Bangalore, the capital of the Indian state of Karnataka, is often referred to as the “Silicon Valley of India” due to its central role in the country’s information technology (IT) industry. Today, Bangalore is home to 80% of all global IT behemoths. The city has a $110 billion GDP, accounting for over 87% of Karnataka’s GDP. The Bangalore IT cluster accounts for most of India’s total IT exports. Multiple organisations have also named Bangalore one of the world’s smartest and most sophisticated cities. So, how did the city once known as “the garden city” come to be called India’s Silicon Valley? Let’s find out.
Emerging as the Country’s IT Capital
The journey of Bangalore to become India’s IT capital began in the 1970s when the Indian government started to invest in the city’s IT sector. This investment drew multinational firms such as Texas Instruments and IBM, which established R&D centres in Bangalore. The pleasant atmosphere and inexpensive cost of living in the city made it an appealing destination for IT experts. Bangalore’s IT sector began to expand fast in the 1980s. Several reasons contributed to this increase, including the liberalisation of the Indian economy, which made it easier for foreign corporations to invest in India, and the rise of the Internet. Because of its world-class universities and engineering institutes, the city also benefited from a big pool of highly trained IT employees.
Establishing Itself as India’s Silicon Valley
In the 1990s, Bangalore’s IT sector grew even faster. It was mainly due to the Y2K scare, which increased demand for IT services. Bangalore’s IT firms capitalised on this need by offering high-quality services at a lower cost than their Western counterparts. Bangalore’s IT sector expanded throughout the 2000s, especially during the global financial crisis 2008. It was due to Bangalore’s IT firms’ ability to provide cost-effective solutions that helped their clients decrease costs and enhance efficiency.
The Rise of the Bangalore Startup Scene
In recent years, Bangalore has emerged as a main hub for startups. The city is home to over 10,000 startups developing innovative products and services in various industries, including IT, healthcare, education, and e-commerce. In 2022, Bangalore-based startups raised over $10 billion in funding, making it the second-most funded startup ecosystem in India after Delhi-NCR.
Factors that have contributed to Bangalore’s success:
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A favourable government environment
For many years, the Indian government has strongly supported the IT sector. It has offered various incentives to IT firms, including tax reductions and access to cheap land.
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A large pool of skilled labour
Bangalore has a large number of highly qualified IT experts. This is because the city is home to world-class universities and engineering schools.
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A supportive ecosystem
Bangalore has a robust IT industry ecosystem. This covers venture capitalists, angel investors, and startup incubators. Its success as India’s IT powerhouse has benefited the city in various ways. It has created jobs, helped the economy, and improved Bangalore’s quality of life. In addition, the city has emerged as a global centre for innovation and entrepreneurship.
