By Sunil Raman
BBC News correspondent in Bangalore
Big companies like Wipro are spreading their money around India
Growing concern among hi-tech companies about Bangalore's infrastructure has spurred states such as Kerala, Tamil Nadu and Punjab to pitch for new investment at Bangalore's IT.Com 2004, the industry's key annual get-together.
The southern state of Kerala was the first in India to set up a software technology park, but it let the imitative be snatched by the go-ahead authorities in Bangalore and Hyderabad.
Now, the new chief minister of Kerala, Oomen Chandy, has decided to focus on IT investment for the state.
This week, he arrived in Bangalore to meet industry players such as Narayana Murthy of Infosys, and representatives of Wipro, Intel, Accenture and others.
Infosys has already secured a foothold in Kerala with a software development centre in the capital Thiruvananthapuram, and has acquired 50 acres to set up its own campus.
Wipro Software Limited has acquired 200 acres in the capital's Infopark for its centre.
Tata Consultancy Services (TCS) will build a training centre, and consultancy McKinsey has set up an outsourcing centre in the state.
One key advantage is cost. When compared with other Indian states, Kerala has 60% cheaper rents, 50% lower operational costs, and the lowest power and water tariffs.
But Kerala government representatives privately concede that the state has not yet focused enough to improve the English language skills of its people.
Neighbouring Tamil Nadu is not being left behind. The state government there has announced several fiscal incentives for IT companies; in the past few months, many Bangalore-based companies have indicated their willingness to set up new businesses in capital Chennai.
Chennai is considered to have better infrastructure, enough English-speaking people, a government keen on investment and enough engineers being churned out by Tamil Nadu's 232 engineering colleges.
Infrastructure is the great competitive issue for rival states
According to one state official: "IT companies have begun to realise that Bangalore has reached a plateau and Chennai offers a better option."
Infosys plans to ramp up its workforce there to 25,000 people, TCS has acquired 70 acres of land where a development centre will cater for 20,000 people, and Wipro plans to expand its campus to accommodate 20,000 professionals.
Tamil Nadu is challenging Bangalore directly. A proposed software technology park at Hosur would be only an hour's drive from Electronics City in Bangalore.
Punjab is hoping to become one of the few north Indian states to attract significant hi-tech investment. Infosys has already started construction of its Chandigarh office, and officials hope more may come.
Punjab's IT secretary, N K Kalsi, reckons the state's infrastructure is its advantage. He says Punjab has the highest density of mobile phones and landlines, superior roads, and better manpower.
The state's chief minister, Amarinder Singh, is to arrive in Bangalore on Sunday to meet various IT chiefs.
In Chandigarh, the city authorities have launched a training programme in soft skills in a few schools and colleges; pupils will be trained in communication skills, and voice and accent improvement, and given lessons in global culture.