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But according to Global Start-Up 2018’s Ecosystem Report, the IT hub has fallen five spots from its preceding year and down to #20 on the list despite being home to over 2,000 active technology start-ups. There are a few reasons for it:

Talent Drained:

Bangalore has been a magnet for technology talent, the quality of which seems to have degraded over time. This issue has been attributed both to low recruitment metrics that lead to higher churn and poor average salaries – $8,600, which is 13 times lower than its counterpart in the Silicon Valley.

Profitability Issues

Most start-ups in Bangalore have struggled to turn a profit, and even Flipkart – an iconic symbol in the Indian start-up economy – is yet to turn a profit after ten years. Delhi, India’s capital, reported more profitable start-ups. It’s due to an odd but widespread belief in India that justifies long periods of heavy losses, which mimics the early years of Google, Amazon, and Facebook.

Local Competition

Other cities from within the country are on the rise in terms of developing a start-up ecosystem. There’s Hyderabad, Chennai, and Pune largely due to their large IT pool, favourable investment climate, and cheap real estate. Some researchers expect Pune to completely out-pace Bangalore in the near future even.

When observing the start-up ecosystem from beyond the scope of merely Bangalore, however, it is easy to see that the problem also lies in innovation. Despite being the third-largest ecosystem for start-ups in the world, India filed for merely 1,423 patents in 2015-16. In comparison, South Korea filed for 14,626 patents while China and Japan topped the list at 29,846 and 44,235 patents respectively.

The stark contrast stems from a tendency within the sub-continent to emulate successful global ideas to serve the local need – Saavn for Spotify, OYO for Airbnb, Ola for Uber, and Flipkart for Amazon, to name a few.

But there is still some success to revel in. eCommerce industries, more specifically the food industry, seem to have thrived since maturity. This would include BigBasket and Grofers, among the 302-odd online grocery companies, started in 2015. Several drowned within the hype, adopting on-demand hyperlocal models, but fast-forward to 2018 and it’s easy to find BigBasket and Grofers reigning atop the food chain.

This could be attributed to their business models, both of which were largely either investor-led or driven by owned distribution centres. Nonetheless, success within small cities has been limited, owing to their preference to physically gauge the freshness of groceries bought.

In the automotive industry, bigger companies such as Toyota have in fact capitalized on the human capital ripe within India. The company forged a path different from its competitors with respect to automation. While automation threatens 77% of the auto-industry jobs within the sub-continent, Toyota instead redirected to growth based on efficient technological improvements and aggressively competitive prices. This growth hinged on skilled labour, which India seemed ready to provide.

This provides a variety of avenues which require exploration. On one end, India does seem talent drained from an IT-industry point of view. Simultaneously, the eCommerce food industry and companies akin to the Toyota mindset handle their talent in a more efficient and powerful manner. These are values to expand upon, and perhaps there is more to understand from global counterparts such as China and Singapore with their richer start-up ecosystems.

With that said, is the population in India a problem or something to be converted into an economic powerhouse? Probably the latter.

The author of this article is a talent acquisition professional and have been working in the IT industry from 2 decades

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