Multinational R&D units in India help reverse brain drain: Report

Reveals MNC R&D centers have created a positive spill-over effect for the Indian ecosystem

Zinnov Management Consulting, a leading management consulting firm, said the presence of multinational R&D centers in India has been a positive influence on the local industry ecosystem in India, particularly while fostering innovation, academic partnerships, entrepreneurial zeal and reversing brain drain.

In its report on MNC research and development (R&D) centers in India titled, ‘Impact of MNC R&D Centers in India’, Zinnov said MNC R&D centers here have begun to understand and capitalize on ideas and talent from India, which has resulted in increased innovation in the last few years.

The report said the R&D factory in India is still very nascent when compared with other Asian countries such as Japan, South Korea, Taiwan and Israel predominantly because their local R&D ecosystem was always very conducive for MNC companies to enter and extract value in an accelerated fashion. India’s existing R&D ecosystem has been built by these MNC R&D companies and it still remains a key charter for them to mature this ecosystem into an assembly line for innovation.

Mr. Pari Natarajan, Chief Executive Officer, Zinnov Management Consulting, Pvt. Ltd, said, “MNC Centers have seen continued growth in the last few years, having grown by 5% in the past year. Offshoring has been a key driver riding largely on the presence of a mature industry ecosystem, including the availability of a great talent pool, differentiated cost arbitrage and the innovation capabilities.”

The report points out that these R&D centers have also been instrumental in triggering increased FDI spends and in the development of secondary and tertiary locations, apart from providing direct or indirect employment to hundreds of thousands of people. The centers have also been a crucial facilitator in checking the process of brain drain to western markets, while effecting reverse brain drain.

“The main reasons for brain drain some years back were the lack of attractive jobs and growth opportunities. However, over the years, MNC centers have played a crucial role in creating an ecosystem conducive to growth of individuals which has helped India control the problem of brain drain. In fact, due to the availability of better opportunities in countries like India and China, a reverse brain drain has kick started,” Mr. Natarajan added.

The report, in its outlook for the future, said that many of these R&D centers in India are now beginning to re-define their approach towards globalization, particularly in the next 12 months. In the drive to optimize costs, they would also explore opportunities in Tier II and Tier III cities in India to execute some non-core functions at these ultra low-cost destinations. A result of this focus on secondary locations is that 43 Tier II and Tier III locations are emerging as IT hubs in India, thereby reducing pressure on Tier I locations.

About Zinnov Management Consulting Pvt. Ltd
Founded in 2002, Zinnov – meaning Zeal in Innovation – is a leading management consulting company providing services in the area of Offshore Advisory, Market Expansion and Human Capital Optimization to Fortune 1000 companies. Zinnov works collectively with clients to tackle prevailing organizational challenges by analyzing the changing dynamics, improving performance, and building institutional capability. The services delivered to its clients through advanced reasoning and analytical techniques, provides solutions that help in integrating organizational vision, business definition and processes.