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R&D Spend Growth Slipped by 5-10 Percent in Two Years

si Team
Monday, March 29, 2010
si Team
Boom or recession, the R&D spend growth has remained minimal, with verticals like software witnessing a downward slip by 10 percent. Pari Natarajan, CEO, Zinnov Management Consulting says, “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 like SaaS and cloud. We also see that this demand for cost control will indeed force R&D centers in India to put a check on the salary escalations for the next couple of years.”

Throwing light on how compensation and benefit are shaping up post recession and what are the global changes and their impact on the centers in India, Zinnov released its recent study on ‘Compensation and Benefit Study 2010’. The study highlights that while companies will be cutting down on salary increments 6-10 percent this year, the experience pool will continue to put lot of pressure on costs. The study also says that lesser increments could result in a short term spike in attrition. While the availability of talent pool will continue to exist, companies would be going slow on hiring and rather selectively hire for new positions based on requirements.

Dwelling on the aspect of future outlook, the study reads that many of these R&D subsidiary centers would also explore opportunities with tier-2 and 3 cities in India to execute some non-core functions at these ultra low-cost destinations. Last but not the least, the study brought to light that service providers will also play an important role in the product development value chain. These providers would add significant value in cost optimization by undertaking non-core, non-complex functions, thereby allowing companies to save some funds for futuristic investments.
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