Monday, February 25, 2008

R&D offshoring to hit $21.4 bn

Source :

The IT R&D offshoring market in India is expected to record a CAGR of 23% to touch $21.4 billion by 2012, according to a study done by Zinnov, a consulting firm. Zinnov said there are around 600 MNC captive centres in India and for 2008, the total revenue is expected to touch $9.4 billion with $5.8 billion going to come from the MNC captive centres rest from the third-party vendors.

Zinnov CEO Pari Natarajan said, despite this growth in the R&D offshoring market in India there is a dearth of required talent pool. For example, it is estimated that there are only 800 IT product managers in the country. At the same time, the salary costs of these professionals are also increasing questioning the business viability of these captives.

Mr Natarajan said, salaries constitute around 70-75% of an R&D companys operations and this was also impacting the productivity of these companies.

He said, MNC firms in the revenue range of $100-200 million are the most hard hit in getting the right quality people. This growth in R&D offshoring is primarily driven by the MNCs captives, though at the same it is also seeing the increasing presence of third party vendors, especially the Indian players.