October - December 2006 Vol 2 Issue 11
Brainwave      Insight      Technova      Perspective      X'Pressions     


Topic of discussion in this issue

“ Indian Companies going global does it really signify Indian companies have come of age ? “

Indian companies hunt for assets abroad to acquire global scale current score: 307 acquisitions worth over $20 billion for the raiders,however integration and sustainability pose a challenge to the Indian MNC’s in the making .

Views-in-Favour and Counter-Views on this conflagrant battle are solicited. Your views should reach us at b_cognizance@iiita.ac.in latest by 15 Jan’07.

Solution for the previous topic

"MNC giants are setting up their research centers in India to rope in the cheap Indian Genius? "


MNCs are flocking to India largely due to the availability of the cheap Indian genius. The big players of the global IT industry—Oracle, IBM, SAP, etc—already have development centres in India. 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. Oracle, Philips, SAP and Texas Instruments (TI) also have R&D centres in India. An increasing number of companies have realized 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.

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.

India has one of the highest numbers of engineering graduates in the world, many from world-class institutions such as the IITs. Mr Anand of Sun Microsystems say, "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." 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 there. 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."

Cost-effectiveness continues to be the major driver, as most R&D centres in India leverage more on the skill-sets of their engineers. It is very true that Indian engineers and developers come at a much lower rate than their Western counterparts and that is why the MNCs are flocking to India.


India is geographically 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 idea behind 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 work.

Besides other factors, the time difference between the West and India helps MNCs carry out day and night development activities, which contributes to their overall growth and productivity.

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 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.