Many MNCs R&D centers are now focusing on the emerging markets of developing for innovations to make sure that their products reach to the right customer at the right time. To achieve this goal MNCs have totally focused on the perspective of Indian research and development industry in the development of their product and making the final product more user friendly and economical as the cost spent on R&D in countries like India is much less than that of the developed countries. With this MNCs are also involved in patenting their innovations in the same developed country, so that they get the maximum out of the small innovation made by the researchers.
This trend is not new which can be seen from a news article published in Economic Times (ET), Philips R&D was set up in 1996 in Bangalore, India. At that time MNCs were not a big part of Bangalore, presently Bangalore is known as the IT hub of India where many MNCs are working. Let us get back to Philips R&D who started as a small unit for providing implementation support to technical product teams in Netherlands. This R&D cell grew vastly and engineers working in this cell started patenting their own components of main devices and now they have even patented complete products. In recent years this cell has undergone many changes and has evolved as a prolific generator of patents.
Philips filed for 210 patents from their R&D cell in India which is now called Innovation Campus. It is not the only one example. Many more patents of global as well as local importance have found their way from India’s research centers and into the mainstream of MNCs technology. This is being done by the MNCs to reduce the time of product entering the market, provide solution to the customers in emerging as well as developed countries and last but not the least to keep a check on the economic development.
It has to be kept in mind that with the steady increase in the filing of patent applications all around the world, the R&D sector of all the technologies have now started making innovations directed towards the developing countries because all the MNCs want to exploit their resources and earn as much as they can from them.
According to paper written by IIM Professor Rakesh Besant and Sunil Mani of the Center for Development Studies, “Foreign R&D centers have increased their dependence on all Indian teams- a trend reflected in the number of Indian inventors in patent applications filed by foreign companies in India and abroad in recent years.” The share of Indian inventors patenting for US companies has fled from 16% to 67% in the time span of 1999 to 2010.
According to a survey of R&D centers by McKinsey, 2/3rds of executives state that their companies are spending part of their 2011 R&D budgets in emerging economies with most focusing on the support of either product platforms sold in global markets or innovation for products made and sold in local, emerging-economy markets.
The reason for this has been the following two reasons:
1. Global Market
2. Local Markets
Global Markets:With the lapse of time India has emerged as a market of opportunities for MNCs. The R&D centers of MNCs in India have filed 1098 utility patent applications in 2010 in comparison to 481 patent applications filed in 2006. Most of these patents are being granted for innovations that solve a tough customer problem.
Adobe local research base has seen the growth of 7% in a time span of 2006 to 2010 in filing of US patents by their local research base. Adobe is also boasting the locally crafted PageMaker 7 which has become a global standard now. Adobe CEO Shantanu Narayen was quoted saying that, “We have filed a couple of hundreds patents from here and do full products like Adobe Illustrator. We have also done a lot of PDF work here for readers and multiple devices”
Local Markets:With the work on global products, the R&Ds in India are also focusing on the local markets. Huawei’s local research centre who is known as a 3G and 4G supplier works on high end telecom software platforms and applications for next generation networks, a large part of which will be a part of the first 4G enabled handset in India. Bharti and Qualcomm are also part of this innovation.
According to the manager of Zinnov, India is a growing and unique market which needs local solution to problems and local talent too. The McKinsey survey highlighted the fact that the companies appear to be aligning their goals, whether it is seeking lower development costs or gaining better access to customer insights, with their specific R&D focus in emerging economies.
The first and the basic reason for this is the lower development cost. Apart from that the acceleration in the trend of greater R&D innovation which should reach markets faster and get launched in them as soon as possible is the main reason. It has been seen in many companies that with the rise in the technology, companies find it difficult to cope up with the problems associated with the technology and the expenses that company spending on the technology are very high. That is why companies tend to shift their R&Ds into the emerging economies where they get the development done at a very cheap price. Another aspect of shifting R&Ds is that the companies different R&Ds provide different answers to the same problem depending on the geographical distribution of the country which leads to development of different modules in different countries.