Global R&D spend down for the first time in 6 yrs

BANGALORE, INDIA: Zinnov Management Consulting, a provider of IT advisory services, recently released its report on R&D spending titled, 'Global R&D Benchmarking 2010'.

The study targeted at MNC R&D centers in India, reported that for the first time in six years, global R&D spending has decreased. However, this decline is much lower than the decline in net sales, which indicates the strategic importance of R&D, said a press release.

Highlighting the vertical split of R&D spending, the report reads that verticals such as automotive, semiconductor and telecom have witnessed a significant decline in absolute R&D spending while others remained steady.

It also added that companies headquartered in APAC were the only ones to increase their R&D spending, with the contribution being more than 10 per cent of the global R&D spending at PPP (private-public partnership).

The Top 500 R&D spenders account for close to 90 per cent of the total corporate R&D spending in the world, with the majority of investments coming from North America (NA) and Europe (EU).

Pari Natarajan, chief executive officer, Zinnov, said, “Our study showcases that only about 27 per cent of the top 1,000 R&D spenders have a center in India, in fact in some verticals, less than 20 per cent of the companies headquartered in APAC, EU and Japan have an India R&D center. India still accounts for a small proportion of the total R&D investments by global companies despite having a strong talent pool across verticals”.

He added that they have noticed that only a few large centers have been set up in India, with most of the centers having an employee headcount of less than 300. They very strongly feel that there is indeed a lot of scope to expand for optimization.

Giving specifics of geographical growth, the study reads that North America dominates software R&D and even though most R&D centers for software in India are mature, the need for diversification may increase competition from alternate locations such as China, the release added.

For telecom, North America and Europe dominate the R&D spending, while as for India, some of the R&D centers here have become global R&D hubs in just a short period of time.

In the Semiconductor vertical, it reported that North America is one of the top R&D spenders.