The research and development outsourcing market for information technology in India is seen growing from $1.3 billion in 2003 to over $8 billion by 2010.
According to a study by Ireland-based leading market research resource, Research & Markets, India is now well on the road to becoming the world's favourite destination for outsourcing.
"But a low cost advantage does not spell sustainability. Moving away from call centres and other low-end services, firms are now beginning to exploit the intellectual calibre that is available in India," the study said.
"Evidence of high-end outsourcing is evident from the large number established R&D outsourcing centres in India."
The report looks at various aspects of R&D outsourcing industry in India, with special focus on the R&D outsourcing scenario in the IT, telecom, auto, research and pharmaceuticals sectors. Estimates for R&D outsourcing in India, with forecasts till 2007 for the IT, telecom and pharmaceutical sectors, are also provided.
The report examines the key drivers and inhibitors impacting the growth of R&D outsourcing, prospects for growth and key success factors. Success stories of some of the major companies like Texas Instruments, Microsoft, Cisco and GE, who have set up large R&D centres in India, are also provided.
The report is based on secondary data as well as extensive interviews with key people at the Indian R&D centres, to understand reasons for success/failure and other attributes of the successful companies.
The report will help companies setting up offshore R&D centres understand the key success factors; or what they need to do to make their offshoring efforts successful from selection of key people, cultural issues, location, links with educational institutions, support from parent company, dos and don'ts.
"Outsourcing of services has considerably helped India's image as a business destination. The availability of English speaking, low-wage, skilled labour, are the most often cited reasons."
According to the report, the factors driving the increasing momentum of R&D off-shoring/outsourcing industry are: availability of highly skilled manpower; cost-effectiveness; proximity to fast-growing Asian markets; benefit of follow-the-sun schedules and information security solutions.
While the inhibitors are: inadequate infrastructure; security and intellectual property laws; quality of higher education and political risk.
In this study of successful R&D establishments, the success stories found were built on a well-defined set of success factors enumerated below: selection of key person to run the R&D operations; champions of the R&D set up; human resource management; strong quality systems; integration and communication; cultural issues; affiliation with educational institutions/ universities; clear roadmap and early successes.