India dominates R&D Outsourcing
India makes giant strides in R&D Outsourcing
That India has abundant talent is not an empty claim. And, now even in the complex and highly specialised field of R&D, India is making giant strides.
Statistics speak for themselves.
- According to a report by management advisory firm Zinnov, in 2013, 25 more global companies opened their R&D centres in India, taking the total number of MNC-run R&D centres in India to approximately 1,031 – that is, 33% of the global services market.
- Since 2012, there has been a spurt in the number of MNCs opening their R&D bases in India.
- Research and development centres in India accounted for $18.3 billion, which is approximately one-third of the global R&D and services market.
- According to Zinnov's study, Indian engineering R&D services revenue will touch $38 billion by 2020.
This is a clear indication of the huge global demand for high-end Indian skills.
Crossing the final frontier – R&D outsourcing
R&D outsourcing was, till recently, viewed as the one sacrosanct aspect of any business that could never (rather, should never) cross the threshold of the company concerned. After all, this department fiercely guarded all new innovations and inventions and outsourcing such a critical function could well spawn a host of competitors.
All that has changed now. Today, R&D is as easily outsourced as a backend job. Simply because the innovation per se is not as important as who finally appropriates it. Skype is a case in point.
"It's a big world out there, and if a company is going to compete in it, then it has to look outside its home market for that talent."-Stewart Witzeman, director of the Eastman Innovation Center at Eastman Chemical, a US-based Fortune 500 company.
Big players enter India
Since 2013, among the big players that have set up base in India are Groupon, Unilever, Expedia, Panasonic, FireEye, Ricoh, Royal DSM, Ruckus Wireless, Abbott, and Sigma-Aldrich.
Within this nascent but extremely fast-growing R&D sector, two segments are poised for even more spectacular growth - medical devices and automotive.
Spurt in Engineering R&D outsourcing
Perhaps, no other field has witnessed such a spurt in R&D outsourcing activities as engineering. The report further reveals the rapid pace at which the French high-tech engineering company Altran was expanding its base in India, and was "doing to product engineering outsourcing what IBM did to IT outsourcing ten years ago (by building a powerful base in India)".
The combined MNC captive centres in India and the country's Engineering R&D outsourcing sector, together account for almost 23% of the overall global engineering R&D outsourcing market. This catapults India to the top of the list as the largest provider of such outsourcing services."
The Zinnov research also highlighted the fact that India accounted for $16.3 billion in 2012-13 in engineering R&D services, a growth of 10.9%.