India's R&D centres are 25 percent cheaper than China's

Bangalore: Operating cost of MNC research and development (R&D) centres in India is 25 per cent lower compared to China, according to a report unveiled today by global advisory firm Zinnov Management Consulting.

Besides, MNC R&D centres in India saved a cumulative $44 billion for their parent organisations in the last three years, said the study titled ‘Operations Cost Benchmarking (OCB) 2011’.

These centres witnessed salary increments of 10-15 per cent on an average in 2010-11, during which cost of operations rose by 9 per cent, said the study. It found that average experience at MNC R&D centres is increasing and currently stands at about 5.7 years.

The Tier-II locations in India are emerging fast and offer up to 40-50 per cent savings on cost, according to the study, which also said that demand for engineering/embedded R&D work is increasing in this country.

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“Tier-II locations have started to mature and these locations are catching up fast,” Zinnov Director C S Chandramouli told reporters.

The firm’s another Director, Praveen Bhadada, said the R&D subsidiaries in India offer significant cost arbitrage even with the current cost inflation. “The fact R&D centres in India have helped the parent organisations save a cumulative of $44 billion for the last three years is testimony to that,” he said.

Multi-city strategy, technical career path, compensation revision, focused hiring, focus on sustained career growth and attrition management are some of the key components that R&D subsidiary centres would look to redefine going forward, he added.

MNC R&D centres looking for growth, innovation and leadership in India might witness a cost inflation of 8-12 per cent in 2011-12 in rupee terms, it forecast.

PTI