A Whiff Of Terror In Bangalore

A foiled bomb plot has outsourcing shops rethinking security measures

On Mar. 5, Indian police surrounded a two-room house on the outskirts of New Delhi. Holed up inside were members of Lashkar-e-Toyba, a Pakistani terrorist group active in the mountainous state of Kashmir. Police commandos soon rushed into the house, killing three men. Inside the hideout, they found three AK-56 rifles, hand grenades, 220 pounds of explosives, and detailed plans for an assault on the Indian Military Academy in Dehra Dun, the kind of facility they have typically attacked. But this time around, police found evidence of a different sort of target: technology companies on Mahatma Gandhi Road, Bangalore's main drag.

Four days later, software house Wipro Technologies (WIT ) got a bomb threat at its office on Mahatma Gandhi Road. For two hours, police combed hallways and offices with bomb-sniffing dogs. It turned out to be a hoax, made by a Wipro engineer who claimed to be "testing" security alertness. He was arrested. Then on Mar. 14, another bomb scare forced the evacuation of the headquarters of Infosys Technologies Ltd., though that, too, was a hoax.


The incidents have caused flutters across India. Indians are accustomed to terrorism in Kashmir, but Bangalore, deep in the south, had long been thought safe. While Bangalore's risk rating is still low, according to security consultant Hill & Associates, an attack could be devastating. The $22 billion information-technology industry contributes 3.5% of India's gross domestic product. Bangalore is home to nearly 1,500 tech companies and some 200,000 of their employees, and it accounts for 40% of India's IT revenues. "An attack on any of the multinational tech firms here could close down large parts of the city and get global attention," says Paul Ingram, a Bangalore-based manager for Hill.

After a near-war with Pakistan and the New York attacks of September 11, 2001, many outsourcing companies have already boosted security. They have spread data to various sites worldwide. Bangalore execs say that means an attack on one facility would cause minimal disruption and that engineers could pick up work at other sites almost immediately. Infosys stations armed guards at its gates and has isolated visitor parking lots from buildings to limit the potential damage from a car bomb. Employees at most companies are frisked before entering offices, and Wipro, SAP (SAP ), and Hewlett-Packard have installed electronic systems for retina scans and fingerprint identification.

But after the incident in New Delhi, tech companies are taking a closer look at security. Wipro's security chief is recommending that his company move out of offices that face busy streets in Bangalore and Hyderabad, and into areas farther from main thoroughfares. At the 330-acre Electronics City, a Bangalore office park where 25,000 techies work, companies have asked city officials for a fire station, police checkpoints, and armed patrols. "We need to beef up security," says H. Prakash Rao, president of the Electronics City Industries Assn., which represents tenants.

So far, there's no evidence that the threat is hurting business. The outsourcing wave continues unabated, and the industry expects to see 33% growth this year. Furthermore, tech execs are confident they can weather a crisis. "If you want to destroy a software company, you need to hit at the zeros and ones," not just office buildings, says Subroto Bagchi, chief operating officer of software house MindTree Consulting. And many insist Bangalore is as safe as New York, Los Angeles, or London. "A determined group can penetrate anywhere," says Sudip Banerjee, president of enterprise solutions at Wipro. "But we are on guard." For India, maintaining that vigilance is an essential step in keeping the outsourcing boom on track.

By Josey Puliyenthuruthel in Bangalore and Manjeet Kripalani in New Delhi

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