The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Dwas a rapid expansion of these activities. Indian companies are increasingly activein seeking trade and offshoring business opportunities, including BPO and R&D.Several Indian IT companies have established offices in Sweden in the last fewyears. They include large Indian IT companies such as Infosys, TATA ConsultancyServices (TCS) and Wipro. In addition, several companies have established smalleroperations, for example in ICT and KPO (Evalueserve and others). Several ofIndian companies with offices in Sweden or other European locations focus ondrumming up business for offshoring to India and to source technology fromSwedish companies. Indian biotechnology companies (including Dr. Reddy’slaboratories) have begun to offshore R&D work to Swedish companies and theIndian company Biocon Ltd. is collaborating with the Royal Institute ofTechnology in Stockholm and the Swedish company Innate Pharmaceuticals.In recent years, several Swedish companies have shifted their strategic perception ofbusiness opportunities in India. In the past, companies typically viewed India’s marketpotential as limited and had little interest in Indian-based research. However, as thescale and scope for developing Indian-related business has expanded, India is increasinglyseen as part of large companies’ global business operations, including opportunitiesfor offshored industrial production and service provision. Manufacturing industrytrade and investment is expected to continue to grow and dominate the economic relationsbetween the two countries but other areas, including R&D and BPO-KPO, havealso attracted significant interest.Swedish-related corporate R&D operations in India are expected to expand in software,telecommunication, engineering, pharmaceuticals and in other areas. Large companieslike Ericsson plan further expansion of R&D operations in India, both in-house andoutsourced, as do engineering companies such as ABB and Volvo Trucks. The totalnumber of people employed in R&D operations (broadly defined) by Swedish-relatedcompanies in India (both in-house and outsourcing) could potentially reach over 5,000by 2010, compared to about 3,000 in 2006, and less than 100 in the early 1990s.It is difficult to assess to what extent the expansion of Swedish corporate R&D operationsin India (and other Asian economies) is occurring at the expense of activities in Sweden. Insome cases, the expansion of R&D abroad might reflect the transfer of R&D activities fromSweden to India. In other cases, it is a new investment. The record from U.S. and Britishcompanies suggest that locating R&D abroad often is required to sustain competitivenessand can benefit all parties in the home and host countries (Mitra 2006b).294