A few months ago, a client from a global tech startup reached out to me with an exciting request: they wanted my advice on setting up an office in Bengaluru. Their enthusiasm was infectious—they talked about the city’s reputation as India’s Silicon Valley and how it’s a hotspot for talent, innovation, and global connectivity.
But I hesitated. While Bengaluru’s reputation remains stellar, I couldn’t ignore the concerns I’ve been hearing from businesses already operating there. Rising costs, deteriorating infrastructure, and civic challenges have started overshadowing its appeal. This conversation made me take a deeper look into whether Bengaluru still holds its crown or if it’s time to look at emerging hubs.
Bengaluru’s Legacy: Why It Became India’s IT Capital
Bengaluru didn’t earn the title of “India’s Silicon Valley” overnight—it’s the result of decades of innovation, investment, and growth.
1. A $245 Billion IT Powerhouse
The city contributes about one-third of India’s software exports and is home to over 3,500 IT companies and 79 tech parks. These numbers are staggering, showing how critical Bengaluru is to the global tech ecosystem.
2. Home to Global Tech Giants
Bengaluru is home not only to Infosys, Wipro, Flipkart, and R&D centers for Google, Amazon, and Microsoft but has also nurtured unicorns like Swiggy, Ola, and many more.
3. Talent Pipeline Fueled by Top Institutes
With institutions like the Indian Institute of Science (IISc), IIM Bangalore, and numerous engineering colleges, the city has a steady supply of highly skilled professionals. It’s no wonder it became the go-to destination for IT services and innovation.
4. Connectivity That Drives Business
Bengaluru’s international airport connects the city to global tech hubs, making it a logical choice for companies looking to establish a base in Asia.
For decades, all of this worked seamlessly. But now, the cracks are becoming hard to ignore.
Challenges for Employers: Rising Costs and Strained Infrastructure
While Bengaluru’s legacy is impressive, businesses today are grappling with several roadblocks that make operations increasingly difficult.
1. Escalating Costs
- Talent Costs: Salaries in Bengaluru are 30–40% higher compared to other cities. This is beyond the general increase in talent costs across India, making hiring expensive.
- Real Estate Costs: Office spaces have become prohibitively expensive, with rents soaring 60–80% in the past five years. A desk at a coworking space like WeWork in Bengaluru costs ₹15,000–₹32,000 per month, compared to ₹9,000–₹21,000 in Pune.
For startups operating on tight budgets, these numbers are hard to justify.
2. Infrastructure Challenges
- Traffic Congestion: Bengaluru’s traffic ranks among the worst globally, with employees spending over 90 minutes daily in commutes. This not only reduces productivity but also affects morale.
- Water Shortages: Seasonal shortages, especially in March, have become a persistent issue, with companies needing to make alternate arrangements.
- Flooding Risks: Poor drainage systems have led to recurring floods, such as the one in October 2024 at Manyata Tech Park, which disrupted operations for days.
3. Governance Issues
Urban planning hasn’t kept pace with the city’s rapid growth. Businesses often complain about bureaucratic delays, inefficiencies, and a lack of proactive solutions for civic issues.
Challenges for Employees: Living in Bengaluru Isn’t Easy Either
Employers aren’t the only ones struggling—employees, too, face significant challenges that impact their quality of life.
1. Commute Times That Drain Productivity
The average daily commute exceeds 90 minutes, leaving employees too exhausted to perform at their best. The city’s road network simply can’t handle the growing population.
2. Environmental Stress
Frequent water shortages and poor waste management make day-to-day life stressful. Recurring floods add to the chaos, disrupting both personal and professional lives.
3. Cultural Barriers
Non-native workers often report difficulties integrating into the local community, adding another layer of complexity for companies looking to attract talent from other regions.
Why Businesses Are Looking at Tier-2 Cities
With Bengaluru’s challenges mounting, tier-2 cities like Pune and Hyderabad are emerging as attractive alternatives.
1. Cost Benefits
- Talent costs in these cities are 20–30% lower than Bengaluru.
- Real estate is significantly cheaper, with office rents about 50% lower. A coworking desk in Pune costs ₹9,000–₹21,000 per month, compared to Bengaluru’s ₹15,000–₹32,000.
2. Improved Quality of Life
Shorter commutes, better air quality, and affordable living make these cities more appealing for employees, which in turn boosts satisfaction and retention.
3. Growing IT Ecosystems
Cities like Hyderabad’s HITEC City and Pune’s Hinjewadi are rapidly developing, with major IT players expanding their presence.
Comparison Table: Bengaluru vs. Emerging Hubs
| Parameter | Bengaluru | Hyderabad | Pune |
| Talent Costs | High (30–40% higher) | 20–30% Lower | 20–30% Lower |
| Coworking Space Cost | ₹15,000–₹32,000 per desk | ₹12,000–₹19,000 per desk | ₹9,000–₹21,000 per desk |
| Real Estate Costs | Expensive (₹100/sq. ft.+) | Moderate (₹50–70/sq. ft.) | Affordable (₹40–60/sq. ft.) |
| Traffic | Congested | Manageable | Manageable |
| Commute Time | 90+ minutes/day | 30–60 minutes/day | 30–60 minutes/day |
| Infrastructure | Strained | Efficient | Developing |
| Quality of Life | Declining | Improving | High |
| Access To Quality Education | Powerhouse in education with renowned colleges like IISc and IIM-B | Harmonious blend of academic excellence, innovative research, and cultural diversity with MIT, COEP, BVP, and a PICT | Home to prestigious institutions like the University of Hyderabad, Indian School of Business (ISB), and International Institute of Information Technology (IIIT) |
| Environmental Issues | Severe (Water shortages, floods) | Minimal (Planned urbanization) | Moderate (Localized issues) |
Conclusion: Is It Time to Move On?
Bengaluru has played a pivotal role in shaping India’s IT journey, but its rising costs and declining infrastructure are undeniable challenges. Businesses, especially startups, need to weigh these factors carefully.
Emerging hubs like Pune and Hyderabad offer not just cost savings but also a better quality of life for employees—a win-win for companies. If you ask me, Bengaluru’s glory days aren’t over, but the writing is on the wall. If you’re planning to expand, it’s worth exploring tier-2 cities.
