Bangalore’s industrialization has been short but has always had an international character. The city was an established node in the British colonial information network. Its original conceptualization as a garden city attracted a cosmopolitan pensioner class with political and commercial links, and attracted many externally facing publishing, media, and film outlets.16 In the 1940s, the colonial government established Hindustan Aeronautics and the Radio and Electric Manufacturing Company in the city to provide technical support during World War II. A sudden modern industrial presence helped create a comparatively skilled workforce from which later economic transformations would spring.
After national independence in 1947, Bangalore became a preferred location of government laboratories and military research, as Prime Minister Jawaharlal Nehru sought to develop the city as India’s intellectual capital. These strategically sensitive industries were seen as more safe in an inland city, and capable of thriving given the city’s educated workforce and abundance of cheap electricity from the nearby Shivanasamudra hydroelectric plant. 17 This act of public policy meant the city’s outskirts soon became an operational center for the Indian air force and other public sector heavy industry bodies, including Hindustan Machine Tools, Bharat Electronics, and Indian Telephone Industries. Licenses were also provided to large adjoining private firms, including a subsidiary of Bosch. Bangalore soon became host to specialties in radar systems, telecommunications, remote sensing, military equipment, and space research. A relatively affluent lower middle class of publicsector employees meanwhile gained widespread access to good English-based education. Through this confluence of industry and quality education, an unusually large proportion of workers acquired engineering knowledge and commercial awareness that would prove advantageous later.
At the beginning of the 1970s, Bangalore was still a small, middle-class, public-sector research and manufacturing city. Strong restrictions on foreign ownership – which led IBM to leave India in 1978 – had the inadvertent effect of encouraging Indian graduates of the Indian Institutes of Technology to leave for the United States to gain experience, and prompted the establishment of small local export-focused software businesses. But national economic policy began to prioritize India’s potential as a software exporter. Incentives were provided for specific training and improvement of the conditions under which to import hardware and execute export applications. The Department of Electronics gave precedence to domestic firms in public=sector software procurement, thereby stimulating local demand. The first overseas firm to identify and utilize this cluster of talent was Texas Instruments (TI), which established an offshore center in Bangalore in 1985 upon the advice of Indian Senior Vice President Mohan Rao. TI showed others – including Motorola and HP – Bangalore’s offshore potential despite bureaucratic impediments. The company focused its activity initially on maintenance and application work. Meanwhile Bangalore software firms entered the industry, often as part of larger conglomerates, and gradually became large service providers. These included Tata Consulting Services, Wipro, and the start-up Infosys. In the late 1980s, Indian returnees with experience in North American technology began to develop commercial links with Bangalore, and they used local programmers to provide software development support.
Development centers grew in number across the city, while front-end sales and marketing often remained in the United States. In 1990 the Department of Electronics created the Software Technology Park in Bangalore, which heralded the deregulation of imports, freedom for 100 percent foreign equity investment, and tax incentives. The park provided the infrastructural stimulus for the city to enter the global market. Bangalore was nicknamed the “Silicon Plateau,” as it sought to transition to higher-value-added activities by capitalizing on the programming demands of the “Y2K crisis.”19 Business growth in the city had caused, however, an unregulated urban sprawl. Government management capacity to oversee the city’s housing and water infrastructure amid rapid land speculation was limited. The Karnataka state government response was to decentralize and privatize city government functions in order to support private-sector growth, with the focus on the end-users of service provision.
More and more multinational firms began to set up development centers in the 1990s. Bangalore engineers took on a series of coding and data-processing tasks for American and European banks, insurance companies, and health firms. This precipitated the transition into higher-end functions such as design, in areas such as digital signal processors. With a decade or more of experience in the sector, software services firms began to successfully raise venture funding from large banks and technology firms to begin research and development services. By 2000, over 90 percent of multinational firms in Bangalore’s Software Technology Park were presided over by Indians who had lived and worked abroad (many working for parent companies) and who had specific knowledge of the requirements of the U.S. market. Since 2000 local technical expertise has matured through a combination of professional development, training, process management improvements, and high labor circulation, so as to enable a realignment from software services to R&D services. A new generation of entrepreneurial startups is receiving foreign contracts to develop bespoke products in fields such as wireless telecommunications.
Bangalore has evolved into a city of expert knowledge with responsibility for intellectual property development. Local R&D specialist firms are increasingly competitive in the local labor market, able to retain their strongest employees for longer periods. More and more formal alliances between Indian firms and multinationals such as HP and Nortel have taken place since 2000. More than half of the leading IT software and service exporters from India have their headquarters in Bangalore.20 Within 20 years Bangalore’s IT-oriented agglomeration has come to function as a hub of specialization within expanded global production networks. Suburban technology parks, such as the 330-acre Electronic City, for example, house electronics and software firms such as Motorola, Siemens, Infosys, and Wipro. This expansion has led the city to more than triple in size and double in population. The city government is now active in projects of land acquisition, airport and motorway construction, and the installation of water and sanitation infrastructure.21 An international airport opened north of the city in 2008, with government support in the form of heavily subsidized land and a monorail connecting the airport to a new eastern IT corridor. As Bangalore grows into a large metropolitan area, the Bangalore–Mysore Infrastructure Corridor (BMIC) has sought to alleviate urban density and provide more space for the IT sector, as well as quality-of-life improvements. Bangalore’s remarkable industry growth has not, however, been matched by investment in supporting facilities and infrastructure. IT firms report physical infrastructure, power systems, and transport facilities as major constraints today, exacerbated by the absence of proper coordination between the core agencies responsible for urban development. Given the growing competitive threat of Pune and Hyderabad, Bangalore also faces the challenge of finding new low-skilled labor opportunities, especially as the pace of construction and transport development slows.
Bangalore’s platform to enter global value chains despite disadvantages of location and development has hinged on the city’s educational and knowledge strengths, which spurred state and business investment over several generations. This effort began with the establishment of a series of English-medium schools during the 19th century. Later the city became a center for technical education under the supervision of pioneering engineer Sir Mokshagundam Visveswaraiah (Sir MV), and a Government Engineering College was founded in 1917. By the 1960s, a relatively high literacy rate of over 40 percent had incentivized decisions to locate four universities and multiple private colleges in the city.23 Because of its density of skills and competence, Bangalore has been able to supply knowledge-based industries with large English-speaking labor pools for over half a century. Engineering graduates and diplomaholders became literate in corporate management earlier than in any other city in India. Although no longer a leader in private education, the historical institutional advantage has meant the wider region now produces almost two-thirds of India’s engineering graduates, many with international experience. In one not unusual example, a third of R&D workers at General Electric’s Bangalore John F. Welch Technology Center are returnees from the United States.24 Bangalore’s path into globalization accelerated when, thanks to its knowledge base, it was able to harness the internationalization of its software cluster after TI’s arrival in 1985 and then sustain successive climbs up the value chain. The engagement of multinational firms in the 1980s catalyzed Bangalore’s specialized growth. The shift from outsourcing to offshore services was fast-tracked by the activity of firms that upgraded into enhanced production processes and acquired new functions that required higher skills.
The acquisition by firms of quality certifications made new kinds of contracts with the banking and retail sectors possible, which in turn led to improved project management, quality assurance, and productivity standards. By the mid-2000s local firms and entrepreneurs had begun to meld into a technical community with a common agenda for growth. Coalitions for mutual representation have emerged in tandem with government laboratories, and these associations reflect a shared awareness of the city’s status as an industrial center where products can be developed, tested, and adapted quickly for fast-moving global trends. The establishment of these coalitions reflects an important new phase in the city’s global engagement. Although knowledge advantages were in many ways the foundation for global specialization, Bangalore’s software industry growth has also benefited from periodic catalytic support from the Indian government, especially at the key juncture of global economic change in the 1980s. Institutional location decisions made in the post-independence era of state-led industrialization saw Bangalore become a part of a division among four cities of intellectual-technical labor. Bangalore’s specialties in core computing were reinforced by Chennai’s automobile competencies, Pune’s engineering strengths, and Delhi’s legal services culture. Later, the national government’s first Software Technology Park in 1990 was a catalyst to strengthen the skills base in the city across both public-sector manufacturing industries and also aerospace, defense electronics, and telecom laboratories. 25 While the national government stimulus has benefited the city, it is also the case that Karnataka state has historically been much more socially and politically stable than other Indian states – notably West Bengal – with fewer labor disputes and a more open industrial policy. State government bodies correctly identified the opportunity of electronics as a global industry for which non-capital-intensive growth was possible in Bangalore. With the support of the Karnataka Industrial Areas Development Board (KIADB), state-level involvement was instrumental in the establishment of the Electronics City dedicated space on the city’s outskirts. The intentional side of Bangalore’s global engagement did not depend on favorable city governance, but reforms since the 1990s did open up important new investment channels. Upon decentralization agreed in tandem with the World Bank, new target-driven parastatal agencies were set up, including the Bangalore.
Bangalore is India’s fifth-largest metropolitan area and is now a top 100 global city economy.9 Located inland in southern India, more than 1,000 miles south of New Delhi in the fast-growing state of Karnataka, the metro’s overall competitiveness was rated 23rd in Asia in 2012.10 In 2011, it was the recipient of the eighthhighest number of foreign investment projects in the world, because of its leading role as an information technology (IT) and now biotechnology center.11 It is consistently rated the leading IT outsourcing city globally, ahead of Mumbai, Delhi, and Manila, because of its experienced firms and large high-tech talent pool.12 By total jobs created from foreign investment, IBM places Bangalore first globally in 2011, and its investment incentives strategy is assessed as one of the most effective in Asia.
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