Moreover, the government is offering land and other incentives to investors to set up IT firms in smaller towns and cities away from Bangalore

M N Vidyashankar, information technology secretary, government of Karnataka, told reporters, "We are working on a hub-and-spoke model to attract investments in the knowledge sector with a two-pronged strategy. By positioning Bangalore as the hub and tier-two cities across the state as spokes, we want to ensure Karnataka remains the favourite IT destination in India."

"The new strategy will also help de-congest Bangalore and facilitate the uniform growth of secondary cities like Mysore, Mangalore, Hubli, Belgaum and Gulbarga with infrastructure, connectivity and human resources," Vidyashankar added.

While Bangalore remains the favoured destination among IT multinationals, the government has reserved 10,000 acres of land at Bidadi, about 30km from the hi-tech city, for IT and IT-enabled services, including outsourcing and call centres.

The infrastructure will be developed with private partnership and 32 domestic and international infrastructure firms, including foreign firms, have bid for the global tender floated by the government.

A second project has developed around the international airport at Devanahalli, about 35 km from Bangalore, with the Karnataka Industrial Development Board in the process of building an electronic hardware technology park over 1,400 acres of land near the airport.

The first phase of the park, spread over 450 acres, will be developed in the next 12 months to coincide with the launch of the Bangalore international airport in April 2008.