ulaunch Explains the Significance of Bengaluru Being The Fastest Growing Tech Hub in the World

Q. What has happened?
As per the recent research by the global data firm Dealroom.co, Bengaluru has emerged as the world’s fastest-growing mature tech ecosystem since 2016. It was followed by the European cities of London, Munich, Berlin and Paris with Mumbai ranking 6th. 

Q. What was the parameter used to compare these cities?
Dealroom.co collaborated with London & Partners to analyse the investments pouring into the tech capitals of the world. Their report reveals that investment in the Silicon Valley of India- Bengaluru grew 5.4 times from $1.3 billion in 2016 to $7.2 billion in 2020. Investments in Mumbai grew 1.7 times from $0.7 billion to $1.2 billion in the same period.

Q. What makes Bengaluru and India the preferred destination for tech startups and investors?
Bengaluru’s and India’s success in attracting investments can be attributed to the factors:

  • Resource Endowments- Availability of cheap and skilled labour. About 15 lakh engineers graduate every year in India.
  • A large network of incubators across India that provides the requisite support to entrepreneurs.
  • Favourable government policies, such as Startup India, Single window clearances, investments in higher education, etc. that have led to an improvement in ease of doing business.
  • Presence of a large number of Indians working in global firms, who play an important role in connecting foreign buyers with Indian suppliers.
  • Positive investor outlook towards the growth opportunities in India.
  • Relatively less investment and capital required to launch software services
  • A large pool of English speaking and tech-savvy manpower that can continue to cater to the growing demand for professionals for I.T. Enabled Services.
  • A wide network of Tech parks, Software parks, and Special Economic Zones (SEZ) that provide a favourable ecosystem for tech startups.
Bengaluru Startup Hub 1

Q. What are the challenges faced by startups In India?

  • Registration: Despite single-window clearances and online registration, some founders face problems while getting their startups registered. 
  • Financing: Many founders rely on personal savings, family. and friends for financing in the initial phase. This becomes problematic as the business expands, resulting in financial woes like underfunding.
  • Bureaucratic Issues: Despite multiple policies and programmes to boost startups, there are severe shortfalls while translating policy into action. The top-down bureaucratic structure results in significant delays that are detrimental for the emergent startups.
  • In some cases, startups don’t solve the real problems faced by the people and rather create an artificial demand for their products and services.
  • Lack of Exit Option: It is very difficult to close down a business in India. This leads to the problem of capital being stuck in an inefficient and failed startup. The entrepreneur could have used this money to start a new business. 

Q.  What’s the impact of the service sector and digitisation on the economy?

  • Directly, the growth of the IT industries is generating thousands of new job opportunities in India in fields like software development, data analytics, artificial intelligence, IoT, etc.
  • Indirectly, the adoption of computer technology by other industries expands the range of services they provide and can stimulate rapid growth in these sectors. The indirect impact of IT is far larger than the direct impact.
  • IT is both a labour-creating and labour-saving technology. Overall digitisation creates far more jobs than it destroys.
  • The fastest-growing sectors of the global service economy—education, financial services, insurance and health services—have all expanded by adopting IT. Evidence indicates that IT contributes to growth in demand for labour, as well as an overall skill upgrading in the workplace. This enables the countries to transition from developing to developed status, by improving the standard of living for the citizens.
Bengaluru Startup Hub 2

The aspirations of the Indian youth are rising along with their risk-taking appetite. And the proliferation of digital technology has provided a critical pivot for the same. Thus, with the boon of having 65% population below 35 years of age, India can reach stellar heights if the youth are educated, skilled and mentored properly. Startups provide an ideal platform for our dynamic youth to learn, grow and solve the critical problems that our country faces. It’s when the relevant stakeholders in government, industry, and academia realise the synergy that we can expect the aspirational youth to shed the image of a worried job seeker and don the cape of a problem-solving entrepreneur.

Research and Written by Shyam Agrawal, Team ulaunch

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