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THE BANGALORE BRAND

BUSI NESS ENVI RONMENT


Submitted To-
Prof. Kunwar Milind Singh
Submitted by-
Ankit Malhotra
Chhaya Mishra
I shu chopra
Shikhar J aiswal

ABOUT THE CASE
The case explains the competitive advantage of Bangalore that has helped
it earn the name, the "Silicon Valley of India".

It describes the factors that made Bangalore one of the favourite
destinations for IT&ITES companies in India and abroad.

The case touches on the proactive role played by the state government in
developing the city as an IT destination.

However, Bangalore has recently been facing stiff competition from
other cities so far as investment from domestic and foreign companies is
concerned.

The case looks into the infrastructural problems Bangalore is facing and the
growth of alternative destinations such as Hyderabad and Chennai. The last
section of the case explains the recent initiatives taken up by the government
of Karnataka to revitalize the Bangalore brand
The factors that contribute to the competitive advantage of a place

The role of the government in developing and sustaining the competitive
advantage of a place

The role of infrastructure and civic amenities in making a place an
attractive investment destination

The impact of political decisions on business and the relationship
between business and politics

FACTORS :

I NTRODUCTI ON

Referred to as the 'Silicon Valley of India,' Bangalore, the capital of the southern
state of Karnataka, had a population of 5,686,844

in 2001, making it India's fifth
largest city

Around 1300 information technology (IT) companies operate in Bangalore and it
is home to around 110,000 technology workers. This is in addition to the 60,000
people working in Business Process Outsourcing (BPO) firms.

Bangalore has been reported as the largest job-creating city in India with more
than 65,000 jobs likely to be created in 2004
The Bangalore brand has also been facing stiff competition from upcoming cities like
Hyderabad

and Chennai

, for being projected as the IT hub of India. With the support of
the respective state governments, these cities are being projected as the alternative
destination for new IT ventures
Of the $4 billion IT export revenues from Karnataka in 2003-04, 95 percent came
from Bangalore.
GROWTH
Bangalore has a legacy of high quality research institutions starting with
the Indian Institute of Science (IISc) built in 1909.

The Government of India's (GoI) decision to locate high-level R&D
centres in Bangalore laid the foundation for the technological prominence
of the city.

Being the pioneer in India in introducing engineering colleges through
private participation, Karnataka has a large pool of technically qualified
people.

In Bangalore alone, 40,000 graduates trained in technology pass out from
50 colleges every year.
GROWTH (CONTI NUED..)
In 1985, Texas Instruments became the first MNC to open a centre in Bangalore
with the establishment of its circuit design and development centre.

In 1991, the first Software Technology Park in India came up in Bangalore.

In 1992, Bangalore became the first city in India to set up a satellite earth
station for high-speed communication services to facilitate software exports.

In 1996, the National Association of Software & Service Companies
(NASSCOM) came up with a plan intended to help Karnataka overtake the
State of California in the US (known as the Silicon Valley), both in terms of
number of software companies and revenue by 2020...

COMPETI TI ON
Competition to Bangalore has come from cities like Hyderabad, Chennai, Pune,
NCR, Kolkata, Jaipur, Chandigarh, Pune, and Kochi, among others. Wipro Ltd.,
with 11,000 employees in Bangalore, has been looking for growth beyond
Bangalore. "Bangalore is a zero-sum game.

In terms of infrastructure, there has not been any material improvement in the last
five years. As a result, it is becoming difficult to sustain growth here. As per
reports, IBM Corp. has been considering Kolkata as the hub for its software and
IT services activities in India.
ANS-1 BANGALORES COMPETITIVE
ADVANTAGE AS AN I T DESTI NATI ON
From a mere 13 software firms in 1991-92, the city now has a pool of over
1,200 software firms.Working in areas such as computer chip design, systems
software and communication software employing over 100,000 IT
professionals.Compared to other locations in India, Bangalore has high-end
technology/industry concentration such as VLSI and telecom services and
higher degree of MNC presence with over 200 foreign firms in operation
Vast base of skilled manpower: Because of the introduction of various
engineering colleges, Karnataka has a large pool of technically qualified
people
. High pace of Growth: The real estate market their favoured the growth of
IT sector.
Appropriate and Advanced Training Institutes Government support policy
measures:
The various assistance, incentives and concessions and exemptions provided
to investors.



FACTORS RESPONSI BLE FOR
COMPETI TI VE ADVANTAGE


Bangalore has been fortunate to be rich in the supply of both economic and
non-economic factors that make a place a preferred choice of business
location.
High level of R&D: High quality research institutions starting with the
Indian Institute of science (lISc) built in 1909 laid the foundation for the
technological prominence of the city.

Bangalore has a large, highly skilled IT talent pool available at a relatively
low cost, which it owes to historical development of the citys educational,
research and industrial infrastructure.

Bangalore has been considered an ideal place in terms of climate and
infrastructure to conduct scientific research in sensitive areas like defense and
electronics.


CONTINUED..
With the establishment of SOFTWARE TECHNOLOGY PARK(STP)
Scheme in 1991 comes the other competitive advantage of the IT sector in
Bangalore:
100% duty free imports
100% foreign equity permitted
100% corporate Income Tax exemption till 2010
Excise duty exemption & reimbursement of Central Sales Tax (CST).
Dedicated Data Communication links
Single window clearance
Custom bonding and export certification.

ANS-2 HOW BANGALORE SUSTAI N I TS
COMPETI TI VE ADVANTAGE?
Presence of call centers and Business Process Outsourcing (BPO)
companies make it a diverse hub.

Through its IT-orientation, the city has also been able to attract a
reasonable number of companies into database management/development,
data processing/management and engineering, design, and GIS services
.
Bangalores major edge is its Human Resource Bank. The State has
begun to actively address and remove bottleneck in this area to sustain its
competitive advantage.

Bangalore has multitude of Arts, Science, Commerce, Engineering, Law,
Medical and Nursing colleges as well as high quality training institutions.
There are over one million educated housewives in the State of Karnataka
who are an important source of manpower for BPO companies.

ROLE PLAYED BY TELECOM I N
SUSTAINING BANGALORES COMPETITIVE
EDGE
Bangalore offers a truly wide choice of players in telecom.

The entire state is networked via Optic Fibre Cables (OFC) by the State - run BSNL
(formerly DOT) as well as the private companies like Bharthi, Reliance, VSNL and
TATA Tele Services.

The new private companies, Bharthi and Reliance, provide the Last Mile Access directly
to the customer, in all major cities in Karnataka.

VSNL has substantial redundancy in International Bandwidth circuits.

Bangalore offers excellent International Bandwidth via Satellite.

The STPI at Bangalore presently has more than 1050 IT companies as its customers
providing them Individual Satellite Connectivity.

Bangalore STPI accounts for 45% of the total STPI revenues in India.


ROLE PLAYED BY GOVERNMENT I N
SUSTAINING BANGALORES COMPETITIVE
EDGE
IT industry was exempted from payment of purchase tax on computer
hardware, computer peripherals & other capital goods for a period of 5years.

IT industry was given priority in the sanctioning & servicing of power & was
also exempted from power cuts.

In case of Mega projects, a package of concessions relevant to the needs of the
company were offered in addition to the prevailing tax incentives.

The BATF initiated at making Bangalore a world class city & making
Bangalore financially self reliant.

The BPO companies are exempted from the payment of 50% Stamp Duty &
Registration charges on execution of Lease, lease-cum-sale or Sale deeds for the
establishment of their venture.


OTHER MAJ OR FACTORS
KBITS:
The Department of IT has set up Karnataka Biotechnology & Information
Technology Services.

It helps to identify quality man power resources, as well as resolves the
problems, if any, of BPO companies with any other Government Departments.

A High-powered Cell will be constituted in KBITS which will promote
investment of BPO companies .

It will provide specific information to companies based on their specific needs.
This Market friendly cell will participate in various National & International
conferences to provide such information.


FACTORS LEADI NG TO DOWNFALL OF
BANGALORES COMPETITIVE EDGE
The citys infrastructure, especially power and telecom, have not kept pace with
IT expansion.

While the government promises uninterrupted power supply, the reality is far
removed, and many ITES firms maintain their own back-up systems. This
cranks up costs.

The citys public transport infrastructure is also weak and this has resulted in
many people buying their own vehicles, thus overburdening the roads.

New government policy to increase sales tax rate from 5.3%-13.5%.

Efficient employees were being transferred out of Bangalore by new
government.
QUESTION: 3..

Bangalore has not yet lost its edge, however, if the situation deteriorates,
it could lose business to smaller towns and cities, where lower population
levels provide more room for growth. What should be done to sustain
Bangalore's competitive advantage in the future?
STATE GOVERNMENT POLI CI ES
Ans-3 What Should Be Done To Sustain
Bangalores Competitive Advantage In The Future
Competition to Bangalore has come from cities like Hyderabad, Chennai, Pune,
NCR, Kolkata, Jaipur, Chandigarh, and Kochi among others. To sustain its
competitive advantage in future, Bangalore should focus and try to improve on
following points:
Development of Infrastructure: Bangalore is trying to improve its
infrastructure and has undertaken MASSIVE INFRASTRUCTURE
EXPANSION PROGRAMME in which some of the major projects on the
fast track of implementation are :
Bangalore International Airport at Devanahalli.
Bangalore Mysore Expressway.
Bangalore Mass Rapid Transit system.
Upgradation of Minor Airports


CONTINUED.
Upgradation of existing roads and laying of new ones on BOT/BOOT
basis.
Special Economic Zone at Hassan.

Creation of Employment Opportunities: There are about 4000 IT software and
services firms in India. More than 1 million IT professionals / personnel are
engaged in the IT software sector. According to data available, the total number
of IT companies in Bangalore during 2004-05 was 1200, and 1,15,000
professionals were on the roll.

OTHERS....
Procedure for seeking clearence
Approval time
Real estate market
Development of satellite township
Establish R&D institutions
Hotel accomodation
Venture capital fund
Upgrade the range of amenities
Mega project
IT parks
Software professionals
Exemption


REFERENCE

www.BANGALOREIT.COM
www.BUSINESSGYAN.COM
THANK YOU