The Hindu Business Line : R&D outsourcing set for rapid growth

INCREASING awareness about Intellectual Property (IP) and the thrust on creating a regime for its enforcement have led to gradual but certain growth of research and development (R&D) outsourcing by multinational corporations.

According to recent studies including by the National Association of Software and Services Companies (Nasscom), the R&D activity in an outsourcing mode is set to grow as the IP protection takes centre stage for software services and products within India.

The Indian ICT industry, despite its credentials, has faced recurring criticism of not creating enough IP and paucity of original technology has remained a challenge for players making significant strides in the other departments of the IT software and services.

A recent study of Nasscom and KPMG stated that R&D outsourcing to India has gone up over the years in areas such as IT, pharmaceuticals, bio-technology and engineering and design services.

The Indian IP environment is set for a transformation and a number of trends are now gaining visibility within the Indian market that are fuelling the move towards IP creation.

The research study published by Nasscom points out that within the embedded systems segment the R&D outsourcing will account for revenues of around $1.5 billion by 2004-05.

Already, Indian business process outsourcing (BPO) services companies are training their attention on the development of embedded system tools such as microcontrollers and design of hardware and software.

In the case of VLSI (very large system integration) and chip design market, the potential is estimated to grow into a $808 million by 2005.

Further, research initiatives in basic electronics, digital electronics, VLSI design, circuit layout and design, verification and logic design will assume additional importance over the next few years.

Information security and areas such as cryptography, biometrics and security auditing are also expected to grow.

Areas such as high performance computing, wireless and mobile applications, nanotechnology and DSP (digital signal processing) are set to witness more activity over the next few years.

The nature of R&D spend is getting directed towards specific product or service-related attributes in the form of experimental development work.

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