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Engineering India: On The Path To Leadership

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Zinnov recently launched its findings from the Operations Cost Benchmarking study which assessed the investment patterns of MNC R&D Centers in India for the year 2012 - 2013. While India Centers continue to provide cost arbitrage to the headquarters, in the recent years, India Centers are contributing strategically towards value and new product creation. More importantly, India Centers are able to generate additional value at almost the same cost point as the previous years. This is enabling India Centers to become a strategic partner to the headquarters and move up the R&D maturity curve.

One of the critical factors that is enabling this shift towards value and resulting in high quality work is the India center's increased focus on people. This is clearly reflected in the 6.5 per cent increase in people costs compared to the previous year. The areas that companies are focusing on include: building in-house competency, increasing employee engagement initiatives, and hiring for niche and lateral skills.

To increase internal competency and deliver higher value work, organisations have furthered their investments on training and development, with as much as 27 per cent of the discretionary spend being spent on it. India Centers are leveraging globally available programs to nurture middle and senior leadership. India Centers are also acknowledging the need for a strong technical talent pool such as Architects, to increase product ownership and take on big technology bets. Building a structured technical career path, providing mentorship and access to industry role models, participating in industry wide technology programs and developing technology specific training programs are some key initiatives started by the India Centers.

Another key focus area for India Centers is driving employee engagement and organizations are achieving this by incubating corporate wellness programs, sponsoring employees for higher education and sports, providing canteen & transportation facilities, and encouraging social giving. Organisations are also adopting innovative practices to increase employee engagement by establishing connections at a personal level. Some initiatives include acknowledging employees' contributions by posting letters to family members highlighting achievements and conducting family connect programs to explain the employees' job role to their near and dear ones.

Today, gender diversity is one of the key strategic priorities for India centers and hence organisations are increasing their focus on empowering women through mentorship programs, participation in forums with senior leaders and maternity support programs - flexi working hours, 6 months child raising policy, sabbatical leave etc  These innovative and structured engagement programs in addition to a volatile economic scenario have helped reduce attrition to 9.9 percent in 2013, a 7.5 per cent drop in the last three years.

Furthermore, overall hiring dropped by 4 percent between 2012 and 2013 with organizations focusing more on lateral and niche skill hires. A few key roles that are emerging in the R&D centers include Data Scientists, Domain Specialists, UX Designers etc., Some best practices adopted to manage recruitment costs are distributing economic cost of market correction over quarters, disbursing sign-on bonus for senior level across years rather than providing a lump sum amount at the beginning and providing differential salaries for Tier 1 and Tier 2 graduates based on job content and designation.

These structured initiatives and investments on people will help India centers generate 1.2 times the current value being generated. However, in-spite of this increase in value, organisations have to still take on calculated bets to remain increasingly relevant to the HQ and grow exponentially. Some areas that would help achieve this include picking few big bet focus areas, increasing global stakeholder buy-in, developing architectural and leadership capability, evaluating innovation pipeline through impact metrics, and increasing linkages with the ecosystem.

Author is senior manager, globalisation accelerator platform, Zinnov