Our Bureau Bangalore, Sept. 16 The offshoring of R&D services to emerging countries such as India, China and Eastern Europe is expected to pick up in 2010 tracking the global economic recovery despite flattish R&D budgets. Advisory firm Zinnov Management Consulting expects R&D offshoring to grow at an average of 10 per cent in 2010, up from the expected growth of 6-7 per cent in 2009. The total offshore R&D services market in 2009, impacted by the economic crisis, is expected to be in the range of $19.7-$20.3 billion, up from $18.7 billion in 2008. Though large customers have neither dramatically cut down nor increased their R&D spends, offshoring to India, China, Russia and Central European nations is expected to remain flat in the current year. India accounts for about half of the offshore R&D services market, closely followed by China and Eastern European nations. "Based on the interactions with our customers, we expect an incremental increase in the offshoring of R&D services," said Mr Pari Natarajan, CEO, Zinnov. Key drivers The smaller service providers will be impacted as customers consolidate their vendor base, he added.Zinnov helps customers in formulating their R&D offshoring strategies. Cost competitiveness and availability of talent in the emerging markets in comparison with the developed market remain the key drivers of R&D offshoring. "The global economy is currently observing green shoots of recovery with Germany, India and China among others showing signs of improvement. Despite changes in the current market dynamics, there will be continued growth of inter-linkages between global businesses and stronger relationships between the service providers and their customers," Mr Natarajan said. Indian companies top the global R&D service provider rankings of Zinnov. Market leaders Wipro, TCS and HCL Technologies have emerged as market leaders in overall rankings, which are based on components such as financial strength and sheer capabilities such as business models, innovation and expertise, people strength and operations. Aricent, MindTree, Tata Elxsi, Tech Mahindra, Symphony, Sonata Software and GlobalLogic figured among the top ten. These mid-tier vendors are strongly moving towards the top pack and establishing themselves as leaders in specific industry verticals they operate. Zinnov’s rankings are based on the comprehensive study and analysis of the top R&D service providers in India, China and Eastern Europe. Other vendors such as Infosys, Sasken and Patni Computers did not participate in the Zinnov study. |
