R&D: India as global hub

Many opine that India is racing ahead to become a global hub for advanced R&D in several industries. According to Wadhwa’s article, ‘How the disciple became the guru‘ in Harvard International Review, ‘the Indian private sector has found a way to overcome deficiencies in its education system through innovative programs of workforce training and development. These have transformed workers with a weak educational foundation into R&D specialists.’

Based on Wadhwa’s data, China’s performance in creating the manpower for R&D is far superior. China is rapidly graduating more Masters and PhDs in engineering. In 2005, it graduated 63,514 Masters and 9427 PhDs in engineering, exceeding corresponding US numbers: 53,549 and 7,720, respectively.

India’s graduation numbers is comapratively unimpressive: 18,439 Masters and fewer than 1,000 PhDs in engineering. In fact, India wasn’t graduating enough PhDs to meet the growing staff requirements of its universities.

If workforce training can take the output of an education system as weak as India’s and turn its graduates into world-class engineers and scientists, imagine what could be done with a worker base that has received the best education comparable to USA too.

Many things are happening in education sector, particularly in education for engineering and technologies.

The number of IITs is getting doubled with Patna and Punjab already started this year.

IITs are trying to add more and more Ph.Ds. In 2007-08, the IIT-Powai (Mumbai) is expecting at least 210 doctoral students to graduate as against 152 doctoral students received PhDs a year ago. Interestingly, of the 1,351 PhD fellows on the rolls at IIT-B, 209 are working professionals.

Even IIT-Delhi saw 140 PhD degrees this year. The current enrolment for IIT-D for undergraduate programmes is 2,407 while for post-graduate programmes, it is 1514, 216 for MBA and 1171 for PhD programmes.

Other IITs and institutes of excellence must be putting in similar increasing number of PhDs.

Quantitatively, the number of engineering colleges has reached the desired level, but the quality of education and thus the employability of the graduatuing students must improve. Efforts are on for the same.

Pete Engardio in his article ‘India: R&D Stronghold‘ in ‘Business Week’ confirms that India’s offshore R&D centers are booming, despite spiraling wages.

According to a study by Zinnov, a consulting firm that helps multinationals craft global product-development strategies, India’s R&D scene is not only still gaining momentum, it’s also becoming more strategically important. This is happening even though the average cost per employee rose 16.2% annually in the past three years.

Offshore R&D has mushroomed into a $9.35 billion annual industry, Zinnov reports, and is growing at a 23% annual clip. By 2012, the firm predicts, this business will reach $21.4 billion. The findings are based on interviews with senior managers of 120 India-based R&D centers of foreign companies.

The key drivers are multinationals. Roughly two-thirds of the work is done at R&D centers owned by tech giants such as Cisco, Motorola, General Electric, and Hewlett-Packard, as well as a growing number of small- and midsize U.S. companies. The number of such foreign-owned centers has surged from 180 in 2000 to 594 this year.

What’s more, the India R&D bases of multinationals increasingly are becoming the leading sites for developing particular products sold globally, whether they be new chips, software packages, or telecom devices. That means they often are responsible for all of the engineering, strategic direction, and even the profits and losses of a product line. Currently, 10% of offshore centers have “full ownership” of product lines, Zinnov estimates. By 2012, that will reach 30%.

Since 2000, U.S. patents awarded to inventors filing from India rose more than fivefold, to around 550 a year.

India’s R&D workforce is steadily gaining the experience to produce innovation.

As I understand from the Google alert on R&D in India, every day, some thing new is happening. Microsoft inaugurated its new India Development Centre (MSIDC) in Hyderabad that is its largest outside of USA. US slow down is becoming boon for India.

And it is happening in many areas. According to VG Ramakrishnan, director, automotive & transportation practice, Frost & Sullivan, “the Indian automotive engineering services outsourcing industry is expected to grow at a compounded annual growth rate of 32% (CAGR) by 2012-13. The industry has generated revenues to the tune of $500-600 million last year and there is $2.2 billion potential outsourcing opportunity in the next two years,”

And look at the potentials. The top 15 OEMs and system providers taken together spent close to $60 billion on engineering, and research and development (R&D) last year. Globally, the spent on research and development (R&D) in the automotive sector spent is about $130-140 billion.

Are the engineers-in-making listening? They needn’t go for MBA, if they have engineering aptitude. A bright future awaits them.

India might not be at the top of medals list at Olympics, but why can’t it at the top in R&D and innovations?

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