In keeping with the historic trend that companies with a higher R&D spend find India more attractive for investments, there is a clear opportunity to create additional 2,00,000 R&D jobs in India by Global 500 companies in the next five years, according to Zinnov.
About 45 per cent of the world’s top 500 R&D spenders invest in India and the Deccan Triangle (Bangalore, Hyderabad, and Pune) has over 200 established R&D centres and is the innovation engine of India.
Advisory and management consulting firm Zinnov in its report titled ‘Crossing the Value Chasm’, highlights some of the key trends on the top spenders and their operations in India and other global locations.
The report reveals interesting differences in the trend based on industry verticals and geographical preferences for R&D investments.
Top 500 R&D spenders
According to the report, the top 500 R&D spenders contribute over $577 billion with the top 100 R&D spenders alone contributing over 66 per cent to the global R&D spend.
About 40 per cent of the overall R&D spend is from organisations headquartered in North America, followed by 34 per cent from Europe, 18 per cent from Japan, and 7 per cent from Asia-Pacific.
Pari Natarajan, CEO, Zinnov, in a statement said: “To move to the next level, R&D centres in India must work on charters that impact the top-line objectives of the company — the ones that create architectural and business impact, for which higher maturity of product teams is a must.”
Top destination for R&D investments
Today, China is the leading destination for R&D investments with 385 Global 500 companies having a presence there compared with 220 in the Bay Area and 228 companies in India.
Globally, the automotive vertical has the highest R&D spend and India is one of the key destinations for these companies with cities such as Pune and Chennai fast emerging as auto hubs.
Worldwide, the software vertical saw the largest increase in spend of 15 per cent, followed by the semiconductor and energy vertical at 10 and 9 per cent, respectively.
R&D headcount
Today, close to 50 per cent of the Global 500 companies have over 10 per cent of the global R&D headcount in India. While software/Internet companies tend to achieve the milestone of locating 10-20 per cent of their R&D headcount in India faster than others, fee companies seem to have reached a ceiling at a minimal 1-4 percent of the global headcount.
A factor is that many of the India centres lack strong leadership and global stakeholder buy-in. Currently, only 11 per cent of the companies with centres in India have global roles in engineering, product management and support functions.