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India outsourced R&D biz to hit $21B by 2012

Posted: 13 Aug 2008 ?? ?Print Version ?Bookmark and Share

Keywords:India outsource R&D? India design market? India R&D centers?

India is the number one choice for companies looking to outsource R&D, with an offshoring business expected to grow 23 percent to $21 billion by 2012 and a huge talent pool, according to a study by Zinnov.

The management consulting firm's first report on India's R&D centers stated that the number of outsourced R&D centers in India has leapt from 180 in 2000 to 594 this year. The huge talent pool in the country has been fueling that growth, the report said.

About 140,000 engineers currently work in India's R&D centers and another 110,000 are working for companies that serve them, a larger group than previously believed, the company reported. The engineering talent pool in Bangalore, Zinnov reported, is second only to that of Silicon Valley.

The India Semiconductor Association released a report in April projecting the design sector in the country will grow by more than 21 percent during the next three years to $10.96 billion. It estimated about India employs about 130,000 engineers, the vast majority of them in software.

India is attracting and retaining more of its native technical workforce, with 30,000 of its engineers retuning in recent years from jobs in the Unites States. The number of graduates from IIT and other top Indian universities relocating to the Unites States is also on the decline, the report said.

The maturing talent pool is driving an increase in the sophistication of jobs handled in the India R&D centers. About 10 percent of the projects in the centers now involve full soup-to-nuts development of a new product, a slice that is expected to increase to 30 percent by 2012, according to Zinnov.

The report estimates the cost per employee in India grew at 16.2 percent between 2005 and 2007. However, the firm expects the cost growth to slow as pay raises and real estate prices moderate in the future.

At the Design Automation Conference earlier this year, the president of one of India's R&D firms estimated engineers salaries in India could rise to the levels of counterparts in the United States within a decade.

- Rick Merritt
EE Times

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