Most big tech multinationals regard India as a key source of intellectual property not only in software, but also in other verticals such as aerospace, automotive and defence
Indian firms might be struggling to build an innovation culture within their organisations, but big technology multinationals seem to have effectively tapped into the country?s growing engineering talent pool for their global research and development. The fact that India is an integral source of intellectual property for tech biggies is an old story; what is new is that the potential for India to be among the top nations for R&D has become stronger. Around 30% of the top global 1000 R&D spenders across verticals now have a presence in the subcontinent, according to recent study undertaken by Zinnov, a market research firm.
First, a look at some of the innovations emerging from some of the creative hotspots here. Early this year, HP Labs India researchers in Bangalore announced a unique project designed to make computing life simple. Under the aegis of the VAYU project, HP Labs India researchers have created an end-to-end ecosystem that comprises a set of intuitive and relevant user experiences, a distributed software platform and a prototype hardware device?Vayu Internet Device, or VinD?that can connect to a TV, work with mobile phones and connect to additional accessories. All these components are integrated to provide a simplified computing and internet experience in the living room.
Bangalore hosts the engineering operations of the US chipmaker Intel too. At the Intel R&D hub, the researchers in partnership with their US counterparts have enabled a cool new technology?Wireless Display or WiDi?that brings high definition video content from a laptop to a TV. That?s not all. Bangalore is also where Yahoo! has its second largest R&D centre globally. The research arm, called Yahoo! Labs focuses on basic and applied research in the areas of next-generation search, advertising and large-scale computing systems. The centre has undertaken end-to-end development of more than 20 products providing superior consumer experiences and online products for developed and emerging markets.
Down south, India?s Silicon Valley might be the preferred destination for global multinationals to set up up their engineering operations, but other destinations like New Delhi, Hyderabad, Thiruvananthapuram, Mumbai, Gurgaon and Noida are also emerging as innovation havens. Most large organisations around the globe have recognised the good work that is being done by companies in India and the talent that exists here and have either set up their own development centres or have partnered with other companies to take advantage of their expertise towards this end. ?Today the value add in software R&D and services in India is very high and it is certainly well recognised and taken advantage off by corporations around the world,? says Anil Batra, managing director, Riverbed Technology.
A 34-year industry veteran, Batra started the operations of Cisco Systems in India and was the president of India and the SAARC region from 1994 to 2000. His remarks are further substantiated by an industry report which stresses that the potential for India to be among the top nations for R&D has only gotten stronger. A key contributor to the Asia Pacific region is India which has the presence of one-third of all global 1000 R&D spenders, says Zinnov.
There is a total installed talent pool of 2,20,000 engineers in MNC subsidiaries in India and these MNCs have spent $7-7.5 billion on the headcount in India in FY2011 alone. The opportunity areas for India to attract R&D investment span over 13 sectors with software being the most invested in sector.
Microsoft recently opened up its second R&D centre in Bangalore. EMC has announced that its total investment in India will touch $2 billion by 2014. Siemens will be investing $325 million in the next few years to develop nearly 60 new baseline products; GE has invested around $200 million to build an integrated multi-product manufacturing facility in Pune. Recently, Panasonic opened its India R&D centre in NCR region. LG, Toshiba and Samsung have ambitious plans to increase R&D spending in India.
Global R&D spending has increased significantly in FY 2011, despite witnessing a decline in FY 2010. The contribution of R&D spend is divided across North America, European Union and Asia Pacific regions at 36%, 34% and 7% respectively. Though the Asia Pacifion region?s contribution as a percentage of the global R&D spend is small, what is noteworthy is that within the region R&D investments have increased a significant 28% as compared to the previous year.
Sidhant Rastogi, director?globalisation advisory, Zinnov, says, ?The sentiment on the role of R&D in driving the future continues to remain positive across geographies. India definitely has the right potential to become a key R&D hub, not only in software for which it has gained recognition globally, but also in other verticals such as aerospace, automotive and defence.?
In recent years, India has made significant progress in establishing educational centres that will provide a pipeline of R&D talent for the future. Big tech multinationals say that talent is the key reason why they invest in India. The current economic situation has not dampened their spirits and they continue to boost their R&D efforts here.