The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DR&D priorities have varied significantly by type of stakeholder. Government and publicsectorR&D typically has national development goals such as need for basic competency inhumanities, social sciences and national sciences, plus special national security relatedresearch such as nuclear, defense and space technology. Indian corporate R&D hastraditionally focused on adopting technologies to local markets and has only recentlybecome substantive in terms of serving international demand. Industrial research hasfocused on IT, pharmaceuticals, chemicals and consumer electronics. Foreign companieshave emerged as a key factor in internationalization of R&D with much of the expansionfocusing on needs to serve global markets, IT and automobile being prime examples.In addition to the above-mentioned sectors, India has experienced a rapid growth inthe knowledge processing industry operations, parts of which are closely related toR&D competency. The number of large and small foreign and Indian companiesfocusing on higher-end BPO or KPO has been growing rapidly since the late 1990s.Growth areas include data search, integration and management services, financialand insurance research, biotech and pharmaceutical research, computer-aidedsimulation and engineering design, medical content and services, and remote educationand publishing. According to Evalueserve’s estimates, the global KPO marketis expected to grow from 1.2 billion dollars in 2003 to 16 billion dollars in2010. This corresponds to a 45 percent annual growth for KPO compared to 26percent expected for the BPO segment (Evalueserve 2004 and 2005).Examples of major multinational companies with significant KPO operations inIndia are: A.T. Kearney, British Airways, Citibank, Deutsche Bank, GeneralElectric, Goldman Sachs, Datamonitor, Fidelity, International Data Corporation(IDC), J.P. Morgan Chase, IBM Global Services, Lehman Brothers, McKinsey,Morgan Stanley, PWC, Reuters, Standard Chartered Bank, United Airlines andUnion Bank of Switzerland.11.4.2 ICT: Software, IT Hardware and TelecommunicationThe Indian ICT industry has expanded rapidly in software products and services and,in recent years, also in computers and electronics hardware and telecommunicationproducts and services. The industry is comprised of more than 100 major foreigncompanies and an even larger and more diverse group of Indian companies, rangingfrom large organizations with global operations to smaller companies focusing onexports or the domestic markets. The industry displays considerable variations intechnology and organizational sophistication, cost structures, market focus andgrowth performance.India accounted for 65 percent of the global market in offshore IT software and 46percent of the global BPO market in 2004, according to a NASSCOM-McKinseystudy. These offshoring industries have grown three-fold between 2000 and 2004,284