chitradurga as Steel Region.

 Gulbarga, Bagalkote, Bijapura as Cement Region.

 Hubli, Shimoga, Mangalore as IT Region.

 Bagalkot, Dharwad as Agro food Processing Region.

Wait....What is slipping from brand Bangalore? Is it IT or....?

- Posted by Srinivas Prasad 
September 25, 2008 2:58 AM

Lehman Brothers fallout is estimated to hit some 16,000 jobs in India. Infrastructure spending is not stopping in India despite US economic fallout.

Real Estate prices in Bangalore are at a stand still with zero transactions on Independent houses for the past 6 months. Appartments / Flats prices have plunged to 30% already. Cost Cutting is on everyone's mind in bangalore. Job cuts started all the way in January 2008 when the Sub Prime mortgage crisis started to make an impact on Indian Markets. Several other companies are expected to cut jobs in coming months.

We dont have any independent innovation / research either funded locally or any force driving it. Once the VC's and FII's pull out the plug for what so ever reason,what do you expect to be pushing India...let alone bangalore

- Posted by Mr.K 
September 25, 2008 5:31 AM

I think the world tomorrow is going to be far more mobile than it is today, just like we are much more mobile than few decades. I think in the future technologies will ensure that you can work from wherever you are, and not move to the places that offer opportunities for employment / growth.

Having said that, I think every city should be restricted to a size, that would ensure that no city goes beyond its capacity and provides a quality life to its citizens. In 2025, we should be looking at many more cities being developed as hubs of Innovation in whatever space that time demands. Bangalore came as a IT hub as late nineties demanded it to be. Let us leave Bangalore, Chennai, Hyderabad and other over grown cities where they are and move to new cities which still have breathing spaces left. Just like patriotism, there is no point in pointlessly defending the city we live in and insist that everything that is good should come to it, because I live here.

In the same breath I would like to say that I am based out of Bangalore and its my chosen home.

- Posted by Anuradha Goyal 
September 25, 2008 10:24 AM

There is no innovation going on in IT in Bangalore.

I have been working in the Bangalore IT industry since 1992. My teams have delivered (and continue to deliver) business applications that meet customer needs (starting from requirements definition through design and programming all the way to acceptance test). Was this "innovative"? I doubt it. Maybe, offshore software development was an innovation in the early ninties, but that is very commonplace now.

What is happening now is a commodity play, where Indian companies lease out capacity, which I define as:

capacity = commodity + campus + conformance

Cannot see innovation fitting into this equation. Innovation needs a completely different equation!

Of course, since innovation is the current buzzword, every one and his grandmother claim they are innovating. If only innovation was that easy.

About political and administrative leadership in Bangalore city, there is none. Same story in other Indian cities too. You need to understand, the software industry succeeded "in spite of" a lack of vision among the political leardership, not "because of" it.

- Posted by Kishore Kumar 
October 13, 2008 6:43 AM

Bangalore in 2025 will have more of disappearance of present IT-related brouhaha and infrastructure-based requirements.
1. Metro will takeover and more like Tokyo, people will be mechanically going about their visits into the centre of the city now and then.
2. Work from home will become the norm. Local communities will prevail over office-centric social networks. What's the need to worry about the roads or potholes? Stay cool at home and attend to work online.
2. Professionals from agro-based manufacturing sector will replace present-day IT workers as this sector will get to occupy more than 50% of the workforce by 2025. Farmers will be replaced by agro-manufacturing companies irrespective of nationality. Bangalore may become the world's largest food-making centre by thne.
3. Newspapers will disappear and e-papers will cater to the personal designs and tastes of readers and all of them will be instant software-generated e-newspapers.
4. Social networks will be more of professional-based and caste and community will take a back seat. Nobody will know who the other person is but only his ID number and code name, perhaps.
5. India will not be a country be then but a continent more like Europe with people freely moving from one region to the other transcending present-day Pakistan or Bangladesh or Nepal.
6. Yes, by 2025 enormous changes will take place and Chennai, Hyderabad and Bangalore will be more like twin centres placed nearer to each other, within a distance of 30 minutes travel time. And the mode of transport will be something entirely different from the trains or vehicles that we use now.
Let's await the new world and not worry over roads that will never be used by our children.

- Posted by Nagesh Narayana 
November 3, 2008 11:58 AM

The idea of Bangalore being innovative isnt that convincing. Infact , we still are great marketing opportunities for the western world and innovation whatever it is , is very less. If we compare some of our cities to the USA , Bangalore comes close to San Francisco (or the Bay Area in general) in terms of its industrial opportunities , while Mumbai remains the equivalence of NYC.
What cities like Bangalore , Hyderabad and Chennai need is better infrastructure which will drive the investments towards them. Mumbai remains the heart-throb of our country on virtue of its better infrastructural facilities. Its jammed , cramped with exhorbitant home prices but still remains the hotspot (not for innovation but for investment).
May be we are closeby to challenge the big economies of the world , but certainly not in innovation. Theres a long way to go for our country to achieve that. For that we have to look beyond The Big3 cities (not considering Kolkata here) and the other fast developers.

- Posted by Yash 
June 3, 2009 4:18 AM

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Navi Radjou

Navi Radjou is the Executive Director of the Centre for India & Global Business at the Judge Business School at the University of Cambridge. The Centre brings together business, academic and policy leaders and young people from around the world eager to shape India's leading role in the global knowledge economy. Previously, Navi was a vice president at Forrester Research, where he led the firm's analysis of how globalized innovation is driving new collaborative market structures and organizational models. Navi is an Indian-born French national and is based in Cambridge, UK.

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