The city formerly known as Bangalore is where Indias tech industry began 25 years ago. Is the city finally shaking off its reputation as a hub for cheap tech labour?
There are two things that the streets of Bengaluru are full of: bars and software developers. Take a seat at your watering hole of choice, and it won’t be long before you hear murmurs of startups, VCs and funding at a neighbouring table. This is where the entrepreneurs of Bengaluru (known as Bangalore until November 2014) come to meet – in the coffee shops, bars and restaurants of one of India’s most buzzing cities.
“The tech scene and entrepreneurial spirit in Bengaluru are booming,” says Niketh Sabbineni, a local tech entrepreneur who sold his company, Bookpad, to Yahoo in 2014. Although from the Indian city of Hyderabad, he and his cofounders moved to Bengaluru straight out of college in search of three things: access to entrepreneurs, talent and venture capital.
They’re not alone in choosing it as a base to launch a business. In 2017, the World Economic Forum named it the world’s most dynamic city, based on factors including innovation and technology. (This year it was overtaken by Hyderabad, whose state government has implemented a number of strategies to encourage tech entrepreneurship in the city.)
In May, Walmart beat Amazon to buy out Flipkart, an Indian e-commerce platform based in Bengaluru, for £12bn. It represented a watershed moment for the city’s startup scene. “There hasn’t been a [merger] of that magnitude in India for a tech company,” says Sabbineni. “It’s such an important deal.”
However, the deal is not without its controversy. Yesterday (July 2), small business owners organised protests in several Indian cities, arguing the US giant would skew the field against the traders who depend on FlipKart for their livelihood.
Bengaluru has come a long way since the inception of its IT industry. By 1983, two soon-to-be-giants of India’s fledgling tech industry – Infosys and Wipro – had moved their head offices to Bangalore. Other tech companies followed, growing their businesses around the two firms. This included foreign companies looking to cut costs by employing cheap local developers. The IT outsourcing model was born.
On the one hand, the new jobs raised living standards for Bengaluru’s citizens and made them digital natives, but on the other, it branded the city as a place for cheap labour and one that lacked its own ideas.
Emilien Coquard is a French developer who moved to Bengaluru in 2011, and now runs a software recruitment agency connecting foreign companies with local talent. Since arriving, he’s seen the city’s tech culture change.
“There’s been a shift from a software-factory model to a startup mindset,” he says. “Twenty years ago people entered IT engineering because that’s where the jobs were – now they’re doing it because they’re genuinely interested in tech, and they’re super excited to be working in software development.”
Coquard uses the example of Dunzo, an app that connects people looking for help with tasks to others who’ll accept payment for completing them, as evidence of the entrepreneurial mindset he believes is deep-rooted in Indian culture. Dunzo started as a WhatsApp group, before the founders turned it into an app. Now, Google has invested £9m in it.
This entrepreneurial spirit is bolstered in Bengaluru by a number of programmes and government initiatives aimed at supporting the city’s tech scene. One is the not-for-profit 10,000 Startups, which connects startups with funders, accelerators and mentors, with a view to building 10,000 new businesses in the city by 2024.
Suresh Jayaraju, a senior director at 10,000 Startups, says that progress has been swift since the business’s inception, four years ago. The incubator is now reorienting its focus away from the quantity of startups and towards their quality, as well as to concentrate on certain sectors. In particular, the programme is focusing on deep tech, such as blockchain, AI and machine learning.
Jayaraju sees this as an area in which Bengaluru could lead the world. While the city lacks the expertise of more established tech hubs, such as San Francisco’s Bay Area or London, everyone across the world is at an early stage in deep tech, so the playing field is level, he says. “Having started with this so early, we can still have an advantage. If we have the right ideas, we can definitely get funded.”
Not unlike some of its more established competitors, Bengaluru’s tech scene struggles with gender equality. In 2017, just 2% of all equity funding that was raised went to startups with a female founder.
“Women staying at home is more of a norm here,” says Hena Mehta, a tech entrepreneur who started a Lean In chapter for Bangalore. “Even educated women who went to college and had jobs before getting married tend to choose to stay at home and raise kids.”
While larger companies often have equality and diversity policies aimed at increasing female representation, startups tend to recruit on a “talent-first” basis. Mehta is currently building a team for her own startup, and says she doesn’t have the resources to find enough female candidates. “I literally haven’t seen a single woman’s resume come through for software engineering,” she says.
While Bengaluru still has some catching up to do, its tech scene is definitely starting to get the attention of the rest of the world – and this time not just as a source of cheap labour.
Last month, US incubator Techstars launched its first startup accelerator programme in Bengaluru. Vishal Ramaswamy, community lead for Techstars, sees this as a vote of confidence in the city’s entrepreneurial culture.
This is echoed in the reverse brain drain that Ramaswamy says Bengaluru is experiencing. “There are a lot of people of Indian origin who’re in the US – investors, corporate folks, serial entrepreneurs – who’re slowly coming back to India,” he says. “They’ve got US experience and contacts, and they’re coming back to set up businesses in India.”
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