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MNC R&Ds prefer local leadership in India
By Jaya Kishore B
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Friday, 08 August 2008, 17:34 IST
Bangalore: Today, MNC R&D centers in India have realized that there is a genuine need for local leadership to achieve success and hence to excel, said Pari Natarajan, CEO of Zinnov, a management consulting company.
While speaking to the media in the sidelines of launch of a unique platform for R&D companies in India namely, 'R&D Innovation Council' by Zinnov, on Wednesday, Natarajan stated that today many companies have begun to move their senior executives to the country and many are moving towards complete ownership model where the India teams own a part or full products as well. Interestingly, Some of the large companies have almost 90 percent of their teams working on products they completely designed, developed and delivered from their India centers, added he. 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, said Natarajan, quoting a study conducted by Zinnov.
Natarajan also pointed out that the companies that tried doing top down innovation, i.e., leaders in the U.S. controlling resources in India, have failed. "Companies are moving towards strong local leadership that will facilitate bottom-up innovation," he affirmed.
However, the R&D ecosystem in India is still in a burgeoning stage compared to other Asian countries such as Japan, South Korea, Taiwan and Israel, said Natarajan."The prime reason for such a slow growth attributes to the local R&D ecosystem in these countries 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."
R&D offshoring to India is now a $9.35 billion industry, with MNC-owned R&D centers accounting for about $5.83 billion. This is expected to grow to be a 21.4 billion industry by 2012.
Zinnov's newly launched 'R&D Innovation Council' would help India centers improve productivity, drive innovation and optimize operations. "We have over the years taken several initiatives to help R&D centers in India evolve by sharing key insights on the sector through our comprehensive understanding and exhaustive studies," he said.
