For many companies these days, it’s absolutely natural for them to tap the knowledge base abroad for parts of resource and development (R&D). Why? Students in “first-world” countries are still shying from the technical jobs, whereas in India, there are at least 100, 000 English-speaking engineers graduating a year. Folks in R&D, often unable to find enough engineers here in the West, head over to Asia. R&D is massively competitive, meaning products put out a year late often suffer great losses — as a consequence, the time-to-market pressure put on by the companies abroad also pushes Indians (and Chinese!) to innovate faster and faster. Also, these Asian economies want products suited to them — not just Western hand-me-downs (via BusinessWeek).
Everyone knows that the Indian economy, after liberalizing in the early nineties, has soared — perhaps not as fast as the other “Asian tigers” (e.g. Singapore, South Korea, Taiwan), but still very rapidly.Â Unlike most of the Southeast Asian countries, however, India focused on nurturing its domestic companies rather than ruthlessly focusing on exports and foreign investment.Â In this, lies India’s strength: the economy is more independent from foreign investment and balanced. Infosys, Tata Motors, WiPro… slowly more and more people are paying attention to these companies.
Back to R&D. The general stigma in the past years has been, “Oh, yeah, India can do the basic stuff… but we really don’t think they are capable of busting out the final product.” And this, my friends, is the challenge most South and Southeast Asian countries have had to tackle. In the 1980s, South Korea, Thailand, and Indonesia all devoted at least 80% of their education budget towards primary and secondary education. That adds volume to the workforce, but investment in higher-education became necessary to propel their industries to the next level. I think India does have many knowledge-based versus labor-based companies. Really, the country is capable of delivering quality, finished products. (Take Tata Motors and the Tata Nano, a gorgeous little design innovation.) All India needs is a chance.
We believe that the same is true for the outsourcing and offshoring of R&D. In fact we think such innovation will be the next IT and that companies that are proactive about R&D globalization will gain competitive advantage over slothful competitors. (Gunjan Bagla, Atul Goel — Business Week)