India emerging R&D hot spot for high-tech firms

At Microsoft’s research centre in a leafy lane in India’s tech capital — Bangalore — a new generation of researchers are being groomed half a world away from the software giant’s sprawling headquarters in Seattle. The centre is helping change the perception that India is no place for top-end research and development.

Staffed with about 60 full-time researchers, many of them Indians with PhDs from top universities in the United States, the centre is at the cutting edge of Microsoft’s R&D. It covers seven areas of research including mobility and cryptography.

Its success, including developing a popular tool for Microsoft’s new search engine Bing, underscores the potential of R&D in India at a time when cost-conscious firms are keen to offshore to save money by using talented researchers abroad.

Showing off the Bing tool which enables searches for locations with incomplete or even incorrect addresses, B Ashok, a director of a research unit at the centre, said the innovation would never have taken root if the R&D had been done in the US. “It was completely inspired by the Indian environment, but is applicable worldwide,” he said.

While India might seem like a natural location to expand offshoring into R&D, it is hampered by some serious structural problems that range from not enough home grown researchers to a lack of government support.

India produces about 3,00,000 computer science graduates a year. Yet it produces only about 100 computer science PhDs, a small fraction of the 1,500-2,000 that get awarded in the US, or China, every year.

With few government incentives and an education system that emphasises rote learning, India lacks the kind of environment found in say, Silicon Valley, where universities, venture capitalists and startups encourage innovation.

Rival China has already pulled ahead with more than 1,100 R&D centres compared to less than 800 in India, despite lingering concerns about rule of law and intellectual property rights. Aside from providing funding to encourage students to complete their PhDs, China also offers fiscal incentives such as tax breaks for R&D centres and special economic zones provide infrastructure for hi-tech and R&D industries.

India is also losing out in the patent stakes. In 2006-2007, just 7,000 patents were granted in this country of 1.1 billion people, compared to nearly 1,60,000 in the US.

Beyond coding
Microsoft and other firms have been working around the government’s indifference. Cisco, IBM, Intel, Nokia, Ericsson and Suzuki Motor have all gone beyond low-end coding and tweaking products for the local market, with hefty investments and recruitment.

Their success shows India’s potential if the government starts supporting such ventures and building high-tech parks and incubators.

Texas Instruments and San Jose-based Cadence Design were among the first to set up R&D in India in the mid-80s, drawn by the legions of English-speaking software engineers who could be hired at about 20 per cent of the cost of engineers in the US.

Firms first focused on the ‘D’ in R&D, but research has grown in importance in recent years, and many of the facilities in India are now the largest outside their home base.

“The Indian units are more tuned to the needs of customers in emerging markets. Besides, Bangalore is only a five-hour flight away from three strategic regions: Southeast Asia, east Asia and West Asia,” said Aravind Sitaraman, vice president at Cisco.

IBM’s new $100 million-mobile communications research, Mobile Web, is the first time a big project has been driven from outside the US.

Reuters

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