Resurgent South. It’s all systems go in the Silicon Plateau

The so-called Silicon Plateau, Indian IT industry’s hub in Bengaluru, is abuzz at every level.

Four out of the country’s top seven cities which contribute the most to IT exports are based out of South India. Bengaluru, Chennai, Hyderabad and Coimbatore in that order drive much of country’s information technology business are expected to export close to half of total IT exports of estimated $146 billion in 2015.

India’s No 2 and No 3 IT exporters are headquartered in Bengaluru. The $8.5-billion Infosys Ltd, the second largest software exporter in the country whose performance was lagging for some time, is back on track. Its CEO Vishal Sikka while still cautious in outlook expects revenues to grow in the range of 10-12 per cent in 2015-16. Industry body Nasscom's guidance for the year is 13-14 per cent and the Infosys management has indicated that it will get back to industry leading growth from the next fiscal year.

Part of the management's concern is the cyclical nature of the IT business, which tends to slow in the second half of the financial year due to holidays and IT budgets generally getting finalised by March. COO UB Pravin Rao, in a recent analyst call, indicated that while the demand environment is robust, the second half of the financial year will be weaker than the first. “There is good momentum coming back into the banking sector but energy, utilities and telecom continues to be challenging,” he said.

Cross town rival Wipro, which is the third largest IT outsourcer, made changes to some of its business verticals and shuffled certain management positions to give a push to its growth. While there is overall growth in the sector, attrition continues to be an issue for the top Indian IT majors with Cognizant, with a large section of its workforce based in Chennai, hitting the 20 per cent mark in the September quarter. To tackle this issue, Cognizant plans to introduce quarterly promotions as opposed to annual cycle. Infosys has also come up with a similar policy to arrest attrition. In the mid-size space, Mindtree is expected to surpass industry growth this year too, on the back of deals that it is winning in the digital space.

The start-up ecosystem is firing on all cylinders as more ventures move into Bengaluru and more venture capitalists invest in outfits here.

India has now emerged the youngest start-up nation in the world with over 72 per cent founders under 35. With presence of more than 4,200 start-ups, and growing at 40 per cent over the last year, India has overtaken Israel to have the third largest start-up base in the world after the US and the UK.

According to a report published by Nasscom, in association with research firm Zinnov, around 1,200 tech start-ups were born in 2015 out of which more than half were focussed on e-commerce, consumer services and aggregation business. Even private ventures like Bengaluru-based Bhive Workspace, a place where start-ups are provided all working amenities, this year saw 40 start-ups signing on.

Recently, Nasscom wrote to the Centre to ease the rules for registration of businesses, funding, and simplifying compliance procedures, which would help in more investment flows. In June, market regulator SEBI responded and relaxed the listing norms and set the ball rolling to create a dedicated platform for start-ups to list on stock exchanges. This gave the start-up ecosystem a funding fillip. Recenly, Ola closed a $500-million funding round.

Several associated/support industries are also riding the start-up wave. For instance, warehouses are popping up all over Bengaluru. Following the success of its first warehouse initiative in Bengluru, Nasscom, along with the Karnataka government, set up a 50,000 square feet Start-Up Warehouse NextGen.

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