R&D India makes the grade

Despite costs rising, India is still an attractive R&D centre for multinationals. In addition evidence shows that India is ready to move up the innovation ladder.

Global product development consultancy Zinnov report growth in India's R&D industry of 23% per year. Currently worth US$ 9.35 billion, they predict 2012 value of US$ 21.4 billion.

Rising costs but still competitive

With tech multinationals responsible for circa 60% of R&D work, even with increased local salaries - 16% average annual rise over last three years - there are undeniable outsourcing cost advantages. Total cost of employing a full-time Indian engineer ranges between US$ 35,000 - US$ 55,000; the US average is almost three times that amount.

Higher value, more specialist work

Yet growth isn't fuelled by cheaper labor, quality is improving, the type of work is shifting from low complexity, low value product testing to complete ownership R&D product development. Drivers of change include:

• 'Democratising' technologies - including SaaS, SOA, Open Source and Cloud - leveling the international R&D playing field.
• Returning expatriates, estimates suggest 30,000 developers have returned to India from the US over recent years.
• Improved local graduate 'talent pool' due to a decline in graduates relocating to the US.
• Maturing domestic market, one-third of Bangalore's 80,500 engineers working in foreign owned R&D centres have 7-15 years experience.

Intel and Nokia increase R&D investment

Intel recently provided evidence of this paradigm shift, launching the Xeon Processor 7400, first mass-market microprocessor developed exclusively in India, Praveen Vishakantaiah, president of Intel India commented, "It's not just services and software that India is known for... you can also do this kind of complex research and development and product design here in India".

Having expanded India R&D activity in 1999 in a bid to cherry-pick top university talent, Nokia is set to double - to US$ 300 million - its direct venture investment fund in an effort to back and benefit from Indian and Chinese technology start-ups. In addition to financial return they seek new complimentary technologies.

Home of 100 global companies

At India R&D Conference 2007, Prime minister Dr Manmohan Singh stated, "We take satisfaction from the fact that over 100 global companies have come to India to set up R&D Centres". As finance minister in the early 90's, Dr Singh helped establish Software Technology Parks to promote innovation. Bangalore was the first to benefit by providing incentives to IT companies, including Microsoft to locate there, they continue to benefit - foreign entry has led to an 83% literacy rate compared to 65% national average.

Pharma focus on original products

Innovation is in evidence elsewhere, Indian pharma is getting in on the act. Tighter patent legislation and increased US litigation means increased R&D investment - Glenmark recently received US$ 150 million from Forest Laboratories and Tejin for an original product - more is expected. In addition, today saw India and the EU agree to cooperate in civil nuclear research and development at the end of the ninth India-European Union Summit in Marseilles.

With increased skills, experience and US patents awarded to Indian inventors (up fivefold since 2000, to 550 a year) India looks set to move up the innovation ladder.

September 29, 2008 Add a comment

The future of Indian healthcare

Dr. Ruchi Bhatt, an exponent of e-health presents the case for revolutionising India's healthcare system; Dr. Bhatt is Business Head of Kayaguru Healthcare.

An ideal healthcare portal

India's huge population poses problems for the nation's healthcare sector. E-health is a solution that can bring together all the major sectors such as development agencies, health industry experts, public health specialists, policy makers, academicians, technology developers and civil society practitioners to provide schemes that are useful to common people.

Aims of an Indian health portal

One of the most profound changes seen in many countries around the world is a shift from a hospital based healthcare system to a more ambulatory system with home care, day care clinics and same day surgeries. We are now treating patients in ways that were thought impossible a few years ago. It is now possible for a patient to come to hospital in the morning, have a coronagraph and be home that same day! You can also have your intravenous antibiotics at home or have adjustment to your anticoagulation regimen on an out patient basis.

Chronic diseases management

The incidence of chronic disease is rising in part due to an aging population and more efficient treatment.

With chronic diseases, our management aims to stabilize the patient, keeping him in that state while also slowing/stopping more functional deterioration and preventing further complications. To achieve these goals it is mandatory to have a high level of coordination in the care team, but it is also important to actively involve the patient himself.

Knowledge management

The healthcare sector is one of the most information driven industries and the amount of information that must be dealt with on a regular basis is growing every day. Also, with the advent of the internet, access to information is easy. It is now usual to have patients come to their appointment with printed documents found online.

Classical electronic health records approach

Most of the electronic health records available on the market today are not patient-centered but rather 'hospital-centered'. As such they were not designed to easily address the challenges raised by the new paradigms found in the healthcare sector today. One of the consequences is that the care activities delivered outside hospital walls are difficult to integrate. Another major consequence is that no tools or functionalities are available to integrate the patient as an active member of the care team.

Evidence based medicine

The e-health system enables the doctor to check international research and data to confirm their diagnosis. This helps reduce confusion in a patients treatment, especially in developing countries.

Virtual healthcare team

The most important benefit of e-health in India is that it has enabled several patients to discuss their problems online, i.e. through the internet. The following diagram shows how such a system can work.

Benefits:

For patient

• Improved information about their disease/illness
• Access the internet from anywhere and get updated reports
• Not restricted to keeping prescription details with a hospital
• Online medical advice available from renowned doctors
• Reduced travel expenses for treatment

For doctor

• Improves the healthcare system
• No manual writing of prescriptions
• Time saving and efficient

For government

• Able to monitor the healthcare system of the country
• Get to measure the number of patients examined by a doctor daily
• Data captured for various regions

E-health services are gradually being adopted by healthcare provider organizations in India. The growth of e-health services has given rise to the need for a new breed of healthcare professionals, healthcare administrators and healthcare technologists.

Further information about Dr. Ruchi Bhatt can be found on Linkedin

September 17, 2008 Add a comment

Magic Circle prepare for Indian legal services deregulation

The world's biggest democracy has an inward looking and closed legal services sector. Banned from market entry, foreign law firms are frustrated as levels of M&A activity have made India their destination of choice.

Frustration is understandable considering current levels of Indian M&A activity, India's attraction is clear. Restrictions within the market aren't confined to the magic circle. Bar Council of India prevents domestic firms from advertising and limits them to 20 partners.

Countdown to deregulation

Entry will be granted, estimates suggest 3 more years. Justice Minister, Bridget Prentice warns India, make the move sooner not later, "Most people in India who are interested in this recognise that it's a matter of when not if. We would say, 'You can do this in three to five years. Don't go down the Japanese route of taking 20 years'."

Managing Partner of Clifford Chance, David Childs is confident, his new Mumbai based business support centre will employ 10% of global support staff - 300 people - by April 09. Looking to increase Asia billing he says, "In four years time, Asia will certainly become very important to us, particularly India - and there is no doubt we will be in India."

Legal-loopholes

Larger firms have found a legal-loophole through client referral arrangements - Allen & Overy with TriLegal Partners, Jones Day with P&A Law, and Linklaters with Talwar Thakore & Associates - more are planned.

Specialist Indian teams - the Clifford Chance and Baker & McKenzie teams number 180+ - fly in to represent firms from hotel rooms and business centres, deals are being done. Alison Hook, Head of International Development at Law Society of England & Wales estimates £35 million worth of international legal work in India since 2004.

External pressure mounts

Law Society represents the powerful firms; unsurprisingly they encourage India to open its door. Hook warns if they delay India will be bypassed for Singapore or Dubai, from where India would be serviced remotely.

Lobbying has begun, July saw Law Society host a lunch and conference - jointly sponsored by Indian firm Singhania & Co - to honour Indian Law Minister Shri H.R. Bhardwaj, who stressed the closeness of Indian and British legal communities.

Inward trade missions invite top-50 Indian firms to take part in 'match-making' events. 15-20 Indian firms visited London, Cambridge, Birmingham and Leeds this month, to network with likeminded British firms.

Case closed

While courting is underway, smaller Indian firms feel rejected and object to international competition, arguing new entrants will damage the industry. The British Indian Lawyers Association takes issue with the fact Indian lawyers will not be able to practice in the UK.

Ultimately Indian big business will have its way, they want international expertise. Pressure increases and the end game becomes clear, referral arrangements will become mergers and existing specialist teams will parachute in to head up new India operations.

September 11, 2008 Add a comment

Inflation spikes, interest rates rise, GDP drops - from boom to bust?

India's growth and global rise was seen as inevitable by many. Many now speculate that the bubble has burst. Although slowing down, foreign analysts would do well to remember that India's economy is still rapidly growing, however, there will be inevitable ups and downs along the way.

Current India economy coverage makes grim reading. Andrew Holland of Merrill Lynch says, "This time last year the talk was of India decoupling from the troubles of the rest of the world economy. Now it's clear that India has it's own problems. It has gone from hero to zero."

Inflation spirals

Reserve Bank of India (RBI) predict 13-year high inflation of 12.4% in mid-August, will rise further. Compounding problems prudent Governor, Yaga Venugopal Reddy ends his term in early September having warned of economic overheating due to populist Government policies including generous fuel subsidies, farm worker loan waivers and 21% salary increases for 5 million civil servants.

Interest rates forced to follow

Forced to react, RBI has had to raise interest rates to recent-record 9%, leading to further GDP slowdown - 7.9% year-on-year, April to June - compared to 8.8% previous quarter. Foreign investors are getting jumpy, the Sensex Index is falling and India's fiscal deficit is under scrutiny.

Talking to India Insights, Rajiv Banerjee, Special Correspondent for The Economic Times believes that sentiment in India is guarded, "There's a palpable sense of slowdown given the slide on the stock market, and rising interest rates that have affected consumer spending."

So is India's success story over?

India's status is under threat. World Bank figures predict that Russia will become the world's second fastest growing economy (after China) with 7.1% growth, surpassing India's 7%.

Domestic problems need addressing, but the global economy inflicts global pain. While decoupling was predicted, booming global oil prices have a telling effect, India imports 70% of its oil and heavily subsidises domestic prices. Banerjee supports this view, "A lot depends on how crude oil prices move, a drop means inflation may head downwards, thereby providing consumers with relief from skyrocketing prices."

Jim O'Neill, chief economist at Goldman Sachs - who predicted that India's economy could surpass the US by 2050 - still sees potential but qualifies it in the paper, "Ten things for India to achieve its 2050 potential", in the short term he sees the price of oil as a major problem, "Given the inflation challenge, the fiscal and current account position, one might say oil prices are the most critical thing for India in the next six moths or so."

Still growing in a global down turn

Considering India's starting point and its size and scale progress was never going to be as straightforward as some predicted, HSBC economist, Robert Prior-Wandesforde appears to have a measured view, "Just as many forecasters and markets were too optimistic in 2005-07, effectively running with the view that whatever China could do, India could do better, there are now some that are suggesting that it can do nothing right".

Banerjee, still senses optimism and provides perspective, "It (growth) may not be at the scale seen previously, due to the global slowdown, but even if India grows 6-7%, it will still be one of the fastest growing economies amidst a global downturn."

September 7, 2008 Add a comment