Japan to drive Indian offshoring industry: Zinnov

BANGALORE, INDIA: Zinnov Management Consulting, a leading management consulting firm, today launched a first-of-its-kind study, titled “Global 1,000 R&D Spenders: India Opportunity Identified”.  The study in totality brought to light the Global R&D Landscape from the perspective of the total number of dollars that are being invested by the top 1000 global companies from various geographies. 

The report highlighted that the top 1,000 global R and D spenders accounted for about 53 percent of the total global R&D spend of about USD 1 trillion in 2007-08. It read that though the R&D spend has increased year on year, the total R&D spend as a percentage of revenue has decreased for the mega spenders over the last four years. U.S and Europe based companies together account for around 75 percent of the R&D spend of Top 1,000 companies in 2007-08.

In addition to some facts and figures, one very important aspect that the study brought to surface is that Japan seems to be the next destination after US and Europe, which will drive the next phase of growth for the Indian offshoring industry. With home to about 190 Global R&D spenders, Japan has witnessed high growth  in R and D investment as well as R&D as a percentage of sales in 2007-08.

“The offshoring potential from Japan is largely untapped and more and more companies are now looking to outperform their US and EU competitors.  Besides this, while R&D offshoring to India from the US markets is reasonably high, given the current economic situation, the recession hit US market is likely to be overcautious on any new R and D offshoring commitments, which makes Japan the next desired destination to look at. This therefore, provides an opportunity to the Indian offshoring community to look at Japan as the next destination to get more work offshored”, said Praveen Bhadada, engagement manager, Zinnov Management Consulting Pvt. Ltd.

The study said that Global R&D companies based out of Asia have witnessed a rapid increase in R&D investments over the last 3 years. However, the Indian R&D landscape has witnessed a decline in the trend of number of new centers opening has only 281 of the top 1,000 R&D spenders, which provides them with huge opportunity of growth. 

Detailing on industry sectors that have witnessed the maximum amount of R&D spending  globally, the launched study read that automotive has indeed been the single largest R&D spender, followed by Pharmaceutical and Hi-Tech. It also added that R&D spend in Computer Software is dominated by the US market, while the European Union leads in Pharmaceutical, Telecom and Automotive sectors.

As for the R&D investment for 2007-08, the report said that the telecom sector has registered the highest R&D investment growth followed by automotive. Additionally, among the Top 10 verticals, pharmaceuticals has witnessed the highest R&D investment to sales ratio of 15.4 percent with a R&D growth rate of 13.8 percent.