Though Karnataka has witnessed a slowdown in exports in recent times because of the volatility of the world economy, the ecosystem is helping the State weather the storm.

Karnataka's software exports stood at $18.21 billion, a growth of 7.75 per cent compared to 2009-10's figures of $16.9 billion. While in terms of absolute percentages, this is lower than the 9.03 per cent of the previous fiscal; it is interesting to note that in spite of the slowing growth, 41 new companies set up shop in the State.

While this is lesser than the 77 companies that started operations in 2009-10, the addition is significant when considered in the general context that Bangalore is choking on infrastructure problems.

The compelling magnetism

Commenting on this, Mr Milan Sheth, Partner, Business Advisory Services at Ernst and Young, said growth was slowing in Karnataka because of the presence of other options. “Compared to other States, Karnataka's growth is lower because of alternatives like Pune, Chennai, Kolkata and the National Capital Region. Karnataka has a bigger base and therefore a lower growth,” he told Business Line.

But the attractiveness of other cities apart, Bangalore still has compelling magnetism with investors because of the existing ecosystem which is important when you want a readily-sourceable talent pool. “Bangalore is the hub of IT innovation and so a lot of new companies are being setup in Karnataka. For example, if you are into embedded software, there are ecosystem players in Bangalore. So, any company in India which is developing a new business area would more often than not be setting up operations in Bangalore or at least in Karnataka.”

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