[kictanet] India Losing it's Attraction as Offshore R & D option?

Thu Feb 21 15:22:08 EAT 2008

Brian,

R&D skills (errmmhh - anyone?)

My opinion... contribution...

To harvest these sort of skills we will need to focus our education system
to churn out more science based students.
Issue is there are many students who would love to take up the sciences
while at secondary school level but have resource issues to contend with -
no labs or poorly equipped labs, few teachers and ofcourse the inherent
challenges of learning and excelling in the science subject areas
themselves.

There are various solutions to these 'shortages' and adaptation of teaching
methods and teaching aids can go a long way to overcome even the lack of
labs.

Second to this will be to provide centres of excellence at tertiary level to
absorb these students, to do this would need to increase opportunities for
our students to undertake science careers, here locally, in the
various fields (those fields mapped on our own country needs and those of
the global platform - I keep wondering when we discover oil in this country
where are the skills to benefits from this discovery going to come from?) I
clearly need to stop wondering!

Inclusion of research techniques etc as a module at this level will also
open up any latent skills/interests in these students to follow through into
R&D centres.

Building a grant system for research at the university level will also go a
long way in allowing us to 'own' and patent our findings or developements.
though one might argue this is longer term but the seeds need to be planted
yesterday.

Ultimately I am a believer in preparing to do things for our selves and as
much as we need to get good bandwidth, fairly priced labour and all
the goodies you have listed below, the capacity building should get as much
attention and funding as it possibly can, today, so that the elusive human
resource factor is well prepared or believe it or not we will be at the same
level as India only we will have no 'patents' to show for it. Why ? because
we do not have the sufficient skilled human resource...

Fatma

On Thu, Feb 21, 2008 at 11:32 AM, brian <brian at caret.net> wrote:

> This should be v. interesting for us as we gear up for the "offshoring"
> onslaught.....
>
> Question is: What do we need to do to be ready to pitch for the kind of
> R&D investments that India has benefited from?
> - good bandwidth? (imminent)
> - fairly priced labour force (done)
> - R&D skills (errmmhh - anyone?)
> - conducive investment policy (somewhat)
> - stable political environment (oh dear...)
> anything else?
>
>
> Brian
>
> ps. for Alex ;-)
>
> http://ca.news.yahoo.com/s/afp/080220/technology/india_economy_technology_research_labour
>
> ----------------------------
>
>
> Tue Feb 19, 10:45 PM
>
>
> BANGALORE, India (AFP) - India used to be seen as the perfect offshore
> research and development hub for global firms seeking to tap its low-cost
> and supposedly vast engineering talent pool to devise products for world
> markets.
> ADVERTISEMENT
>
> Companies including Microsoft, IBM, Intel, AMD, Google, Motorola, Yahoo!,
> Cisco and Siemens have opened R and D centres in India, drawn by payroll
> costs that were once a quarter of those in the US and Europe.
>
> But the cost advantage is fading and engineers trained in basic research
> are harder to find, reducing India's appeal, says Zinnov, a consultancy that
> advises overseas firms on R and D issues.
>
> "Some companies witnessed a 20 percent rise last year in the cost of
> running their R and D operations in India," Zinnov chief executive Pari
> Natarajan said in an interview.
>
> "If this trend continues, the cost advantage of doing R and D in India
> compared to the US will go away," he said, predicting a shakeout in the R
> and D offshoring market.
>
> India is home to 594 R and D facilities set up by overseas firms that
> invested a combined 5.83 billion dollars, according to Zinnov.
>
> Rising costs and a shortage of skilled workers have also hurt other
> industries -- from software to retailing -- in an economy that has expanded
> at an annual average of 8.6 percent over the past four years. But the R
> and D offshoring market has received scant attention.
>
> "Costs are going up all over, and we are also facing a shortage of shop
> floor workers," said Anjun Roy, economist at the Federation of Indian
> Chambers of Commerce and Industry.
>
> "There is a need to improve skill sets in a lot of areas."
>
> Like software makers, R and D centres whose expenses are incurred mainly
> in rupees were hurt by a more than 12 percent rise last year in the value of
> the Indian unit against the dollar.
>
> Wages jumped about 15 percent as companies fought to hire and retain
> hard-to-find engineers skilled in research.
>
> India turns out more than half a million engineers every year, but
> institutions do not train them in basic research, limiting the available
> talent pool to no more than 100,000 people, said Natarajan.
>
> The shortage may set back the ambitious expansion plans announced by
> companies such as networking giant Cisco, which said in October that it
> plans to triple its headcount in India to 10,000 in three years.
>
> "It's going to be very difficult for companies which have very aggressive
> hiring targets," Natarajan said. "It's almost impossible to hire unless you
> compromise on the quality of talent."
>
> Cisco, which plans to use India to develop products for customers in
> emerging markets, has opened 170 academies across the country and is
> training 8,600 students to overcome the talent crunch, human resources
> executive Leo Scrivener said.
>
> "We are aware that a large pool of technical specialists and business
> solutions experts can't be readily hired from the market," Scrivener told
> AFP.
>
> Cisco has benefited from its R and D facility in India that has generated
> 110 US patents, with another 400 pending with the US Patents and Trademark
> Office.
>
> Hundreds of patents have been filed by other research facilities based in
> the country. Half the work on an Intel wonder chip, a fingernail-sized
> device unveiled last year that offers supercomputer performance, was done by
> its India research centre.
>
> Despite the problems facing R and D, Zinnov predicts that investment in
> existing facilities by large global companies capable of riding out rising
> costs, and with the infrastructure to train fresh graduates, will drive
> India as an offshore R and D destination.
>
> That will pump up the R and D market by an annual average of 23 percent
> until 2012, even as per-employee cost in India increases by a yearly 13.3percent.
>
> Smaller facilities may have to shut shop or sell out while investment in
> new R and D centres will likely dry up as part of a looming consolidation,
> said Natarajan.
>
>
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