India Hosts 30% of Global Top 1,000 R&D Companies: Zinnov

Top Quote Study highlights India's Potential to Attract Investments in Automotive, Aerospace and Defense Sectors. End Quote
  • (1888PressRelease) June 21, 2012 - Bangalore: Zinnov, a leading Globalization and Market Expansion Advisory firm, today released its latest study titled, 'Global R&D Benchmarking Study: FY2011' which analyzed trends in R&D activities and investments globally. After witnessing a decline in the Global R&D spending in FY2010, the study reflects that FY2011 has seen an increase in spending and the potential for India to be among the top nations for R&D has only gotten stronger.

    Key findings:
    - Global R&D spending has increased significantly in FY 2011 , despite witnessing a decline in FY 2010
    - Global Net Sales and Global R&D spending have grown at a rate of 13.55 percent and 8.2 percent respectively
    - The contribution of R&D spend is divided across NA, EU and APAC regions at 36 percent, 34 percent and 7 percent respectively
    - A key contributor to the APAC region is India which has the presence of one-third of all Global 1000 R&D spenders

    India R&D Potential is high: The total R&D investment globally is on the rise and the NA and EU region continue to dominate. The contribution of R&D investment from across geographies is 36 percent for North American HQ companies,34 percent for EU HQ companies and 7 percent for APAC HQ companies. Though the APAC regions contribution (as a percentage of the Global R&D Spend) is seemingly small, what is noteworthy is that within the region R&D investments have increased a significant 28 percent as compared to the previous year.

    A large contributor to APAC's growth is India whose prominence as an R&D hub is growing; currently 30 percent of the top 1000 R&D spenders across verticals have a presence here. One of the key facts highlighted by the report is that there is a total installed talent pool of 220,000 in MNC subsidiaries in India and these MNCs have spent USD 7-7.5 billion on the headcount in India in FY2011 alone. The study also found that the opportunity areas for India to attract R&D investment span over 13 sectors with Software being the most invested in sector.

    Comment on the study, Mr. Sidhant Rastogi, Director - Globalization Advisory, Zinnov, said,
    "The sentiment on the role of R&D in driving the future continues to remain positive across geographies, supported by the significant increase in R&D spending in FY2011. Global R&D investments have grown by 8.2 percent as compared to the previous year FY2010. This growth has been primarily driven by organizations in the Semiconductor, Industrial & Consumer Hardware and Electrical & Electronic sectors".

    "India definitely has the right potential to become a key R&D hub, not only in Software for which it has gained recognition globally, but also in other verticals such as Aerospace, Automotive and Defense", he added.

    Vertical Highlights from the Zinnov Study
    Of the Top 1,000 R&D spenders globally, the Industrial sector led with 14.6 percent of the Total R&D spend. Software/Internet and Automotive constituted 9.4 percent each, while Semiconductor and Electrical/Electronic Equipment followed by contributing 8.6 percent and 8.3 percent of R&D spend, respectively.

    Software/Internet: North American companies are the largest contributors to Software/Internet R&D making 77 percent of investments, with EU at a distant second with 18 percent. Though most Software/Internet R&D centers in India are mature, the need for diversification may increase competition from alternate locations such as China.

    Industrial: Small and medium companies are investing aggressively towards R&D, and while EU leads with a 44 percent contribution, APAC and Japan together contribute 34 percent. Most R&D centers in the Industrial vertical in India are new and are rapidly ramping up.

    Semiconductor: North American companies are leaders in Semiconductor investment with 67 percent share in R&D. Though Indian R&D centers are mature with companies having 40 - 60 percent of their Global R&D talent pool in the country; competition from other APAC locations is rapidly rising.

    Electrical / Electronic equipment and Computer Hardware: Equipment manufacturers are concentrated in the Asia Pacific region with Japan being the leader - together contributing 72 percent of R&D investment globally. Indian R&D centers operate at a low intensity, with majority of companies allocating less than 20 per cent of their talent pool in India.

    Telecom and Networking: North America and Europe dominate this sector, contributing 37 percent and 43 percent of investments respectively, while APAC and Japan companies invest 19 percent in total. India has made great progress, with R&D centers becoming global hubs in less than 15 years since inception.

    Aerospace and Defense: The Zinnov study observed that North America with 45 percent and the EU with 52 percent of investment also dominate the Aerospace and Defense vertical. There is significant potential for India to grow as an aerospace and defense R&D hub with many companies setting up centers over the past few years and many more expected to enter this space soon enough.

    Automotive: Japanese and European corporations account for 76 percent of R&D spend in the Automotive vertical, with North America contributing 20 percent to the Global share. In India, this vertical is positioned for growth with several corporations planning an increase in headcount and ramping up capacity within the country.

    About Zinnov
    Founded in 2002, Zinnov - meaning Zeal in Innovation - is a leading Globalization and Market Expansion Advisory firm, with specialization in areas like Global Sourcing, Emerging Markets Expansion, Human Capital Optimization, Small & Medium Businesses, Innovation, Cloud Computing and Enterprise Mobility. Zinnov provides advice to global leaders in business and technology and works collectively with them to tackle prevailing organizational challenges by analyzing changing dynamics, improving performance, and building institutional capability. The services delivered to its clients through advanced reasoning and analytical techniques, provides solutions that help in integrating organizational vision, business definition and processes.

    For further details, please contact:

    Vaishnavi Murali/Mridula Benjamin
    20:20 MSL
    vaishnavi.murali ( @ ) 2020msl dot com / mridula dot benjamin ( @ ) 2020msl dot com

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