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How's business in India? Watch Bangalore

Bangalore, known as a magnet for India's technology jobs, is facing competition for investment from other cities, but business conditions are tough across India.

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Communal tensions could compound the challenges facing Bangalore. Last week, thousands of Indians from the country’s northeast fled the city fearing  violence following ethnic and sectarian fighting in Assam state in the northeast.

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That said, Hyderabad has had recent political turmoil of its own, with the Telangana movement, which demands statehood for the Andhra Pradesh region, staging recent protests that “caused much discomfort to IT businesses in Hyderabad,” according to Mr. Srivastava.

Not everyone is worried about competing cities

Despite the challenges faced by the IT sector in Bangalore and elsewhere, some of Bangalore’s IT entrepreneurs are sanguine about their city’s prospects.

Salil Godika is one of a group of still-young veterans of India’s IT giants such as Wipro and Infosys who broke away to set up Happiest Minds Technologies in Bangalore one year ago.

The company is opening a second location in Bangalore and already employs more than 500 people at its headquarters in Electronics City. “Other cities are coming up, it is a good sign for India,” he says. “It is not an either/or thing between Bangalore and elsewhere.”

Electronic City hosts schools specializing in fields important to the companies nearby. A few hundred yards down a tree-lined street from household names such as Siemens and Infosys is the International Institute of Information Technology-Bangalore.

Yes, the city now has competition from cities such as Pune, says Amit Paul Babu, a placement officer who helps recent graduates find employment in Bangalore's IT sector. But, “Bangalore still has a major human resources advantage,” he says adding that India’s economic slowdown has not affected India's IT sector.  

The recent electricity failure in northern India, which attracted international attention when it left some 600 million people without power for several days, also didn’t really disrupt the industry, he says.

“People have backup, and there wasn’t a huge business downturn,” says Mr. Babu. Still, he concedes that the outage adversely affected India's image, something that could in turn undermine Bangalore's status as a globally known IT hub.

Image problem for Bangalore

There are other signs of the city's stressed infrastructure, which is creating more problems for the city’s image and busienss environment, says Manoj Patil, an engineer from Bangalore.

The city has plans to complete the new overground train network in an effort to reduce Bangalore’s notorious traffic congestion.  Currently it serves less than half the stations on the projected route.

“They have to go for it,” says Mr. Patil.

A half-mile from the end of the line at Baiyappanahali station is Gopalan mall, one of many multistory shopping hubs across the city of 8 million.

Inside, Sridhar, a recent business graduate, manages a stall selling CDs and books by Sadhguru, an Indian mystic. “We don’t notice the economic slowdown on a day-to-day level, not yet, anyway,” he says.

Bangalore’s problems, he believes, are those of India writ-large, where corruption and mismanagement scandals flare up regularly.

Last week, for example, India’s national auditor said the government lost billions of dollars after selling coalfields to private companies without an auction. Some estimates put the loss to state coffers at $210 billion.

“Even the educated people here, the ones with jobs and knowledge, they do not think about anything but themselves,” says Sridhar. “Go outside and watch some people crossing the road. They don’t care about the rules, or the best thing to do for everyone. It is the same with our country in general,” he says.

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