Bloomberg Television Sep 20, 2026
With Mohandas Pai, former CFO of Infosys and a technology investor in Bangalore · Nitesh Aggarwal, Chief Strategy Officer at Tech Mahindra · Deepa Mani, Professor at the Indian School of Business · Sonalde Desai, Demographer at the National Council of Applied Economic Research
India exported $245 billion of services last year, and Mohandas Pai says 60% of the world's outsourcing work now runs through the country.
The state that produces the largest share of it is not spending the proceeds on more of it. Karnataka hands out about $8 billion a year in cash payments to women and free power, Pai said, and puts 20 million or 30 million into innovation.
"Bangalore suffers from prosperity. Have you heard of anybody suffering from prosperity?"
Mohandas Pai, former CFO of Infosys, on Bloomberg Television, was the company's finance chief in 1999 when it became the first Indian firm to list on a U.S. stock exchange. He now backs startups from Bangalore, and he spent much of this segment on what the state government does with the money the industry earns.
The full segment is covered here so you can skip it.
Here are the 7 numbers that matter.
Key Takeaways
India's software service exports ran to $245 billion last year, and Pai puts 60% of global outsourcing inside the country
6 million people work in the export industry, and it hires 150,000 to 200,000 more every year
Pai traces the whole industry to 3 causes, and the first is policy nobody wrote for technology
A 1950s law on retirement contributions created the first big demand for data processing, Deepa Mani said
The tech sector produces about 55% of a $4 trillion economy while roughly 45% of the workforce is still in farming
Karnataka gives away about $8 billion a year in cash and free power, against 20 million or 30 million spent on innovation
India and its states together hand out $110 billion of subsidies a year, Pai said, and put under $7 billion into innovation
Parliamentary seats are frozen on the 1971 census until 2026, and a new census could move them north as the South earns more
Sonalde Desai called the result "not a recipe for a happy future for the Indian Union"
Bangalore holds 2.8 million cars and 205 million square feet of top-grade office space, and the world's second worst traffic
1. How The Boom Started
Bangalore is the third-largest city in India and the home of its technology industry, and the segment opened on the moment that industry reached the American market. Pai was the chief financial officer of Infosys when it listed on the Nasdaq in 1999, the first Indian company to trade on a U.S. exchange.
The 1999 market grew fast, but slower than today
The world that we entered when we listed on the Nasdaq in 1999 was a very different world, because even though growth was fast-paced, it was lower than now.
Mohandas Pai
He described a sequence of platform shifts the industry had to follow: mainframes, then the AS/400 minicomputers, then personal computers, then the internet, then enterprise software. Each one took time. Asked to account for the ecosystem that emerged, he named three causes.
Pai's account of the industry is unintended policy, deliberate policy, and Western demand
If you look at the tech ecosystem in India, I would say it's an outcome of 3 things. One, unintended policy consequences. Second, conscious policy interventions by different governments. And third, exogenous shocks in demand that came from the West.
Mohandas Pai
Deepa Mani, a professor at the Indian School of Business, supplied the clearest example of the first cause. The Employee Provident Fund Act obliged companies to pay retirement contributions for their workers, and paying them meant tracking millions of small payments.
A retirement-contributions law created the first domestic demand for data processing
All of this created significant demand for electronic data processing. So those were the origins of some of the early firms in the IT services space.
Deepa Mani
2. $245B Of Service Exports
David Westin's narration described an industry that began with multinationals and a few large consultancies, Tata and Infosys among them, and now supports innovation elsewhere while producing its own. Pai gave the scale.
India exported $245B of services last year
We have probably the largest software service export industry in the world. Last year we exported $245 billion of services to the globe. 60% of global outsourcing comes here. 6 million people are employed in the software export industry.
Mohandas Pai
The newer part, on his account, is product companies rather than service contracts: business-to-consumer first, then business-to-business, and now deep technology. He put a value on what that wave has created so far.
The product wave has created about $700B of value and about 60 listed companies
They created about $700 billion of value. We got about 60 listed companies which are now raising capital and growing.
Mohandas Pai
The founders, he said, are younger, and many of them left jobs at Intel, Qualcomm and other foreign technology companies to start their own. Later in the segment he gave the industry's hiring rate.
The industry takes on 150K to 200K people a year
We hire 150 to 200 thousand people in technology every year, every year.
Mohandas Pai
3. Why Bangalore Won
Bangalore is the capital of Karnataka, where services account for 70% of the local economy against 19% for manufacturing and 11% for agriculture, according to the show's own figures. Nitesh Aggarwal, Tech Mahindra's chief strategy officer, has spent most of his career in the city and was asked why it holds the title.
The reasons Aggarwal gives are the weather, the culture, the people and the ecosystem
Bangalore is known as the Silicon Valley of India and of the East, and there are reasons behind it. So one of course is, I think you can actually speak about some of the biggest organizations which emanated from Bangalore. And I guess it's the weather, it's the culture, it's the people, it's the ecosystem.
Nitesh Aggarwal
Foreign companies then followed the Indian ones, he said, and set up global capability centers — the offshore offices a multinational staffs itself rather than contracting out to a vendor.
Multinationals built their own offices there rather than only hiring Indian vendors
Even the international firms realized the potential that Bangalore had and therefore come in and set up their GCCs, right?
Nitesh Aggarwal
That produced wealth, and the wealth pays for the next round. Aggarwal described the loop as self-funding: the venture capital is already in the city, so a founder choosing a base has two realistic options.
Venture money is already there, which leaves founders two cities to choose from
Because VCs today are very active in Bangalore. That means today if you want to set up a new startup, right? Bangalore and maybe Delhi are the two options, right?
Nitesh Aggarwal
4. Growth Here, Jobs Elsewhere
The show put the split plainly. Bangalore and the tech sector account for about 55% of India's $4 trillion economy, against 27% for industry and manufacturing and 17% for agriculture. The growth comes from technology; the jobs do not.
Sonalde Desai, a demographer at the National Council of Applied Economic Research, gave the employment side of the same picture.
Farming employs roughly 45% of workers, high-tech under 10%
Roughly about 45% of the workforce is in farming, but the very high-tech formal sector labor force is way less than 10%.
Sonalde Desai
5. Seats Move, Money Does Not
Desai said the mismatch is redrawing political lines. Southern states are older and are pulling in workers from the north to staff factories and plantations.
Southern states are ageing and importing northern workers
So a lot of states in the South are now getting Northern workers coming in to work in their factories, on their plantations and so on. Particularly because the Southern population is slowly becoming older, OK? And they need continuous influx of younger workers, so the migration trend is increasing.
Sonalde Desai
Westin asked whether faster population growth in the north would eventually hand it more seats in Parliament. Desai's answer turned on a freeze that is about to expire.
Representation has been frozen on the 1971 census until 2026
So, the current representation in Parliament has been frozen based on the 1971 census until 2026. Now there is a new census ongoing, and this census could be used to restructure the representation, which would increase the proportionate share of Northern states versus the Southern states, OK?
Sonalde Desai
The grievance she described is specific: southern states cut fertility by improving child health and female education, and the reward for it would be fewer seats.
The states that grew their economies may lose the votes
So now we have this interesting contrast where Southern states have more economic power, but they may have lower political power, OK? This is not a recipe for a happy future for the Indian Union.
Sonalde Desai
6. Giveaways Beat Innovation
Karnataka has 67 million people, and Pai's argument is that a poor country's politics rewards spending that shows up in a voter's hands this year rather than spending that pays off in ten.
Every government chooses between winning power and investing for later
So the challenge for any government is between investing in development, investing for the future, and coming to power. So what do they do? They spend a lot of money giving away freebies.
Mohandas Pai
He put a figure on his own state's version of it.
Karnataka gives away about $8B a year in cash and free power
For example, the current government in my state is giving about $8 billion of freebies per year in giving free money to women, and maybe about 15 million women or 16 million women, and giving free power, etc. So they are not investing enough in innovation.
Mohandas Pai
Pai also said domestic pools of capital are fenced in. Indian institutions face tax restrictions on what they can buy and cannot put money into alternative investment funds, the vehicles venture and private equity managers raise. In the United States, he said, endowments, insurers, family offices and technology founders all fund the same ecosystem.
India's own institutions cannot buy into the funds that back startups
They've got restrictions, tax restrictions on where they can invest. They cannot even invest in funds, alternate investment funds right now. In America, the endowments invest, the insurance companies invest, right? Family offices invest, tech entrepreneurs invest. We don't have that ecosystem.
Mohandas Pai
Then the national comparison, and the state one underneath it.
$110B of subsidies a year, under $7B into innovation
For example, the government of India and the state government give about $110 billion of subsidies a year. It's very large for poor people. But they're not even investing $6, $7 billion in innovation.
Mohandas Pai
Karnataka exports $130B of services and invests 20M or 30M in innovation
For example, in my state of Karnataka, we export $130 billion of services a year. $100 billion of software. 40% of all software exports. $30 billion remittances come here from people. But we're probably investing maybe 20 million or 30 million in innovation.
Mohandas Pai
His explanation for the gap is that the politicians in charge of the money are answering to poor voters and do not see the return on the other side of it.
7. Suffering From Prosperity
Pai and other executives have been public about the strain on the city. The show's own research put Bangalore sixth among global tech cities and second worst in the world for traffic congestion; on the TomTom Traffic Index it takes 15 minutes to drive 2.5 miles, about 4 kilometers.
Pai's phrase for the problem is prosperity
So Bangalore is a very special city. It's a very welcoming city to outsiders. People come from all over. Bangalore suffers from prosperity. Have you heard of anybody suffering from prosperity?
Mohandas Pai
Westin laughed, and Pai gave the two numbers behind the joke.
2.8M cars and 205M sq ft of Grade A office space
Because we got 2.8 million cars. People buy cars. They buy 1 car, 2 cars, 3 cars. They buy bigger houses. We got 205 million square feet of Grade A office space.
Mohandas Pai
Bonus Insights
Infrastructure arrives after the building does, and the city is due another round
The same answer went on to describe Bangalore's growth as a series of waves, with roads and public works trailing whatever the private sector has already built, and the city overheating each time before the state catches up. The speaker, who called himself a local Bangalorean, said the next wave of infrastructure is needed now and that other cities are picking up business in the meantime. The transcript's speaker labels were assigned from content rather than audio, so this passage is left without a name.
The segment is built on a Kannada word
Westin opened on "elige," the word for progress in Kannada, the language spoken in Bangalore, and closed on the competition coming from cities in neighboring states that have had the same success and the same side effects.
Pai's bottom line is that India's technology industry has already reached world scale on exports, and the binding constraint now is a government that spends its money on voters rather than on the industry paying for them.
Products, Companies & Tools Mentioned
Infosys (Pai was its CFO when it listed on the Nasdaq in 1999, the first Indian company on a U.S. exchange)
Tech Mahindra (Aggarwal's employer; he argued Bangalore's venture money and its wealth base make it self-funding for new companies)
Tata (Named with Infosys as one of the large consultancies that dominated the early industry)
Nasdaq (Where Infosys listed in 1999, at the height of the dot-com market)
Intel and Qualcomm (The foreign technology employers Pai says India's new founders are leaving to start their own companies)
Indian School of Business (Deepa Mani's institution; she traced the industry's origins to a 1950s retirement-contributions law)
National Council of Applied Economic Research (Sonalde Desai's institution; her work on fertility and migration is the basis of the North-South argument here)
Books & Resources Mentioned
TomTom Traffic Index (The show's source for Bangalore having the world's second worst congestion, at 15 minutes to drive 2.5 miles)
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