Source: Times Of India
The success of any IT firm depends on how innovative it can be, no wonder top multinational firms continue to pump billions of dollars in their R&D centres, based all across the globe. However, what catches one’s attention is that a large number of these R&D centres are coming up in developing countries, of which India is clearly emerging as a hot, very hot, chilli-hot favourite.
The pace of action has been fast in India’s very own backyard, a fact that is more than evident seeing that Bangalore is home to Google, Yahoo, Intel, IBM, Adobe, Microsoft and many other top IT firms’ R&D centres. Then again, we have Nokia, the mobile phone giant planning to set up an R&D hub in India. There are even top gun MNCs, whose faith in Indian innovativeness has seen them set up more than one R&D centre on the sub-continent, e.g. IBM has a centre each in Delhi and Bangalore; Microsoft has one each in Hyderabad and Bangalore, while Adobe’s R&D centres are based in both Noida and Bangalore.
To quote an Economist Intelligence Unit survey carried out some years ago: “As a large Asian country where English is spoken, wages are modest and Western education is available, India has quickly grown as an R&D powerhouse”. A number of reports confirm nearly 25% of fresh global investments by IT MNCs are now being channelised towards their Indian R&D centres. But, just how much research and development is actually happening in India? A brief review of four global IT Goliaths and their Indian experiments reveals the following:
1. Microsoft India
With two separate research facilities in India, the first being Microsoft India Development Centre (MSIDC) in Hyderabad, only Microsoft’s largest development centre outside USA, Ravi Venkatesan, Chairman – Microsoft India has this to say: “Our excitement is how to make the ‘I’ in India stand for innovation, and how to apply this innovation to emerging markets.” Started in 1998, the Hyderabad facility employs over 1,200 people working on over 50-products and technologies, as of now. “At MSIDC, teams have end-to-end responsibilities on products based on cutting edge technologies. Every product team deals with all aspects of software development i.e. development, testing and programme management,” says Srini Koppolu, Vice President and Managing Director - MSIDC. The actual handling of products from conceptualisation to incubation to development by the Indian team, indicates a real shift in maturity, feels Venkatesan.
In Microsoft’s Hyderabad centre, a team of engineers is working on Windows Vista and Longhorn server and has fully developed the Data Protection Manager in India. Similarly, the virtualisation team recently released Virtual PC 2007 and is now working on the next release of Virtual Server 2005. They also demonstrate their expertise in integration of MS Office application with back-end ERP systems, by fully developing Microsoft Dynamics SNAP and Duet for Microsoft Office and SAP. In addition, the teams have full responsibility for Office Mobile (which includes Word, Excel and PowerPoint), SQL Mobile (now called SQL CE), Visual Studio for Devices and office communicator for mobiles. And, according to Koppolu: “MSIDC is a leader in creating intellectual property from India, and has filed over 100-patents in the last two years.”
Microsoft’s other centre; Microsoft Research India (MRI) was established in Bangalore in January 2005. As P. Anandan, Managing Director – MRI says: “India has a rich pool of research talent and provides opportunities to work on interesting problems. For example, the number of languages in India makes it a good place to conduct research in multi-lingual systems. India is an excellent place to do research in technologies that are suited to emerging economies.” This centre has 50-researchers working on multi-lingual systems, mobility networks, cryptography, security, and algorithms and other such technologies for emerging markets. Adds Anandan: “We are a young lab and have made significant progress in many research projects. As of March 2007, we have already published more than 60-papers in leading international journals and conferences, and have won prizes at prestigious conferences for our papers.” And, the last two years has seen the lab file for several patents.
In fact, Venkatesan says the Bangalore centre has tied up with several academic institutions like IIT to boost IT research and increase the qualified people pool, including improving the quality of research being done in India.
2. Intel India
Intel has also been an early starter in India setting up the Intel India Development Centre (IIDC) in Bangalore in 1998, the firm’s largest non-manufacturing site outside the US. IDC’s mission is to ‘grow and sustain a design / development capability in India that delivers high-quality, cost-effective solutions for all major Intel divisions”. The centre claims over 800-inventions and has filed for nearly 50-patents in the last nine years.
“There are many reasons why we chose to set up our R&D centre in India. First, India has a mature, open and credible business environment. Second, there exists a legal system with a good track record for IP protection and enforcement of business contracts. What’s more, there is a large source of skilled and talented people here enabling our presence in a fast and emerging market,” says Rahul Bedi, India business operations manager, Intel India.
So far, Intel has pumped in $700-million in India and has committed another $1-billion investment in various fields, including venture capital and R&D in India. Its workforce too has grown from 100-employees in 2000 to about 3,000 in 2006.
But, what’s the Indian centre’s global contribution? “The Bangalore team is becoming the primary competency centre for Intel’s supply chain applications,” says Bedi. The mobility group has contributed to the Centrino Duo platform, while about 500-members of IIDC significantly contributed to the development of Centrino Duo technology.
Similarly, IIDC’s digital enterprise group contributed to the development of quad core processor. While, the corporate technology group contributed to the world’s first programmable processor to deliver teraflops performance. Teraflops deliver supercomputer-like performance from single, 80-core chip, not much larger than the size of a fingernail, while using less electricity than most of today’s home appliances. As well, IIDC played a central role in the development of Teraflops Research Chip, contributing about 50% of the work, in terms of the logic, circuit and physical design. The Indian engineering team is part of Intel Corporate Technology Group’s Circuit Research Labs established in June 2004 and is one of two such locations worldwide (the other being in Oregon).
As for innovations, the Indian centre has conceptualised platforms for emerging markets including community PC, a concept partially developed in India. As of now, IDC is also expanding R&D efforts to include core areas like power efficiency (low power IA), terascale CPUS and health platforms.
Cerf, the co-inventor of Google, which has been named as one of the most innovative firms along with Microsoft, rightly states: “Given the amazing evolution of R&D capability and infrastructure here (in India), India has a major opportunity to contribute.”
And, India declaring faith in itself, India has declared innovation to be its strategic national priority, its new Mantra. Extremely ambitious, India’s goals are nicely captured by the slogans used to promote the 2005 and 2006 National R&D Expositions in New Delhi: “Think Innovation, Think India,” “Mind to Market,” and best of all, perhaps, “The World’s Knowledge Hub of the Future.”
And, there is no doubt that India can do it, it can meet such ambitious goals, since “India has 380-universities and 11,200-higher-education institutions churning out around 6,000-PhDs and 200,000-engineers, 300,000-science graduates and post-graduates annually”, and that R&D investment has been growing at a compounded annual growth rate of more than 40%.
In short, the competition is intensifying. Despite this reality, many Western firms still view the companies in rapidly developing economies to be mere copycats, first making low-cost ‘knock-off’ versions of US, Japanese, and Western European products for their home markets, later adding some new bells and whistles for the low-end export market. However, this is an unfair assessment. These firms are doing far more than just reproducing (at lower cost) what’s already there; they are innovating and improving in ways that provide value to both consumers and their own brands.
This process has been seen before, when in the 1950s and 1960s, Japanese electronics firms provided U.S. consumers with smaller and better transistor radios, challenging-and eventually displacing-Admiral, Magnavox, Zenith, and other popular U.S. brands. The Japanese companies then introduced other products, including state-of-the-art colour TV sets, which soon set the global standard for quality and reliability. By the mid-to-late 1970s, many Americans thought: “If it isn’t Sony, it isn’t worth owning.”
Similarly, Japanese auto-makers challenged the status quo. Before the once-dominant US auto-makers fully realized what was happening, the Japanese-Toyota, in particular-were setting new standards for quality and design, and everybody else was playing catch-up.
Likewise, current challengers, the South Koreans, whose LG Electronics, which first marketed its home appliances in the US under the low-end Goldstar brand, is now a serious competitor in the upscale designer market. And, Hyundai cars, once seen and sold as ‘cheap basic transportation’, are now challenging Honda, Ford, General Motors, Toyota, and Volkswagen. Samsung, a relatively unknown electronics firm a decade ago, was named the No. 1 consumer electronics brand in the world in the 2005 BusinessWeek / Interbrand survey of the top 100-global brands.
What drives this phenomenon is not only low cost, but the ability to invent, improve, and innovate in ways that generate the necessary payback: profits, knowledge, or an enhanced brand or organization.
Chinese, Indian, and other RDE companies are not all (or even mostly) copycats any more. Indeed, many RDE challengers, Chinese electronics firm - Hisense, Brazilian aerospace firm Embraer, and the Indian pharmaceutical giant Ranbaxy, now consider innovation central to the corporate culture.
For many decades, innovation was thought to be the province of the US, Europe, and Japan. That is long passé and so not true of today. Today, innovation is taking place at a rapid pace on a global scale. Chicago, Stuttgart, and Tokyo had better watch out; Delhi, Hong Kong, Shanghai, and Sao Paulo are getting ready to challenge, in fact they are more than up for the challenge as successful innovators, the Indian move from ‘mind to market’, as quickly as possible.
India has quickly moved up the quality chain, with the ‘Made in India’ tag fast replacing the cheap ‘n tacky ‘Made in China’, as the world realises that, while the Chinese product lasts for a day or two, Indian products go the distance, value for money, cost effective equality, all because Indians are learning how to innovate enough to match the depth of every pocket.
Innovation is India’s New Mantra and one that is working exceedingly well, as is evident from the increasing number of global minnows and whales of the IT industry and otherwise, wishing to make a big splash in India’s pool of talented R&D workforce!
