When New York Times columnist Thomas Friedman went to Bangalore a few years ago to meet with Nandan Nilekani, the chief executive of the Indian IT company Infosys told him about the newly acquired confidence of the Indian IT elite. He demonstrated that digital broadband infrastructures in combination with high tech software and modern computers had enabled less advanced countries to take part in cross border value-creating processes. According to Nilekani the playing field of the world economy had been leveled thus favoring emerging national economies. In Friedman's eyes this world was "flat".
It only takes a little tour across Bangalore to see what this world looks like. Around the colonial city centre, world-leading software companies such as Microsoft, IBM, Intel, Dell and SAP together have erected so-called Electronic Cities miraculously transforming both the economy and the social structure of the region. It all began in 2000, when American companies haunted by Y2K started searching for affordable programming engineers, and found them in Bangalore. This was followed by the call center wave. Increasing numbers of mobile phone and credit card companies relocated their customer service call centers to India. After all, customers should not care where their adviser is actually sitting.
Thanks to what has come to be known as BPO (Business Process Outsourcing), thousands of jobs were created. Yet Bangalore's skilled engineers were not content with simple tasks. So more recently, another concept emerged called KPO (Knowledge Process Outsourcing). The projects now conducted in Bangalore involve top-class scientific research whether in the field of software, medicine or market strategy. Bangalore is still on the way up, and salaries and purchasing power are following suit.
Bangalore, with its abundant green spaces, cafes, boutiques and restaurants as well as a brand-new airport stands apart from the overwhelmingly noisy, smoggy and crowded cities of the rest of India. The capital of the Karnataka state represents the India of the future having reaped the benefits of globalization. Whereas European and American banks and businesses are only just beginning to realize the potential the Indian market has to offer, Indian industry holdings such as Tata or Mittal have already strengthened their position in global trade.
Anshu Jain, Head of Global Markets at Deutsche Bank, and the new chairman of Citigroup, Vikram Pandit are all representatives of the new Indian elite who made it to top-management. Lakshmi Mittal, the Tata family, and the Ambani brothers who own the Reliance group, are some of the richest people in the world, while in the software branch, Infosys and Wipro are competing head-to-head with their American and Asian counterparts.
Yet all is not golden. Only one million Indians - a quarter of a percent of the working population - enjoy the privilege of working in the IT industry. Although 470 million Indians are of working age, only 7 percent belong to the so-called organized sector which involves being registered, having a fiscal status and therefore paying income tax. Most Indians however, - agricultural workers, owners of street stands and shops, rickshaw drivers, domestic workers etc., are part of the unorganized sector. There is no regulated job market to speak of. Edward Luce, former South Asia correspondent of the Financial Times, uses the word "schizophrenia" to describe the Indian economy because it associates in this way a global orientation and medieval characteristics.
The Indian economy and society is plagued by the underemployment of millions of people. Nearly every new government, in the same way as the one currently held together by Sonia Gandhi's Congress party, has tried to promote inclusive growth, a form of upward movement that would not leave anyone behind. However, when Delhi draws up a new program for economic and infrastructural development, the money often goes missing before implementation. The corruption of Indian officials is legendary. People have learned to live with it at every level of society. And yet, the example of Bangalore as India's IT hub shows the potential and dynamics of the subcontinent. Therefore, Europe and the US have many reasons to take a much closer look at the office towers of Bangalore.
Hans F. Bellstedt is founder and managing partner of hbpa - The House of Public Affairs.
Related material from the Atlantic Community:
- Eric Heymann et al.: India's Infrastructure: Chances and Risks for investments
- Eckart von Klaeden: India's Changes