'Slowdown has made R&D services providers stronger'

Most mid-tier R&D services providers including Tata Elxsi, Tech Mahindra, Aricent, Mindtree and Symphony Services have come out of the recession quite strongly, by reassessing their strategies.

According to the ‘Global R&D Services Providers’ Rating’ prepared by management consulting firm Zinnov, while Wipro, TCS and HCL have established themselves as market leaders in the overall rating, a few mid-market service providers have moved strongly towards the top pack by establishing themselves as leaders in specific industry verticals.

Service providers have some inherent advantages that they bring to their clients, and these inherent advantages have only become more evident and apparent due to the onset of the economic downturn. Important aspects like domain expertise, scaleable delivery model mapped with metrics-driven performance system and a strong economic sense of helping to address challenges of the high cost of staffing, infrastructure investments and building domains. This only adds to the uniqueness of service providers, the report released here on Wednesday said.

“The purpose of releasing a comprehensive rating and analysis for top R&D service providers in India, China and Eastern Europe, is to assist business leaders in spearheading their global engineering initiatives in their organisations and facilitate them to identify the right partners to enable them to serve customer needs better,” said Pari Natarajan, CEO, Zinnov Management Consulting.

“The tectonic shift in the economy has led to numerous changes in the present market dynamics. But, one thing that can be safely assumed is the continued growth of inter-linkages between global businesses and stronger relationships between service providers and global companies would only continue to grow in the times to come,” he added.

The impact of recession had seen a spurt in contract re-negotiations, an increase in sales cycle time and business continuity risk in the R&D services space for nearly one year. However, starting April this year, the R&D services’ landscape has seen some ‘green shoots’ of recovery.

The report said that R&D offshoring to countries like India, China, Russia and, central and eastern Europe is expected to grow at 6-7 per cent, to $19.7-20.3 billion in 2009 when compared with the previous year. Of this, India and China will make it close to 90 per cent of the overall market.

The offshoring of R&D Services this year has been impacted by the economic reset like many of the other global industries, R&D offshoring to India, China, Russia and, central and eastern Europe is expected to remain flat.