Bengaluru, once the undisputed tech capital of India, is now facing serious challenges that are prompting some of the world’s biggest technology companies to look elsewhere. Traffic congestion, rising operational costs, and declining startup funding are rising concerns about the city’s sustainability as a global tech hub. Meanwhile, Hyderabad has emerged as a strong contender, attracting major players like Microsoft, Google, and Apple. But what exactly is driving this shift?
Bengaluru’s declining appeal
1. Startup funding slump
In 2024, Bangalore witnessed a 19% decline in startup funding, bringing investments down to $3.4 billion, a level last seen in 2015. This downward trend has raised concerns about the city’s ability to sustain its reputation as India’s startup hub.
2. Infrastructure woes
Traffic congestion has become unbearable, with daily commuters spending hours stuck on the roads. This has significantly impacted productivity and made business operations more difficult.
Water shortage and rising pollution levels have further added to Bangalore’s struggles, making it less attractive for new investments.
Hyderabad’s competitive edge
Hyderabad is institutionalizing massive infrastructure development at lower costs. Hyderabad is witnessing a construction boom, with ₹2,400 crore worth of mega infrastructure projects, including new flyovers, underpasses, and road expansions, all being built at nearly half the cost of similar projects in Bangalore.
Tech Giants Expanding in Hyderabad
- Microsoft has doubled down on Hyderabad, employing over 10,000 professionals in the city, making it one of its largest global offices.
- Google has recently acquired a 649,000-square-foot office space in Hyderabad, signaling a major expansion.
- Apple’s supplier, Foxconn, is set to manufacture AirPods near Hyderabad starting in early 2025, marking a significant move in Apple’s global operations.
With Bangalore’s growing struggles and Hyderabad’s cost-effective infrastructure, proactive government policies, and business-friendly environment, it is clear why global tech companies are making the shift. Some believe that, if this trend continues, Hyderabad might soon become India’s new Silicon Valley, leaving Bangalore in its rearview mirror. There is another opinion that says, despite Hyderabad’s rapid growth, major text companies like Microsoft and Google are not abandoning Bengaluru. Instead, they continue to expand their presence in the city and other parts of India.
Google’s expansion in Bengaluru and beyond
- In 2024, Google leased a 649,000-square-foot office space in Alembic City, Whitefield, Bengaluru, with a three-year lock-in period.
- Construction is underway for a 3 million square foot campus in Hyderabad, set to be Google’s largest office outside the U.S.
- Google is also finalizing locations for its first physical retail stores in India, focusing on New Delhi and Mumbai.
Microsoft’s investments in India
- Microsoft has announced a $3 billion investment to expand its Azure cloud and AI capabilities in India over the next two years.
- In 2018, Microsoft consolidated its Bengaluru operations into a single campus spanning 585,000 square feet on the Outer Ring Road near Bellandur.
This shit underscores the dynamic nature of India’s tech landscape and highlights the importance of sustainable urban development in maintaining a city’s attractiveness to global investors.