When SAP needed software to help enterprises comply with India’s GST e-invoicing and e-way bill mandates, it turned to its engineers in Bengaluru. What began as a fix for the country’s fast-evolving tax reporting rules has since travelled far beyond it: the technology first engineered in India is now part of SAP’s global Document and Reporting Compliance (DRC) platform, helping the German software giant’s customers meet local regulatory requirements across multiple markets.
This built for India, shipped to the world trajectory captures how SAP Labs India has evolved from a development centre into one of the company’s biggest innovation hubs — and the role has only grown in the AI era, with Bengaluru emerging as a key driver of SAP’s enterprise AI strategy.
The numbers underline the transformation. Around 40% of SAP’s global R&D workforce is now based in India, and nearly a quarter of the company’s worldwide patents originate from the country. More than 80% of SAP’s AI agents — the software assistants it is betting on to automate enterprise workflows — are being built here.
Established in 1998, SAP Labs India has grown into the company’s largest R&D hub outside Germany, with about 18,000 employees — bigger than its centres in China, Brazil and even the US. Beyond engineering, the Bengaluru centre today houses global product managers, chief architects and AI leaders who help shape SAP’s worldwide technology roadmap.
The clearest test of that standing came after SAP CEO Christian Klein announced at Sapphire 2024 that the company’s generative AI assistant, Joule, would become the primary interface for 80% of repetitive business tasks across its applications. Delivering on that commitment fell to Bengaluru. Under the Joule Content Acceleration Programme (JCAP), SAP Labs India brought together teams across business lines to identify the most frequently used enterprise transactions and redesign them for AI-driven interactions. The programme was completed within the year, helping embed Joule across SAP’s software portfolio.
“India was chosen as the country to lead this programme for adoption for two simple reasons,” Milesh J, head of strategy & operations at SAP Labs India, said. “Firstly, we have the length and breadth of different applications, from sales order creation to customer and vendor creation, with those development teams sitting here. Secondly, adoption of the technology is best driven in a structure where a cross-topic approach across applications is dominant.”
India’s mandate has since expanded beyond embedding AI into existing products to building the next generation of AI agents for finance, procurement, manufacturing and human resources. Among the flagship projects are agents that automate the financial close — cutting the days of manual effort that finance teams spend reconciling statements before audits — alongside similar agents for procurement, HR and manufacturing. The Bengaluru centre is also home to teams working on Joule engineering, AI security and SAP’s Business Data Cloud, the layers that together underpin the company’s AI-first technology stack.
The shift has been more than two decades in the making. When Milesh joined SAP in 2000, the India centre had about 500 employees and largely executed engineering plans drawn up in Germany. As India’s talent pool deepened and responsibilities expanded, the centre moved into product management, architecture and global technology leadership. Today, chief product officers, product managers and chief architects based in Bengaluru help define SAP’s product roadmap worldwide — deciding what gets built, not just how.
Cost still counts, Milesh conceded, but it is no longer the point. “It would be wrong to say that India’s cost advantage doesn’t make it appealing because we still have that benefit. But the difference from the 90s and early 2000s is that companies now look beyond cost because we offer a combination of talent, speed and technological capability. All of these factors are pivotal to progress in AI,” he said.