Global top 500 companies to create 2 lakh R&D jobs in India by 2018: Zinnov

Written by Heena Jhingan | Updated: Dec 14 2013, 01:37am hrs
According to a report by Zinnov, a leading globalization advisory and management consulting firm the top 500 R&D spenders contribute over $ 577 billion with the top 100 R&D spenders alone contributing about 66% to the global R&D spend. 40% of the overall R&D spend is from organizations headquartered in North America, followed by 34% from Europe, 18 % from Japan, and 7% from Asia-Pacific. China today is the leading destination for R&D investments with a total of 385 G500 companies having a presence there as compared to 220 G500 companies in the Bay Area and 228 G500 companies in India.

The report titled, Crossing the Value Chasm finds that globally the Automotive vertical has the highest R&D spend and India is one of the key destinations for these companies with cities such as Pune and Chennai fast emerging as Auto Hubs. Worldwide, the Software vertical saw the largest increase in spend of 15% followed by the Semiconductor and Energy vertical at 10 and 9 % respectively. In 2012, 26 companies increased their global R&D spend by at least 20% and contributed over $ 19 billion . 14 of these companies have a presence in India and have increased their global R&D spend by $14 billion, of this only $ 129 million was invested in India. In keeping with the historic trend that companies with a higher R&D spend find India more attractive for investments, there is a clear opportunity to create additional 200K R&D jobs in India by G500 companies in the next 5 years.

Today, close to 50 percent of the G500 companies present have over 10 percent of the global R&D head count in India. While software/Internet companies tend to achieve the milestone of locating 10-20% of their R&D headcount in India faster than others, fee companies seem to have reached a ceiling at a minimal 1-4% of the global head count.

A factor is that many of the India centers lack strong leadership and global stakeholder buy-in. Currently, only 11% of the companies with centers in India have global roles in engineering, product management and support functions. Only 15% of the India leaders are proactive, influential and have a global impact, indicating a need to grow strong a leadership pipeline.

Pari Natarajan, CEO, Zinnov, said, To move to the next level R&D centers in India must work on charters that impact the top-line objectives of the company the ones that create architectural and business impact, for which higher maturity of product teams is a must. In order to cross this value chasm, companies should pick focus areas, create point of views and socialize with stakeholders, develop architectural and leadership capabilities, create innovation programs, manage pipelines and measure and reward value metrics.