San Jose; California, is nick named silicon valley, owing to presence of large number of technology companies in this city.
Now the term Silicon Valley has become so popular that any area having sizeable number of technology firms is known as Silicon Valley. Bangalore, India is one of these cities famously dubbed as Indian Silicon Valley. It is home to as many as 900 IT firms.
The Indian Silicon Valley Bangalore has increased in size to more or less the same size as that of San Jose, The American Silicon Valley. The estimated GDP of the city during 2007 was 83 billion us dollars.
The rise of Bangalore as IT city is attributed to various factors.
First of all its location helped it to be the hub for defense technology and supply companies. As it was situated away from Pakistan and China, Indian planners considered it to be suitable for locating strategic industries. Hence they located important defense equipment manufacturing factories in Bangalore. For example The Hindustan Aeronautics Limited (HAL) headquarters is based in Bangalore, and is responsible for research and development activities needed to develop indigenous fighter aircraft for the Indian Air Force. Other such companies which were homed in Bangalore were HAL, DRDO, BHEL, and ISRO.
Owing to these strategic industries and defense manufacturers skilled engineers were in high demand in this city. Engineers from neighboring regions shifted to Bangalore. Later on these highly skilled engineers supported the growth of IT. In other words the growth in IT was a direct result of external economies of scale generated by the defense equipment manufacturers.
Another reason was boom in engineering colleges in Karnataka.
Boost came from the liberalization policies adopted by the Government is also one of these factors which established Bangalore as IT capital of India. In 1991, Government actively pursued the liberalization of the economy. This provided the best environment for start ups.
High speed internet was another reason as Bangalore was technology intensive city hence Bangalore was first city to be connected to internet. The Internet boom along with economic liberalization of 90’s provided double boom to IT industry of Bangalore.
Special Economic Zone (SEZ) Karnataka was among the first to setup tax free zones to support technology companies. This further encouraged ICT companies to set their businesses in Bangalore.
Low crime rate and great weather Compared to other metropolitan and bigger Indian cities, Bangalore has relatively low crime rate. Weather of the city is also pleasant almost throughout the year. This encouraged entrepreneurs to move to Bangalore.
The rise of Indian information technology has created many millionaires in this city. Now the city is the third largest hub for high-net-worth individuals. The city can boost over 10,000-dollar millionaires and about 60,000 super-rich people who have an investable surplus of US$714,299 and US$79,400 respectively.
These Information Technology firms located in the city contributed 33% of India’s 23 billion dollars IT exports in 2006-07.
The dark side of Bangalore growth
The growth of IT has presented the city with unique challenges. The encouragement of high-tech industry in Bangalore, for example, has not favored local employment development, rather it forced out small enterprise. The state Government has also resisted the massive investments, required by Cities’ IT moguls, to reverse the rapid decline in intra-city transport which has already begun to drive new and expanding businesses to other centers across India.