Bangalore In 2025: Global Innovation Hub ...or Backwater?
Last week, I attended at Stanford University a fascinating event hosted by the World Economic Forum (WEF). WEF had invited me to join some of the world's foremost innovation experts to address crucial questions surrounding three key topics: geographical innovation clusters, innovation talent, and collaborative innovation. WEF plans to use our suggestions to help structure the discussion among global CEOs who will attend their annual Davos meeting in 2009.
Participants were asked to debate how high-tech clusters like Silicon Valley, Taiwan's Hsinchu Science Park, and Bangalore will evolve in coming decades. Two teams (for this post, I will name them "Pollyanna" and "Cassandra") were formed to envision the future of Bangalore by unfolding two contrasting scenarios: a positive scenario and a gloomier one. By projecting ourselves into 2025, both teams were asked to look back and identify the driving forces - i.e., crucial business/policy decisions (or lack thereof!) made over the past 17 years (2008-2025) - behind our respective scenarios.
I led the Pollyanna team. We envisioned Bangalore in 2025 as a global innovation hub not only in IT, but also in clean energy, bioengineering and medical devices (e.g., next-gen pacemakers), and even space technology. We credited this superstardom enjoyed by Bangalore in 2025 to the diversification strategy of Bangalore's policy-makers who, in 2009, smartly decided to place big bets on emerging non-IT technologies like clean tech.
My optimistic team "recalled" the rise of a new-generation of pragmatic politicians during the 2010s who massively invested in education and infrastructure, thus swelling Bangalore's talent pool and making high-tech manufacturing finally viable in the region for multinationals. In addition to aggressively promoting India's "tech brand" abroad, these visionary politicians also partnered with MIT and Stanford to set up new multi-disciplinary research universities in Bangalore. These R&D institutions were allowed to spin off their cutting-edge technologies into startups.
We also gave much credit to the "returnees" - thousands of US-resident Indians with PhDs and MBAs who, from 2012 onward, returned en masse to Bangalore to launch startups and run research institutions. These New Argonauts, as Berkeley Professor AnnaLee Saxenian designates them, were instrumental in accelerating the inflow of scientific knowledge, business acumen, and VC capital from the US to Bangalore. These entrepreneurial professionals helped forge strong social networks both within India, as well as with their Western partners. By 2020, many of these returnees became billionaires in India by scaling up their clean tech and bioengineering startups into multinationals. By 2025, they had become India's Bill Gates and serve as new role models for the Indian youth.
After my team's dream session was over, we were asked to mingle with the Cassandra team and hear their version of Bangalore's future. They described a gloomier scenario whereby by 2025, Bangalore would become the backwater of the global innovation markets. How come? Having placed all its development eggs in the IT basket, the city had become an IT services sweatshop that peddles its white-collar services to the highest Western bidder. There is no real innovation happening in Bangalore as high cost of housing combined with nightmarish traffic congestions had kept both prospective investors and PhD-armed scientists at bay. Starting in 2008, political leaders who formed the successive coalition governments spent more time jockeying for power than investing in vocational education and reforming universities to promote industry-academy cooperation. The result? By 2020, Indian IT vendors like Infosys and multinationals like IBM and Cisco had relocated their headquarters and R&D operations to business-friendly Indian cities like Chennai and Hyderabad.
Now, let's return to September 2008. As Yogi Berra put it well: "It's hard to make predictions, especially about the future." I personally can't forecast which scenario is more likely to play out for Bangalore in coming decades. Irrespective of what scenario unfolds, here are three hard truths that policy-makers in Bangalore must face (and hopefully react to):
1) Human infrastructure will become more critical than physical infrastructure. While building a world-class airport in Bangalore is important, it won't be frequented by investors if they can't find enough qualified talent in the city! And multi-lane highways and efficient ports are useless if they interconnect biotech campuses and clean tech factories that remain empty due to an acute skills shortage. To paraphrase Sam Pitroda, Chairman of the National Knowledge Commission, who also attended the WEF event, Bangalore's future success hinges on much it invests in blackboards as much as in roads.
2) Competition from Chennai and Hyderabad will heat up. While Bangalore steals the limelight as India's IT hub, other South Indian cities like Chennai and Hyderabad are quietly upping the ante by multiplying incentives for domestic and foreign tech investors. Take Chennai, for instance. Dubbed as the "intellectual capital" of India, Chennai boasts the largest number of engineering colleges in the country. Its progressive politicians exploit the region's above-par infrastructure to attract huge manufacturing investments from tech giants like Nokia. Watch out Bangalore: now Chennai aims to become India's nanotech R&D and manufacturing capital.
3) The software industry alone won't create enough employment. The Bangalore cluster is way too skewed towards the software and services sector, which can't absorb fast-enough the millions of young workers entering the labor market each year (the entire Indian software industry is expected to directly employ only 2.3 million workers by 2010). Bangalore has got to diversify and place bets on new technologies like clean tech and bioengineering, and beef up its manufacturing infrastructure. Otherwise, it will not only lose its innovation crown but will also face social unrest fueled by massive unemployment.
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