R&D Centers in India Help MNCs to Save $40 billion

Date:   Tuesday , August 03, 2010

The cost of running R&D centers in India has continued to decline over the last two years. R&D centers of MNCs in India have generated significant cost savings for their headquarters because of the lower operating costs over the years.

According to a study titled ‘R&D Operations Cost 2010 - The Need to Look Beyond Cost Control’ by the management consulting firm Zinnov Management Consulting, R&D centers in India have helped parent organizations save a total of $40 billion in the last three years.

Currently, the cost of running R&D centers in India stands at ` 18.2 lakh per person per year. It reveals that the cost has declined by 0.9 percent in Rupee terms, 4 percent in U.S. Dollar terms, and 3.3 percent in Euro terms in FY 2010, indicating signs of continued cost optimization due to the constrained economic environment. The decline was primarily driven by strict budgetary constraints of R&D centers of global companies in the form of minimal or no salary increments, focus on variable pay, freeze on hiring, and cost optimization across infrastructure, travel, and communication.

Bringing into perspective a comparative analysis of cities, the study says that the Bangalore-based companies incur higher cost as compared to the other cities.