India R&D offshoring industry has seen a phenomenal growth in the last 6 years and has played a key role in showcasing its capability in innovation and high quality work. However, current changing economies, increased scale of operations, and the keen competitive intelligence at work demands new strategies.

Today, R&D offshoring to India is a USD 9.35 Billion industry (2008); with MNC-owned R&D centers accounting for about USD 5.83 Billion of this market. Of the total, Software Product Development constitutes about USD 3.15 Billion of R&D market, with Embedded Systems at USD 1.56 Billion and Engineering Services constituting USD 1.27 Billion. The dominant verticals comprise of Enterprise Software, followed by Telecom and Networking.

R&D offshoring in India started way back in the 1980s and gained momentum after 2002, is now poised for the next phase of growth. Cost today is no more a key driver for offshoring R&D operations to India, as companies seek to value the skilled R&D talent pool and emerging market opportunities.

Despite the current depressed economic conditions and a marked slowdown in growth rate of the industry at this point and time, the long term potential of the industry is robust. We believe, the exisitng powerful forces like potential market for local products, willingness of MNC product companies to invest in India start-ups, high economic growth of the middle class population and risk taking abilities will continue to drive growth.

Furthermore, since India has now gained familiarity and experience with offshoring simultaneously increasing the breadth of service lines, some significant high-potential industries like Manufacturing, High-tech Telecom, Retail and IT & ITES, would bring in sheer volumes.

The success of Global R&D companies in today’s time truly depends on how effectively they deal with each of the many challenges such as lower productivity, lack of innovation, cost escalation, management instability and talent crunch. We, over the years, have taken several initiatives to help R&D centers evolve by sharing key insights on the sector through our comprehensive understanding and exhaustive studies.

Read more on the India R&D offshoring landscape, key drivers, current challenges as well are some critical success factors for them.

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