India, a favorite destination for R&D outsourcing

October 10, 2011: Last few years have witnessed a tremendous growth in R&D activities of global players that is being outsourced to Indian IT outsourcing companies. The Indian Research and Development outsourcing sector is expected to touch $13.1 million by the year end and the Indian IT outsourcing companies experience significant changes in the projects being outsourced to them. With the recent success of Indian software products, the global players who outsourced basic functions such as testing have started to entrust Indian companies with the entire product development process starting form research and development.

With the rising confidence in Indian software products, clients have started to hand over the entire product lifecycle to Indian software suppliers. As a result, the Indian vendors are engaged in idea generation to product launch than mere basic functions such as developing products based on specifications and requirements.

According to Hari Rajagopalachari, executive director of PricewaterhouseCooper, a major consulting firm, the superior performance of software products such as Finacle introduced by Infosys has boosted the confidence in Indian software products globally. As a result clients are entering into long term partnership with Indian software companies such as HCL, Wipro, and Mindtree extending over the complete product lifecycle. Even though vendor partnering is in the infant stage, it definitely is growing and it amounts to $1.1 billion of the present day market.

Competition in the market is so intense that companies are engaged in marketing and sustaining products rather than focusing on new product development. Nokia and Microsoft committed the mistake of not focusing on new products and that has made them to lose their market share to competitors such as Apple and Samsung and Google respectively. This is where the role of outsourced product development (OPD) partners becomes crucial for the existence of companies.

According to Sunil Singh, managing director, of Globallogic India, in 2000 when they started clients used to entrust them with engineering and not idea generation. But now things have changed and clients are looking towards creating a long term partnership with Indian OPD vendors in terms of innovation. Clients now brief them with one line and they take the responsibility of developing and delivering the product.

For example a major consumer electronics client just stated a one line problem statement to its OPD partner in India and that was to develop television that is distinct from any TV in the US market and help them to launch it.   

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