* Bengaluru shut down after violent protests
* Companies, executives say city still retains edge
* But water, infrastructure challenges loom (Adds details on Thomson Reuters)
By Supriya Kurane and Robin Paxton
BENGALURU, Sept 16 (Reuters) - Oracle employees were at work on Monday when protesters entered their nine-storey building in India's technology hub, Bengaluru, and asked them to leave in support of demonstrations that had erupted across the city over a water dispute.
By early afternoon, one of the U.S. software giant's biggest overseas offices had been evacuated, two employees there told Reuters, as had the Bengaluru premises of dozens of multinationals and Indian firms that stayed shut on Tuesday to ensure staff safety.
A spokeswoman for Oracle in India said no one was available to comment on the incident.
Two days of violence, in which protesters torched buses and clashed with riot police after a court ordered Karnataka state to share water from a river with another region, have exposed the growing pains of the dynamic technology hub's chaotic boom.
"They come and live here, which means our resources are being used by them. Tomorrow, if there is no water in the city, will they have an office here?" said 30-year-old local activist Keerthi Shankaraghatta, who led a group that staged peaceful calls to shut down several offices during the protests.
Videos posted on his Facebook page show employees from companies including Accenture and ICICI Bank being escorted out of their offices.
ICICI declined to comment. Accenture did not respond to a request for comment.
Thomson Reuters , the parent company of Reuters News, has more than 4,500 staff in Bengaluru.
The company said a significant number of its employees in the city had worked remotely on Tuesday, while a small core group worked from its offices.
Bengaluru businesses have faced four days of disruption this month after the water protests and an unrelated strike, hitting operations in a city that accounts for a significant chunk of India's $97 billion in information technology exports.
The head of Indian drugmaker Biocon jokingly referred to Bengaluru as "Bandhaluru", using the Hindi word "Bandh" for closed.
Employees of two large Indian companies told Reuters their buses were stopped and rocked by protesters, who asked them to join the demonstrations.
Cars and trucks registered in the neighbouring state of Tamil Nadu were smashed and set on fire. A 22-year-old IT worker, who declined to be identified, said she saw a police van in flames.
"For the first time, I felt unsafe in a city I love so much," said Prejin Joe, who runs a tech startup in Bengaluru and is originally from another southern state, Kerala.
Despite such experiences, and images of burning buses and trucks broadcast by Indian TV news channels, employers said the spasm of violence, in which two people were killed, had done no major damage to the appeal of the southern city.
Several big employers contacted by Reuters said the violence had not changed their view of the city as an attractive place to be based. None was prepared to be quoted.
Yet major infrastructure problems like congestion and poor water management, if not adequately addressed, may over time blunt Bengaluru's edge over other dynamic commercial centres in India and beyond.
From a sleepy retirement centre known as "Garden City" in the 1990s, Bengaluru, or Bangalore, has grown to become a sprawling metropolis of 10 million that is home to major offices of firms such as Amazon.com, Dell and local giant Wipro .
To some, Bengaluru's rise mirrors India's economic progress over the past two decades, with business parks staffed with thousands of young, English-speaking graduates lured by the city's cosmopolitan feel and well-paid office jobs.
But the growth has come at a cost. Streets are gridlocked, property prices have jumped and lakes and open spaces concreted over. Many locals like Shankaraghatta are angry at the pressure new inhabitants put on resources.
"Bangalore definitely has its challenges in terms of traffic, water and infrastructure. The government has got a lot to do in terms of urban planning, but this city has a never-give-up attitude," said Ryan Fernando, head of a Bengaluru-based chain of nutrition clinics.
Prime Minister Narendra Modi has grand designs to build 100 futuristic 'smart' cities that promise a hygienic, networked life for residents, but India's existing urban spaces lack efficient public transport and sanitation.
In the southern city of Chennai, poor urban planning and rampant "encroachment" by property developers were blamed for exacerbating deadly floods last December.
With India's cities forecast to absorb 400 million more people within a generation, experts worry the hassles of doing business could eventually outweigh the cost advantages that brought so many companies to Bengaluru.
Cities like Hyderabad, nearly 600 km (370 miles) to the north, are rushing to offer tax incentives and tout newer infrastructure to lure big employers away from crowded Bengaluru. Facebook, Uber and Google have large offices in Hyderabad.
But for now the advantages Bengaluru enjoys, with its unrivalled pool of skilled software engineers and swanky business parks, make it the city of choice for most large firms.
Companies leased out top grade office space of more than 7 million square feet in Bengaluru in the first nine months of 2015, double 2013 levels and more than any other Indian city, according to property consultancy Cushman and Wakefield data.
Hyderabad also leased out double the amount of prime commercial space in 2015 from two years earlier, but at the lower level of over 2 million square feet, the data showed.
"What has happened has been blown out of proportion. Bengaluru's mojo has not gone," said Shailesh Pathak, executive director at Bhartiya Group, which runs an integrated residential, business and commercial township in Bengaluru.
"People will certainly diversify to Hyderabad, Chennai, the Delhi National Capital Region and Pune - as they are already doing. But Bengaluru remains head and shoulders above all other megacities."
Additional reporting by Aby Jose Koilparambil, Tanvi Mehta, Tenzin Pema, Nivedita Balu, Ateeq Shariff and Siddharth Cavale in BENGALURU; Sankalp Phartiyal, Zeba Siddiqui and Euan Rocha in MUMBAI; Krishna N. Das and Douglas Busvine in NEW DELHI; Writing by Tommy Wilkes; Editing by Mike Collett-White