MNC R&D centres mushroom in India
With so many foreign IT companies setting
up R&D centres in India, Abhinav Singh believes that India is poised
to become the R&D hub of the global IT industry
|HP’s Indian research lab has been given
the responsibility of doing research on emerging markets. It
is expected to visualise a new technology and demonstrate it
for use as a futuristic option, says Dr S Ramani
MNCs are looking at India in a big way,
and are making huge investments to set up R&D centres in the
country. The big names of the global IT industry—Oracle, IBM, SAP,
etc—already have development centres in India, and are planning
to further expand their existing facilities and infrastructure.
A lot of them are carrying out a significant proportion of their
R&D work in India, which contributes to their overall growth
and success. Some of these companies have their largest development
centres outside the US in India. The list includes Oracle, Philips,
SAP and Texas Instruments (TI). Such has been the success of these
centres that an increasing number of companies have realised India’s
potential as an R&D resource, and are keen to set up their own
centres here. Hardly surprising, because India has the largest pool
of developers in the world, and its world-class technical institutes
produce world-class talent.
In recent years it has been
observed that more and more foreign companies are delegating work
of strategic importance to their development centres in India. This
is further established by the fact that many of them have set up
their largest R&D centres outside their country of origin in
India. For instance, the Philips Innovation Campus (PIC) at Bangalore
is the largest R&D centre for Philips outside Holland. PIC develops
most of the software required for the company’s products; the centre
works mainly on embedded software. Of course, Philips also carries
out software-related work at its headquarters in Eindhoven in Holland,
but as Dr Bob Hoekstra, CEO, PIC, says, "Almost every Philips
product having software in it has a contribution from the Bangalore
campus, which proves how much importance Philips gives to its Indian
centre. The work delivered by Indian developers is just world-class."
Almost all the MNC R&D
centres work in close collaboration with their counterparts across
the globe. For example, Oracle’s India Development Centre (IDC),
which is spread across twin locations in Hyderabad and Bangalore,
is the largest development centre for Oracle outside the US. It
carries on joint product development, and is involved in all of
Oracle’s database products, applications, business intelligence
products and application development tools. Oracle has now allocated
some new activity areas to the centre. Says L Gopalakrishnan, director,
platform technologies group at IDC, Oracle "We are now working
on grid computing technology, and porting Oracle products to Linux."
Driving MNC growth
Many MNC development centres
in India are driving the overall growth of their parent companies.
TI’s R&D centre in Bangalore, which was set up in 1984, was
one of the first to be set up by any foreign IT company in India.
So far, TI has secured 225 US patents for work done at the centre.
This has placed it much higher any TI development centre operating
out of the US in terms of the significance of the work being carried
out. The centre, which specialises in very large scale integration
(VLSI) design and the embedded software domain, has developed some
unique products which have won worldwide recognition for TI in the
international market, and have been instrumental in driving its
overall growth. The centre is credited with having fully developed
at least 20 products for TI. These include Ankur, which is a chip
in the digital signal processor (DSP) domain; Sangam, which is a
bridge router for digital subscriber loop (DSL); and Zeno, which
runs multimedia applications.
|Excellent learning abilities and efficient
project management skills are some of the reasons why MNCs would
like to set up R&D centres in India, says Dr Uday Shukla
Many of the R&D centres
are carrying out a significant portion of their product development
in India. For example, Sun Micro-systems’ India Engineering Centre
(IEC) carries out work on the Solaris OS and the Sun One Platform.
IEC has also developed some of Sun’s products wholly in India, including
the portal server, Web server, identity server and meta directory.
In addition, IEC has contributed around 50 percent of the effort
for the development of Sun’s App server. Says Vijay Anand, the centre’s
managing director, "IEC is part of Sun’s core R&D centres
spread across the world. Its software focus is now going to involve
working on Sun’s N1 technology. Apart from this, we have small teams
for process and design."
SAP Labs in Bangalore contributes
nearly 10 percent of the company’s global product development. The
lab has wholly produced some of SAP’s products meant for the global
market, including the Channel Management Solution, which helps chip
manufacturers negotiate prices with their dealers online, the Dealer
Portal for the automotive industry, and mobile laptop solutions
and oil and gas upstream solutions. Clas Neuman, joint managing
director, SAP Labs India, says, "This is the largest single-location
centre for SAP, besides the one at Walldorf in Germany. We have
added new activities at our labs here in India; for example, we
have detailed 10 people who are working on a new solution for value
added tax (VAT). Besides, many of our people here are working on
SAP’s Business Intelligence Solutions on a large scale."
For i2 Technologies, its
Indian R&D centre spread across two locations in Mumbai and
Bangalore is contributing immensely to its overall product development
for the global market. The company has relocated many people from
its US headquarters to its centre in India. The centre here is driving
nearly 60 percent of the company’s global development delivery.
Says Sankalp Saxena, managing director and senior vice president,
i2 Technologies, "Although we have many other development centres
across the world, our India development centre is the largest outside
the US, and we have invested close to around $10 million in 2002
towards its growth." Besides developing many other products,
the centre has fully developed a strategic sourcing solution for
i2, and delivered nearly eight manufacturer-industry templates and
retail solutions from India.
IBM’s Software Lab at Bangalore
and Pune works on WebSphere, Û2, Lotus, Tivoli and Rational.
The company has added new areas like middleware and business intelligence
to its labs in India.
HP Labs, Bangalore, is a
unique research centre dedicated purely to research. HP has vested
it with the responsibility of conducting research on futuristic
technology for emerging markets with a focus on the Asian and African
markets. The lab was set up early last year. It has a team of 20
specialists—engineers, linguists and research scholars who work
on generating new ideas that can help the common man in emerging
markets access technology at an affordable price. The lab works
with all the different divisions of HP. Explains Dr S Ramani, the
lab’s research director, "Other HP labs across the world have
chosen a technology area and work upon it, but we have been vested
with the responsibility of only doing research on emerging markets.
We are expected to visualise a new technology and demonstrate it
for use as a futuristic option."
After evaluating the kind
of work that is being delivered by their development centres in
India, most MNCs are expanding them and increasing the level of
crucial and strategic work being done at these centres. For instance,
i2 technologies increased the headcount at its Indian development
centre from 900 in 2001 to 1,000 in 2002. The company is now planning
to add more people, and expects 90 percent of its global product
development to be touched in some form by its India development
centre in the near future.
|Texas Instruments’ India team has developed
some mission-critical chips which have won worldwide recognition,
says Harish M
Similarly, Sun’s IEC in
Bangalore is in the process of scaling up its operations. Anand
says, "When the centre was set up in 1999 it had only 20 people,
but we have scaled up to 500 people in a matter of four years, and
have increased our operational space." The same goes for TI,
which has expanded in space and is now spread across two different
locations in Bangalore, with a present headcount of 900. Likewise,
Oracle’s IDC is also planning to ramp up to 4,000 people from the
present 2,700 people by the end of 2003.
The Philips campus has added
a research group, which is working on patenting intellectual property
and standards, and does research across different Philips products.
This is the company’s only such research group outside Holland.
The campus, which has around 895 people at present, is aiming to
scale up to 1,000 shortly. Says Dr Hoekstra, "Initially, when
we set up the innovation centre in India in 1996, we had apprehensions
as to how it would fare. But the centre has exceeded our expectations
and established its competence, prompting Philips to keep on increasing
its strength in terms of manpower and the amount of work delegated
to it. That is why it has grown from a headcount of just 10."
For SAP Labs it has been
the same story, as after seeing the quality of work being delivered
from India, not only is the centre shifting to a new, larger location
by September 2003, but it is also in the process of increasing its
headcount from 620 to 750. The centre has also added technology
areas such as mobile device product development to its kitty. HP
Labs has also seen its strength shoot up from two (when the centre
came into being in early 2002) to 20 today. The lab is aiming to
double its existing strength by 2004.
India’s R&D strengths
India has one of the highest numbers
of engineering graduates in the world, many from world-class institutions
such as the IITs. Anand of Sun Microsystems says, "India has
the largest base of Java-certified developers in the world, more
pass out every year from different technical institutes, and we
have around 500 of them working at our engineering centre in Bangalore."
Adds Harish M, TI’s business
development manager, "The team at the TI centre in India has
developed some mission-critical chips which have won worldwide recognition
and have helped carry out all critical programmes for TI successfully."
Many also feel that Indians grasp concepts quickly. Observes Dr
Uday Shukla, director, India Software Lab, IBM Global Services,
"Indians have a hunger to learn new technologies, along with
an excellent learning ability and efficient project management skills.
Seeing this potential, any MNC would like to set up its R&D
centre in India."
Some R&D centres are working in
close association with prominent technical institutes in India such
as the IITs. For instance, HP is leveraging the rich talent of IIT
Chennai, and has opened a centre within the campus where students
generate ideas for the lab. HP has a similar tie-up with the Indian
Institute of Science in Bangalore. Recently, in a tie-up with IIIT
Bangalore’s Hubli centre, IBM decided to set up a centre of excellence
Some of the MNCs decided
to set up their R&D centres in India after seeing the world-class
work being carried out at some of the technical institutes in the
country, which again proves the capability of Indian technical manpower.
SAP Labs in Bangalore has recruited a huge chunk of its manpower
from IIIT Bangalore. Neuman points out, "Before we set up our
centre, our team visited many research institutes in India; after
seeing the standards here, the general satisfaction levels were
very high, and we immediately approved the idea of establishing
our centre here."
|i2’s India development centre is the largest
outside the US, and got investments of close to $10 million
in 2002, says Sankalp Saxena
Cost-effectiveness continues to be
a major driver, but not the key one, as most R&D centres in
India leverage more on the skill-sets of their engineers. Still,
it is true that Indian engineers and developers come at a much lower
rate than their Western counterparts.
Now that most of the centres
have proved their capabilities in terms of the quality of work they
deliver, the cost factor has become instrumental in driving their
Proximity to markets
India is close to the fast-growing Asian markets, and many development
centres here work to cater to these markets.
Dr Shukla of IBM says,
"We at IBM Labs India help in meeting our customers’ needs
through our domain knowledge. Customers are more satisfied when
they find that the company has a development centre close by. The
‘Made In India’ brand has also become very prominent and credible
these days, and customers get a value proposition when they get
quality stuff from such centres."
Similarly, the prime motive
behind the allocation of research work on emerging markets to HP
Labs in India is that India itself is an emerging market, and its
proximity to such markets would help researchers do efficient first-hand
Besides other factors, the time difference
between the West and India helps MNCs carry out round-the-clock
development activities, which in turn helps these companies carry
out round-the-clock operations, and thus contributes to their overall
growth and productivity.
does the future hold?
More MNCs will be tempted to set up
their R&D centres in India, and thus benefit from the advantages
that India has to offer. There are already many examples of MNC
R&D centres doing quality work over here. The delegation of
more mission-critical and significant work by such MNCs to their
Indian centres reaffirms the faith. Even during the current tough
global economic scenario, the expansion plans of these centres have
not been put on hold by the MNC parent companies.
The Indian government has
also been instrumental in helping MNCs set up such centres in India,
and is helping them with tax exemptions and other incentives. While
China is emerging as a major manufacturing hub for IT products,
India is inching towards becoming a global R&D hub for the IT
industry. Many hope that this trend will continue, and that there
will be a regular supply of skilled manpower. This, coupled with
the incentives which the Indian government is giving, can go a long
way in branding India as the R&D hub of the IT world.
developed by R&D centres in India
| Sun Microsystems’
server, Web server, Identity server and
Instruments’ R&D Centre
developed at least 20 products, including the Ankur Digital
Signal Processor; Sangam, a bridge router for the DSL; and Zeno,
which runs multimedia applications.
| SAP Labs
|| The lab
has produced some of SAP’s products meant for the global market,
including the Channel Management Solution, which helps chip
manufacturers negotiate prices with their dealers online; Dealer
Portal for the automotive industry; mobile laptop solutions
and oil and gas upstream solutions. The lab is also working
on a solution for Value Added Tax (VAT).
| i2 Technologies’
|| The centre
has fully developed a strategic sourcing solution for i2, besides
delivering nearly eight manufacturer-industry templates and
retail solutions from India.
|| It develops
most of the software required for Philips products. Almost every
Philips product having software in it has a contribution from
the Bangalore campus.
Instruments’ R&D Centre, Bangalore
in 1984. The centre started with just 20 people, now has 900
people working on VLSI and embedded software, which goes along
with a chip or into the chip.
India Development Centre, spread across two
Bangalore centre was established in 1994; the Hyderabad one
in Bangalore and Hyderabad
|| in 1999.
Oracle’s largest development centre outside the US has 2,700
people, which will be scaled up to 4,000 by the end of 2003.
Does work on Oracle's database products, applications, business
intelligence products and application development tools, besides
Microsystems’ India Engineering Centre, Bangalore
in mid-1999 with 20 people, has scaled up to 500 people today.
Does work mainly on Sun's software which includes Solaris and
| i2 Technologies’
R&D Centre spread across two
in 1988 with 20 people, has scaled up to 1,000 today.
in Bangalore and Mumbai
nearly 60 percent of the company’s global development delivery.
Software Lab spread across two locations in
in 2001. Works on all IBM software like WebSphere,
Lotus, Tivoli and Rational. The centre has added many new areas
of activities such as middleware and business intelligence.
Labs India, Bangalore
in November 1998 with 100 people, will be scaled up to 750 by
September 2003. It is the largest single-location R&D lab
for SAP outside Walldorf, Germany. Nearly 10 percent of SAP's
total R&D work is carried out from the Indian lab.
Innovation Campus, Bangalore
in 1996 with 10 people, has scaled up to 895 people today, and
will be further scaled up to 1,000 before the end of 2003. Works
on developing software for Philips products. Almost all Philips
products that use software have some contribution from this
centre. It is the largest software centre for Philips outside
| HP Labs,
in 2002 with just two people, has scaled up to 20 specialists
today. Plans exist to double its headcount by the beginning
of 2004. Is totally dedicated to high-level research on futuristic
technologies, with special focus on emerging markets.