Source: timesofindia.indiatimes.com

India is no where close to countries like US, Japan and China, when it comes to filing patents. But it still does a significant bit in the IP space. A lot of it’s happening through patent service outsourcing in India. This means, a lot of background work for the numerous patents that are being filed by other countries, are being done out of India.

Experts say, patent services outsourcing, the high value work of legal process outsourcing (LPO) has been a fairly new phenomenon here, hardly four to six years old. According to estimates last year, more than 1.8 million patent applications were filed worldwide.

And the filing costs for these was between $30 billion to $32 billion. But what’s driving growth in the worldwide patent outsourcing market is: Increased offshoring of R&D activity, lack of manpower and the impact of the US Patent Reform Act of 2007.

A study by ValueNotes, a Pune-based research firm shows, revenues from the Indian patent services offshoring industry are estimated at $46 million for 2007. It’s expected to reach $206 million by end 2012. The study reveals the current addressable value of the patent services offshoring market is estimated at $2.2 billion.

“We believe that the Indian patent offshoring industry will grow 35% per annum over the next four years. As for the number of employees, our estimate is that about 6,950 people will be employed by the end of 2012,” says Subha Kalathur, senior analyst with ValueNotes.

As Navtej Saluja, head of intellectual property, Evalueserve, one of the leaders in this space, explains, “A lot of LPO work being done in India has been glorified BPO jobs like filling up forms etc. Patent outsourcing, on the other hand, is a more high end KPO job that requires specific skills and understanding.” It involves end-to-end search jobs before a patent is being filed, drafting the papers, patent analytics. No wonder, vendors who do this niche job hire engineers, scientists, lawyers and train them for IP work.

Last year, there were about 50 vendors offering patent services from India. As of now, US accounts for 60% of the work. “IP currently accounts for over 45% of the LPO market and is expected to lead the growth in this sector in the next three to five years,” says Bhaskar Bagchi, country head, CPA India.ValueNotes classifies the patent services offshoring industry in India broadly into three groups: captives, third-party multi-service providers and third-party pure play patent service providers. Third-party vendors account for more than 75% of the industry.

The good thing is, India hardly has any other competitor in this space, especially for patents being filed in English. Eastern Europe is the frontrunner in multi-lingual patent outsourcing service. Philippines, too, is doing some low-end work.

Kalathur feels quality issues could be a major growth inhibitor in the short term for India. “However, availability of quality professionals will improve in the medium-to-long term, driven by investments made by vendors in training,” says Kalathur. Once that happens, the sector can look at a bigger growth curve.

Source: www.thehindubusinessline.com

Indian companies seem to be at the forefront of the reverse outsourcing trend, with the total employment generated by domestic entities in the US touching around 30,000.

The largest amongst all is the Tata Group conglomerate, which with its 16 diversified businesses, has invested more than $3 billion in the US economy till date and employs about 19,000 people. Similarly, Essar’s American operations generated more than $110 million in revenues last year and its staff strength has grown to 7,200 since 2000.

Essar is expecting to increase the number to 8,500 by 2009, according to a joint report by the US India Business Council (USIBC) and FICCI (Federation of Indian Chambers of Commerce and Industry). Interestingly, less than 30 of Essar’s employees in the US are Indian nationals.

Software and technology giants such as Wipro, Satyam and HCL have also been raising their headcount steadily in the US market, which accounts for the highest IT spend globally. Among the three software companies, Wipro has generated a pool of almost 8,000 jobs by supporting multinational companies such as Cisco and Microsoft. Satyam Computers, which clocked revenues in excess of $800 million, has employed 5,000 professionals, said the report. HCL Technologies, however, has a slightly lower headcount of 3,000 employees spanning a client base in 200 US cities.

“Indian employers and their American workers contribute billions of dollars to federal, state and local coffers by way of wages, corporate taxes, payroll taxes and income taxes. The ripple effects of these jobs and investments stimulate and enrich local economies nationwide,” stated the USBIC-FICCI report.

Auto maker Mahindra & Mahindra and pharma companies such as Ranbaxy and Wockhardt too have contributed to the US economy even though their employee base remains lower.

With over a decade of presence, Mahindra USA Inc, with a staff of 125, paid a cumulative salary of $5.1 million and $880,000 in state and local taxes.

Ranbaxy, which produces some of the drugs at its facilities in New York and New Jersey, has a combined strength of 600 employees, taking its payroll expenses to $35 million.

Wockhardt, the relatively newer entrant in the American market, had a staff cost at around $20 million by providing employment to 200 professionals, revealed the survey.