Zinnov launches R&D innovation council

BANGALORE, INDIA: Zinnov Management Consulting, one of the leading management consultancy firms in India, announced the launch of a unique platform for R&D companies in India titled “R&D Innovation Council”.

The council aims to bring leaders from R&D centres together to discuss various challenges and exchange best practices around issues confronting them. The council will provide a variety of services that will help companies benefit in their decision making.

The council is geared to address issues around operations cost management, productivity, innovation, talent sourcing, vendor partnerships, organization structuring and peer networking.

The convergence of large R&D talent in the country today, experienced leaders, innovation eco-system created by the MNC companies, network of institutions (providing research backbone) and a strong local market is driving innovation in and to India.

Moving up the value chain and being seen as value centres rather than mere cost centres is the latest mantra of R&D centres in India. This is further substantiated by the promising growth forecast of the R&D sector in India.

R&D offshoring to India is now a $9.35 billion industry, with MNC-owned R&D centres accounting for about $5.83 Billion of this market. This is expected to grow to be a 21.4 billion industry by 2012.

Pari Natarajan, CEO, Zinnov Management Consulting, said, “We, through our vast experience in the industry and several engagements with Indian R&D centre stalwarts, realized the need of an offering that would help India centres improve productivity, drive innovation and optimize operations. We have over the years taken several initiatives to help R&D centres in India evolve by sharing key insights on the sector through our comprehensive understanding and exhaustive studies.”

“We expect the R&D offshoring industry to grow at CAGR of 23 percent in an optimistic market scenario; wherein majority of the growth will be driven by large R&D centres and service providers. Most of the R&D centres in India as of today, are small firms with a global revenue of less than $100 million, and operate mostly with less than 100 FTEs (Full Time Employee) in India. On an average, these small R&D centres in India contribute between 80 per cent and 90 per cent to the global R&D of the companies whereas large R&D centres contribute about 25 per cent to 35 per cent to the global R&D,” added Natarajan.

According to Zinnov research, India centres are striving to become high-value centres. They have realized that there is a strong need to have a local leadership in India. Hence many are moving their senior executives to the country.

Glen Serrao, engagement manager, Zinnov, says: “Many companies are moving towards complete ownership model where the India teams own a part or full products as well. Few large companies have almost 90 percent of their teams working on products they completely designed, developed and delivered from their India centres. Small and mid-sized firms that predominantly used India as extended teams have either closed the operations or realized to move into better engagement models.”

“Distributed engineering teams are not working for new product development and companies that tried doing top down innovation (leaders in US controlling resources in India) have failed. Now, companies are moving towards strong local leadership that will facilitate bottom-up innovation,” added Glen.

The R&D factory in India today is still very nascent as compared to other Asian countries such as Japan, South Korea, Taiwan and Israel predominantly because their local R&D ecosystem then was very conducive for MNC companies to enter and extract value in an accelerated fashion. Whereas, in India, the very R&D ecosystem was built by the MNC R&D companies and even today it remains their key charter to mature this ecosystem into an assembly line of innovations.