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MNC RESERCH AND TECHNOLOGY CENTRES IN INDIA

IBEF, Knowledge Centre

Nov 28, 2018 13:05

Today, multinational companies (MNCs) from the USA, Europe as well as the Asia Pacific region are increasingly setting up their research and technology centers in India. These centers are mainly focused on the areas of research & development (R&D), Business Process Management (BPM) and information technology (IT).

These centers are commonly known as Global In-house Centers (GICs). The primary reason for moving their core operations to India are no longer just cost. “It is digital technology that is bringing companies here”, opines K S Viswanathan, Vice President, Industry Initiatives at India’s leading IT industry association NASSCOM. India has clearly moved away from cheap outsourcing work to digital-technology areas such as big data, analytics, mobility, artificial intelligence, machine learning, IoT (Internet of Things), blockchain as well as robotics.

“These GICs are typically more strongly integrated with the core business as they are perceived as an extended team of the parent or onshore organizations,” says Aditya Verma, co-director of Everest Group’s global sourcing practice. “They typically have specialized knowledge of the business as they cater to only one customer (the parent organization) as compared to a multi-tenant service provider.”

The interventions via GICs give an edge to the organization in many ways such as fast- paced data proliferation, improved capabilities and hyper-connectivity. They help the business grow by bringing in direct visible benefits like higher customer engagement, targeted marketing and a visible reduction in capital expenses. In fact, these GICs are a big enabler of overall transformation and high-paced growth of their parent firms.

“Most GICs play a strategic role in building internal innovation capabilities for the parent and act as innovation hotspots to foster and propagate the cultural shift to innovate,” says Prashray Kala, co-director of Everest Group’s global sourcing practice.

“The nature of work being put in these GICs is skewed towards engineering and R&D as opposed to the traditional operations work such as finance and accounting. This enables GICs to be successful and sustainable even with small scale”, emphasizes Verma.

India today happily boasts of having more than 1500 GICs, being operated by MNCs like Target, JCPenney, AB (Anheuser-Busch) Inbev, Saks Fifth Avenue, Grant Thornton, Adobe, Fiat Chrysler, GM, Volkswagen, Hyundai, Texas Instruments, GE, Honeywell, Airbus, Boeing, Shell, AON Hewitt, Intel, Qualcomm, Tesco, Petrofac, Novartis and Mercedes Benz, to name a few. These GICs collectively employ roughly 10 lakh people in India, being an important employment generator.

As one can note, these companies are spread across varied sectors such as financial services, consumer electronics, semiconductors, automotive, retail, consumer goods, energy, oil & gas, engineering, aerospace, healthcare, pharmaceuticals, travel, transportation etc.

Manu Saale, Managing Director of Mercedes-Benz R&D India says, “Even China doesn’t have this kind of talent. The Chinese tend to focus on the local market. India is focused on global initiatives. I haven’t seen the kind of international mindset, outspoken thoughts and engineering capabilities that the world is looking for in China.”

Indian talent is exclaimed worldwide. Dinesh Paliwal, CEO, Harman International Industries explains, “ If you challenge Indians and say, here’s the product, take this, reverse engineer it, bring down the cost to a third of what it is…they will do it. Indians are creative geniuses.”

MNC

SECTOR

DEVELOPMENT

Boeing

Aerospace

Setting up its world’s second-largest electronics and avionics facility in Bengaluru, with an investment worth US$ 180 million.

Walmart

Retail

Strengthening its technology innovation through machine-learning at Walmart Labs Center in Bengaluru.

Adobe

Information Technology

Working on Sensei, an artificial intelligence platform to improve customer insights at Adobe India Research center. Adobe India undertakes more than 1/3rd of the company’s total R&D work.

Samsung

Telecom

Operating its R&D center out of Bengaluru, its biggest research center outside Korea.

BOSCH

Technology

Invested 300 million euros into its Bosch Center for Artificial intelligence across three continents – one of them being India. Also partnered with IIT-Madras for a Robert Bosch Centre for Data Science and Artificial Intelligence.

Mercedes-Benz

Automobiles

Owning its research & development center in Bengaluru, the company’s largest research facility outside of Germany. It has huge designing capabilities.

JCPenney

Retail

Building solutions to integrate its multiple retail channels at its technology center in Bengaluru.

Philips

Healthcare Services

Researching on Artificial Intelligence and machine learning at the Philips Innovation Center in Bengaluru.

Boston Scientific

Corporation

Healthcare

Developing stents, catheters and pacemakers at its Gurgaon research facility. It is the company’s largest R&D office outside US.

Ford Motor Company

Automobiles

Invested US$ 195 million for its global technology and business center in Chennai for product development, mobility solutions and business services.

"The Indian team has done an amazing job of improving the accuracy and relevance of our search through some new tech, including machine learning and advanced algorithms,” emphasizes Michael Amend, executive vice-president of omni-channel in JCPenney. The company’s technology center in Bengaluru is today the core of its global engineering solutions.

Philips’ research, design, intellectual property and standards team operate out of its innovation center at Bengaluru. “Many innovations are expected to scale up from this center”, says M R Srinivasaprasad, CEO of Philips Innovation Centre, India. “Philips recently launched Healthcare@Home, providing home healthcare treatment, diagnosis and care in the areas of critical care, respiratory disease, wound management, post- surgical rehabilitation and sleep disorders”, he elaborates.

With more than 12,000 employees across domains of engineering, IT, finance, accounting, data analytics and manufacturing; Ford’s Chennai facility today is its biggest center of employment, second only to Dearborn, Michigan, US.

To re-enhance their capabilities, GICs are planning to further invest in areas such as analytics, traditional IT along with digital-age IT, domain expertise, leadership quality as well as cost excellence.

While analytics centers will accelerate in generating a clear competitive edge for the MNCs as a whole, digital IT will ensure a technology edge for the organisation at its core, at the same time a strong traditional IT will help rolling out the digital plans across its length and breadth at a faster pace. Domain expertise gets amplified with key skills of focus on priorities, market sensing capabilities, customer focus and profitability watch.

GICs are investing in attracting and retaining talented leaders to give right direction to the entire enterprise. They are also investing in working processes that lead to high value generation.

Finally, cost excellence is being planned to be achieved by paying earnest attention to improving efficiency and productivity.

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