Tech giants' new success mantra: Develop in India for the world

R&D centres of multinational companies are employing about 300,000 experts in India

India has fast emerged as the research hub for global technology firms such as Google, Microsoft, Uber and Apple, thanks to its unique blend of opportunities — a massive domestic market and cheaper highly-skilled workforce.

This is not a one-off case. Growing at 9-10 per cent every year, research and development (R&D) centres of multinational companies (MNCs) are employing about 300,000 experts in India, according to management consulting firm Zinnov.

There are over 900 MNCs in hi-tech sectors such as automotive, industrial automation and software in India, according to Zinnov. The types of work Indian R&D centres undertake include designing of semiconductors, affordable health care equipment, mapping products for low bandwidth networks and equipment that go into driverless cars.

The growth in Indian R&D workforce comes at the expense of global job cuts. “Cost continues to be a significant advantage for India compared to other global geographies, but the scale India provides is still not seen anywhere apart from China. If you look at the kind of work being done here, companies are increasingly looking at the emerging local market flavours,” said Anand Subramaniam, engagement lead and program manager, Zinnov.

“There is nothing new, nothing surprising. This (India) is the place for top-end manpower and has the ecosystem for technology R&D for most global companies,” says M N Vidyashankar, president of the India Electronics and Semiconductor Association (IESA). “Fortunately, the market opportunity is also huge in India for these companies.”

Bengaluru alone has over 500 research labs of major MNCs, followed by cities such as Hyderabad and Gurgaon.

While the first wave of research-oriented centres came to support development of products and solutions for global markets, the recent spike in local consumption has pushed these companies to innovate for India as well. No wonder, many products and features are now launched in India even before developed markets.

San Francisco-based Uber, which competes with Ola in India’s taxi aggregator market, has grown its headcount from 100 to 600 in the past one year. While the company is aggressively looking to expand its operations in India, it is also expanding its development centre in Bengaluru to drive global innovation. Developing for India has already given birth to a few technological firsts for Uber. The company, which earlier allowed payments solely through credit card, was forced to accept cash in India. Uber now accepts cash in markets such as Vietnam and Indonesia. Similarly, several global safety features such as number masking were introduced in India first. “For us to dream of providing transportation which is as reliable as running water for everyone in India, we have reached a point where we have to set up an engineering centre here,” said Thuan Pham, chief technology officer, Uber, at the inauguration of the company’s development centre in Bengaluru in March. “If we all sit in the ivory tower in San Francisco, we cannot imagine how challenging the local conditions are.”

It’s often harder to innovate for India than anywhere else in the world, given its low tech penetration and price sensitivity. As a result, more and more global companies are looking to build products in India and are even collaborating with some of the local start-ups.

Earlier this year, Apple, the world’s most valuable company that had so far shied away from India, expanded its sales team in the country to sell its iPhones. At the same time, it also committed to opening two local development centres to boost innovation. The larger, and more interesting, of the two centres is the maps development centre coming up at Hyderabad. With 4,000 engineers, this will become Apple’s second largest development centre after the US.

Google, which has had a presence in India since 2004, is estimated to employ around 7,000 people in the country.

Amazon is another global technology powerhouse that is innovating in India. While engaged in a battle for market share with home-grown Flipkart, the global e-commerce leader has been able to scale up quickly by developing local solutions. CEO Jeff Bezos has, time and again, lauded his team in India for being instrumental in the success of the company here. Amazon, too, doesn’t reveal how large its India employee base is.
THE INDIAN FOOTPRINT
Global tech firms & their India presence

• Uber About 600 people currently employed
   
• Apple Plans to have 4,000 people on payroll, including map development centre
   
• Google 1,500 engineers currently employed across four offices, plans to hire more staff for Hyderabad and Bengaluru centres
   
• Oracle About 40,000 employees, currently on payroll; second largest outside the US
   
• Microsoft About 7,000 employees, currently employed across 7 centres, including Hyderabad, Bengaluru
   
• SAP Currently has about 6,500 people employed in R&D, second largest presence outside its headquarter
   
• Intel Around 7,500 currently employed