India under radar of European firms to set up R&Ds

By SiliconIndia   |   Tuesday, 25 November 2008, 10:57 Hrs   |    2 Comments
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Bangalore: India's revenue from the R&D market may swing high as European software companies are eyeing the country as a suitable location for their R&D operations. Currently, the country's revenue from the segment stands at $9.35 billion which is predicted to touch $21.4 billion by 2012.

The significant drivers that trigger an aggressive growth trend in offshoring to India include the available talent pool, cost arbitrage and the innovation capabilities. As per the study by Bangalore based research firm Zinnov, these key drivers project a potential of over 8-10 billion euros of addressable market for European companies' R&D operations in India. Zinnov Director CS Chandramouli asserted the European market is estimated at 125 billion euros and currently accounts for 35 percent of global research and development spend. While North America contributes about 42 percent to the global R&D spend, Asia accounted for 22 percent and rest of the world stood at one percent. The number of European companies setting up captives in India has surged by 200 percent.

The study also reveals that out of the top 100 European companies, 18 companies already have 23 captive centers in India, with Bangalore accounting for bulk of them. National Capital Region (NCR) and Chennai are the other preferred locations for European captive centers in India. Infact, only 10 percent of the top 100 companies have their subsidiaries setup in India, while the rest remain untapped.

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