Next best to Bangalore =Kovai.
Bangalore is a great city but Bangalore has reached it's full capacity and companies are exploring other cities to setup R&D centers...One city that comes nearly close to Bangalore is Kovai.(full name Coimbatore)
Why Coimbatore for Software R&D ?
 Good weather & water.
It is surrounded by mountains and sweet Siruvani water is something that Kovai people are proud of -
Very good airport
 There are many world class engineering colleges that produces 1000's of engineering graduates,post graduates and Ph.D's every year.
2.Coimbatore Institute of Technology
3.Govt. College of Technology:
& many more colleges:
The list goes on & on.... These are some of the colleges that supplies brain power to Bangalore.
Ooty is close for vaccation...
 There are already many software R& D companies out there...
For stay, many good hotels like this -
So,why wait ?
Did I say the cost of living is "much" lower compared to Bangalore ?
Did I say the salary is also "much" lower compared to Bangalore ?
Did I say that "attrition rate" is much lower compared to Bangalore ?
There is even an incubation facility inside PSG College of Technology to get bootstrap your business,it's called PSG STEP(Science and Technology Entrepreneurial Park).
Coimbatore ALSO a wonderful place for Software R&D