Reportage from Bangalore: plus and minus of an incredible growth

In October I had the opportunity to spend three weeks in India. I stayed in Bangalore, the capital of the State of Karnataka. With a population of 8.5 millions, Bangalore is the fourth largest metropolitan area in India, after Mumbai, Delhi and Chennai and it is the second fastest growing major metropolis after Surat.

Kempfort Shiva - Bangalore

Above all, Bangalore is the "Silicon Valley of India". It represents  the hub for many IT Companies: for instance, the Headquarters of Infosys and Wipro, the third and fourth largest software Indian Companies are located there. Bangalore also hosts Business and Technologic Outsourcing Centers of many corporations such as ABB, Boeing, Google, Hp, IBM, Nokia and Philips. This makes Bangalore the first outsourcing destination in the World according to Tholons Top 100 Outsourcing Destinations.

A new business center

It is useful to point out that Bangalore has always represented one of the most high-tech city of the region: for instance, it has been one of the first city in Asia to have electricity.

The economic growth of the last ten years has deeply touched this city. With $83 Billion per year and an annual growth of 10%, this metropolis is currently the fourth contributor of the Indian GDP after Mumbai, Delhi and Kolkata.

Which are the most significant outcomes of this incredible growth?

The economic development has attracted people from different parts of India for the opportunities to easily get a job. The immigration has completely changed Bangalore: more buildings have been erected, taking away green spaces; moreover, almost everybody had been able to buy a personal vehicle so traffic and pollution became the first evident effect of the growth. In fact, Bangalore is in the top-10 most polluted cities in India.

Traffic in Bangalore

From the other side, prosperity has meant better condition of life, more professional and educational opportunities but, at the same time, also the increase of inequality. It is very common to see poverty and opulence in the space of few meters in the same street.

The wealth is also evident looking at the boost of the Income per capita: in 2000 in the state of Karnataka it was around 17.500 Rupees (250 Eur), now it is around 77000 (about 1000 Eur) - Per Capita Income of India. Also the cost of life is not as low as it could be expected, but actually comparable to the Eastern Europe: Bangalore is the third most expensive city in India after Dehli and Mumbai.

A cow in the street

Bangalore shows positive and negative effects of its economic growth. Even if it is considered one of the best city to live in India - for the business opportunities, the nightlife and the climate - it presents many contrasts. It is possible to find a nice street or beautiful temples and then, suddenly after the corner, seeing some cows browsing in the garbage.

Finally, in every big city in Europe we can see social and environmental imbalance, but in Bangalore those elements seem multiplied by 100 folds.
Anyway, quoting the former Indian Prime Minister Manmohan Singh about this modern megalopolis: "Bangalore is a brand the world identifies India with. It is also the single biggest reason why India has become such a hot investment destination".

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Poland: the leading outsourcing destination in Europe

I want to dedicate the first post of this blog to Poland, the country in which I live.

Poland is a really interesting case in Europe, in the last years has seen a robust economic growth in a reverse trend with respect to the crisis that has touched Europe bringing a slowdown of the economy and an increase of the unemployment rate and social contrasts.

Wroclaw 

Poland has used very well the Eu funds and the Government has implemented incisive structural reforms also helped by the stability of the political system.

A key element of the Polish development is represented by the delocalization of services like accounting, customer care and IT support from the West to the Eastern Europe. In the last ten years, many corporations have decided to create shared services centers in Poland in order to develop their business, maintaining high quality of service and bringing down costs.

There are two processes to be distinguished: outsourcing and offshoring. Outsourcing is the contracting out of a business process, previously performed internally, to an independent organization from which the process is purchased back as a service. Instead offshoring describes the relocation by  a company of a business process from one country to another: in this case the process rests within the company. It often happens that a company decides to implement both processes: it can create, for instance, a internal centre (but in another country) to delocalize some internal processes, and at the same time, it can commit other processes to an outsourcing center. It also can happen that the same company creates a BPO (Business Process Outsourcing) for external clients and a Global service center for its internal processes.

It is interesting to notice that there are an estimated number of 500 offshore outsourcing centers in Eastern Europe, and Poland is poised for major expansion in the coming years (www.sourcingline.com). According to KPMG, an audit and consultancy firm, Poland ranks third for shared services centers and business process outsourcing in the world after India and China. Poland's key assets are considered its trained and educated workforce, the economic and political stability and the depreciation of the zloty (the local currency).

The importance of Poland in the outsourcing strategies is evident also from the list of the 100 most important outsourcing Cities 2012 (http://www.cuti.org.uy). Although India took 13 places in the list (Bangalore got the first position) and China 8, Poland with 3 cities, Krakow (10st), Warsaw (36th) and Wroclaw (75th), is the most represented European country.

There are two main consequences of this phenomenon. First of all, investments in outsourcing have brought wealth, reflected in new and modern infrastructures, new international power and in a reinforcement of the domestic demand. Secondly, Poland is becoming a point of attraction for international workers, pushed to leave their own Country by the economic crisis of the last years.

Ten years ago in the Western Europe there was the fear of the famous Polish plumber, ready to invade France, Italy and Germany providing a low cost service. Today instead, it is estimated that over 600 thousands foreigners are officially residents in Poland and this number is estimated to increase. It seems to be an historical victory for a Country that came out just 20 years ago from the Soviet grip.

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