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How Bangalore became Asia's Silicon Valley

In Bangalore, it's better to go to work a little earlier. From around 8 a.m. there is no more escape from the city's notorious traffic jams. For the 12.3 million inhabitants, avoiding traffic jams has become an art in its own right. But show between the smells of gasoline and the hectic pace of everyday life spectacular technology parks, huge hotel complexes and chic restaurants that make Bangalore a global and highly innovative metropolis has developed. Which factors influenced this development? How did Bangalore become the Silicon Valley of Asia?

Let's go back in time ...

1984: The creation of an IT capital

With the announcement of the new computer and software policy in 1984, the import and export of hardware and software was liberalized. This was the foundation for Infosys and Wipro to set up their headquarters in Bangalore and hire Indian programmers.

Connections were established with American companies using a far more advanced infrastructure from which Indian software companies profited greatly. In return The Americans were able to capitalize on the large talent pool and low operating costs by setting up branches on Indian soil and thus the pioneers of offshoring software development from west to east. In 1985, Texas Instruments Inc. was the first multinational to set up a development center in Bangalore, paving the way for subsequent corporations.

2010-2020: From outsourcing location to hotspot for R&D

In the past decade alone, Bangalore accounted for 35% of the global in-house centers (GIC) in India. GICs are branches that are usually located in low-cost regions and are owned by the group (also offshoring). So there is no outsourcing. The value of research and development carried out in India is estimated at around $ 40 billion and is expected to continue to grow in the coming years.

This is mainly due to the strong concentration of highly qualified IT specialists who can develop customer-specific software for a number of companies at lower costs. This has an immense attraction for western companies, whose increased competitive pressure is causing the need for good developers to skyrocket. In Bangalore, the demand can be met and that at lower salary and operating costs.

In the meantime, India has gone through some profound changes that have significantly reshaped the country's business structure. Graduates who dreamed of a job at Google quickly became graduates with a desire to start their own business that would achieve such a status. Of the 12 million people who call the city home, almost one million are in the IT industry. The number of universities specializing in IT has long since exceeded 100, and the start-up mania is omnipresent.

These are the people who are in control of the successful startups in India. Ola, for example, has managed to overtake its global competitor Uber in India. Amazon Flipkart's Indian competitor also had a market value of $ 15.5 billion and employed more than 30,000 people in less than 10 years.

Bangalore has been India's technology capital for over three decades. With solid and world-class R&D facilities, academic institutions and public sector companies, the administration has made a significant contribution to running the city in the IT field.

Prashanth Prakash

Chairman of the Startup Vision Group - Karnataka

2020: The Silicon Valley of Asia

The IT industry employs around 4.1 million people in India and adds around $ 137 billion to exports each year. 40% of this is generated in Bangalore.

But the economy alone cannot fully explain Bangalore's development into India's IT capital. The development of technical expertise and a highly skilled workforce has contributed significantly to the strong concentration of R&D facilities in Bangalore. These include names such as Amazon, IBM, Microsoft, Tesco, Nokia, Siemens or Adobe.

These factors have moved Bangalore away from simple outsourcing to an epicenter for entrepreneurship. Numerous young, motivated and talented digital natives who have the business acumen and the innovative strength to change the country and the world sustainably.

However, the raw data alone hardly shows the miraculous way in which Bangalore was able to grow into a cosmopolitan city, and the development is also difficult to quantify.


Indian startups have received over $ 50 billion in investment in the past six years alone, and over 40,000 startups have been created. With 14 unicorns (companies with valuation over $ 1 billion) and a cumulative valuation of $ 61 billion, Bangalore was the biggest engine of India's growth story.

Only 49% of Bangalore's population is originally from the city. The resulting multiculturalism has a fascinating impact on the city's social life. Entire districts are furnished with luxurious boutiques and extravagant residential buildings. In 2015, the city was named the fastest growing IT ecosystem in the world and the World Economic Forum named Bangalore the most dynamic city in the world in 2017 and 2019.

All of these factors have cemented Bangalore as an IT hub and the city the well-deserved title "Silicon Valley of Asia" brought in. Politics and massive influx of investment have completely transformed the city from a once popular retreat to a place known for unprecedented levels of technological creativity and groundbreaking innovation.

We also have the gratifying realization that, in contrast to many other places, the best years for Bangalore are more ahead than behind us. The city holds untapped potential for increasing income and growth in abundance for the coming decades.

If you want to use Bangalore's IT ecosystem yourself and transform your business, get in touch with us by filling out the contact form. We put together your own software development team that works just for you here in Bangalore.

If you would like more information on building a remote team, please feel free to download our ebook. We try to answer all questions about offshoring in software development.

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