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Indian IT multinationals reduced cost on R&D during recession
By siliconindia
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Monday, 12 July 2010, 21:34 IST
Bangalore: Indian IT multinationals slashed their funding for R&D during the last 12 months whereas technology biggies do not restrict research even in bad stages of their business. When it comes to the remuneration part, Pune gives tough competition to Bangalore, according to a study by Zinnov Management Consulting.
An annual report by Zinnov Management Consulting titled, 'Compensation and Benefits Study, 2010' analyses the post recession scenario, the changes initiated by Compensation and Benefits in this scenario and the global impact on the centers in India.
With software/ internet, telecom/ networking, semiconductor and industrial automation witnessing a decline of five percent to ten percent, the R&D spend growth went down significantly in the last 24 months.
"As the cost pressures continue to exist, we foresee companies trying to execute more R&D work at the same or even lesser budgets as compared to last year. Companies would be forced to focus on new growth engines in the form of emerging markets (such as India and China) and newer technologies (such as SaaS/ Cloud). And this will fundamentally push all R&D centers to deliver higher value & higher productivity at lower costs," said Pari Natarajan, CEO, Zinnov.
Through this study, it is realized that, the industry will see an average salary increment between six percent to ten percent on the basis of their growth at the India center and global performance of the company. While companies will be cutting down on salary increments, the ever increasing experience pool will continue to put lot of pressure on costs.
Zinnov has estimated that the average attrition figures for the year will come upto nine percent.
While the availability of talent pool will continue to exist, companies would be going slow on hiring and would only be looking at backfilling existing positions and selectively hire at new positions based on requirements, feels Zinnov Management Consulting, while highlighting about the hiring process to be slow and selective.
Pune is coming at par with Bangalore as an innovation capital going by salaries paid in the R&D area. In 2009, they were just one percent behind Bangalore. Bangalore accounts for 56 percent of R&D positions to Pune's 44 percent.
Mid-sized companies may also benefit as the service providers focus on the long tail of product companies to explore new growth engines for their respective growths.