Infosys pulls out of 100-acre tech park: Decoding the decline of Bengaluru as IT capital

There have been hushed talks about it. Looks like, the threat is now clear and present. Bengaluru may be falling off its high pedestal as software capital. The latest indication came from Infosys, the second largest IT exporter from India.

According to a report in The Economic Times, the company has decided not to go ahead with a development centre it was planning to set up in an information technology park near Bengaluru international airport.

The centre was to be set up on a 100-acre plot and would have had capacity to house 20,000 staff. This is only second to its headquarters, also in the city, where the capacity is 26,000.

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Given the short supply of plots that can be used for industrial use in the city, the company’s decision is significant. According to the ET report, the drastic decision has been taken as the government failed to provide enough infrastructure facilities, including a basic one like drinking water.

The company had proposed to set up the centre on the premise that the government will build a four-lane road linking the IT park to the airport expressway and also provide drinking water.

“Though the government promised to do that on a priority, there have been no signs of that happening even after a wait of four long years,” Infosys executive vice-president Ramadas Kamath has been quoted as saying in the ET report.

The development highlights the big gaps in Bengaluru infrastructure that are negatively impacting the city’s status as IT capital. CNN IBN had earlier reported that apart from Infosys, Wipro was also facing such delays.

The report citing sources said the Azim Premji-promoted company wanted to about Rs 500 crore on a 1.5 mn sq ft plot at Sarjapur to set up a campus of 12,000 to 15,000 seats. However, the endless wait for government clearances is putting the company off now. Sources have told the TV channel that land approvals in the state are extremely slow.

The city’s IT capital status was already taking a hit due to another reason. An earlier report in the Businessworld had said that Bengaluru is witnessing a huge shift in its office demographics as manufacturing companies are increasingly occupying plots for office.

Citing data from Jones Lang LaSalle (JLL), a real estate consultancy company, it said the city in 2013 housed only 18 percent of the total IT/ITES office space in India. This almost half of 34 percent share it enjoyed in 2011 housed.

According to the report, manufacturing companies are settling down in Bengaluru, while IT companies are looking at other cities.

This kind of a change in demographics is likely to become more pronounced with the new government’s stress on the manufacturing sector. Prime minister Narendra Modi has kicked off a Make in India initiative, through which he hopes to revive manufacturing and create more jobs.

So where are the software companies going? Kolkata and Mumbai.

The CNN IBN report cites Wipro officials as saying that the company can easily triple the capacity at its campus in Rajarhat, near Kolkata while the Businessworld report says Navi Mumbai in Mumbai is fast catching up with Bengaluru as an IT/ITES hub.

Like Navi Mumbai, Rajarhat is also a satellite city near Kolkata.

However, unless the Karnataka government pulls up its socks and takes measures to cutits red tape and rectify the creaky infrastructure, Bengaluru will find it difficult to be a hub for any industry, let alone IT.