Bengaluru retains its primacy as an enticing location for high-growth sectors
By Supreet Sachdev
Technology is advancing at a rapid pace today and next-generation technologies, including artificial intelligence (AI), machine learning and cloud computing, are used by various sectors to optimise operations and boost efficiency. The emergence of these technologies presents a range of new opportunities for India.
The evolving business landscape in Bengaluru, the Silicon Valley of India, has brought forth multiple opportunities that led to the city undertaking tremendous strides in the current stage of the tech evolution—Bengaluru is already one of the top five AI hot spots[1] in the world and is on track to emerge as a major AI hub. Global IT firms exploring offshore delivery partners after 1991 liberalisation policies, the proliferation of offshore development centres and the start-up boom are some of the events that led to Bengaluru attaining a dominant position in the technology terrain.
Renowned as a global innovation centre and a software development stronghold, Bengaluru is projected to be one of fastest growing cities in Asia Pacific in 2023[2]. As the city’s economic landscape continues to thrive, the four areas are expected to make substantial contribution to its future growth.
- Bengaluru emerges as an innovation hub for next-generation technologies
What is driving Bengaluru ahead of other cities in the race to attain a pivotal role in the new-age technologies is the combination of a robust talent pool, a mature start-up ecosystem and an array of leading educational institutions that not only generate qualified talents but also act as a constructive platform to nurture deeper collaboration between the academia and the industry. Additionally, the existence of leading venture capital and private equity firms ensures there is no shortage of funds for early-stage ideas while incubation centres empower entrepreneurs to innovate. All of these foster a conducive environment for the generation of path-breaking innovations in emerging areas, such as Generative AI, thus making Bengaluru critical to driving any such initiatives at a national level.
- Global capability centres open up new opportunities
With over 1,580[3] global capability centres (GCC), India is a formidable global player in this segment. With a thrust on delivering impressive tech solutions, these centres have built trust with parent organisations. Encouraged by this, parent organisations now want GCCs in India to play even more significant role in their global decision making and innovation. Being at the forefront of India’s GCC journey, Bengaluru has made a significant contribution to Indian GCCs’ transformation from support function hubs to strategic partners. The city could tap into the next phase of growth opportunities from the GCC space by emerging as a preferred location for global MNCs to set up centre of excellence within their GCC centres and enrich their R&D offerings by forging deeper collaboration with local start-ups.
- Research and development activity gains further traction
Bengaluru is home to leading domestic as well as global aerospace firms, who helped it attain strong aerospace manufacturing capability. This together with the city’s tech prowess enabled it to emerge as an attractive location for aerospace R&D. There are immense opportunities for Bengaluru in the automotive R&D field as well. This is because global automakers are increasingly deploying technology to offer better user experience and personalisation. To deliver such offerings distinctively, these players need to augment their software development capability, thus making Bengaluru the right place for this activity. This trend is expected to gain further traction, as many global automakers steer to differentiate their vehicles through advanced software solutions and the city stands to benefit in the process. Biotech R&D is another promising area where the city has a clear advantage.
- Real estate boom is unfolding
Bengaluru is spending a huge sum in upgrading its infrastructure facilities—INR300 billion[4] was, for instance, allocated for metro and subway rail projects alone. The connectivity projects and other infrastructure development activities are bolstering the prospects of the city’s real estate sector. North Bengaluru, for instance, is a favourite spot for many technology firms as well as R&D centres. The presence of the international airport and the ongoing metro project connecting KR Puram, Yelahanka and the international airport are believed to have attracted leading firms to this region.
Strong demand for IT professionals boosted demand all types of residential real estate projects. The city is also witnessing strong growth in the warehouse segment, as locally developed innovation on the e-commerce front, in addition to the expansion of major players, boosts demand for robust storage facilities.
To conclude, Bengaluru’s ascendancy in these high growth areas makes it one of the key growth engines for India’s next phase of growth. To sustain the current growth momentum, the city should continue to focus on upgrading infrastructure facilities, constantly upskilling talents through dedicated skill development programmes involving both private as well as public sectors and organising frequent conclaves exposing the city’s talent to new opportunities from emerging sectors.
[1] Bengaluru tops AI talent, what can other states learn? Analytics India Magazine, 10 February 2022, accessed on 19 December 2023
[2] Bengaluru To Be Asia-Pacific’s Fastest-Growing City In 2023, Business World, 7 January 2023, accessed on 20 December 2023
[3] GCC 4.0, India Redefining the Globalisation Blueprint, June 2023, accessed on 19 December 2023
[4] Siddaramaiah allocates ₹45,000 crore for ‘Brand Bengaluru’, Hindustan Times, 8 July 2023, accessed on 19 December 2023
(The author is Supreet Sachdev, Office Managing Partner, Bengaluru, KPMG in India, and the views expressed in this article are his own)
