Executive summary talent report final
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The report outlines the growth of the R&D talent pool in India, projected to reach 1 million by 2020, driven by MNCs' increasing focus on R&D and government initiatives like 'Make in India' and 'Digital India'. Key cities such as Bangalore and Pune dominate the R&D landscape, housing 96% of MNCs, while tier-2 cities are emerging as viable alternatives due to lower operational costs and better talent retention. Overall, the momentum in the Indian R&D sector reflects a shift from cost arbitrage to value creation.
Executive summary talent report final
- 1. 2016 This report is solely for the use of Zinnov Client and Zinnov Personnel. No Part of it may be quoted, circulated or reproduced for distribution outside the client organization without prior written approval from Zinnov. INDIA MNC R&D TALENT POOL STUDY EXECUTIVE SUMMARY
- 2. EXECUTIVE SUMMARY • R&D Talent pool in India is expected to grow at a CAGR of 10.9% from present 610,000 to 1 Million by 2020 • Increasing focus of MNCs on R&D in India is reflected in the rapid growth of installed talent • Initiatives such as ‘Make in India’ and ‘Digital India’ are expected to drive the R&D talent intensity • 96% of MNCs are setup in Tier-1 Cities 928 R&D MNCs in India 1165 R&D Centers in India 323,000 MNC R&D Talent Pool in India 06 R&D Hubs in India
- 3. 3 THE INDIAN R&D COMMUNITY 610,000 R&D Talent Pool 1,020,000 R&D Talent Pool IN 2015 BY 2020 MNCs Service Providers Tech Startups India Cos/ Est 323,000 166,000 44,500 76,500 520,000 280,500 109,500 111,000 Tech Startups have raised USD 9 billion in funding in 2015. India’s current product engineering services market is valued at USD 20 billion and is expected to grow at a CAGR of 13.7% over the next 5 years 42% of the Global 500 R&D Spenders have centers in India 11,500 Tech Startups are expected to set up centers with over 72,500 R&D jobs being created India’s R&D globalization and services market is expected to reach USD 38 billion by 2020 By 2020, 49% of the Global 500 R&D Spenders will have centers in India R&D Talent Distribution The R&D Ecosystem in India has grown at a phenomenal pace in the last decade. MNCs, Service Providers, Tech Startups and Indian Cos/Establishments are driving this growth. A number of factors have contributed to this, including a dynamic and young tech talent pool, proactive government initiatives etc. There is an increasing shift in mindsets across the R&D community, moving away from cost arbitrage to value creation. The Indian R&D Talent pool is expected to grow at a CAGR of 10.9% to 1 Million by 2020 Source: Zinnov Research & Analysis
- 4. 4 721 776 835 872 913 928 955 988 1033 1085 1139 204 220 244 268 295 323 353 387 424 464 508 2010 2011 2012 2013 2014 2015 2016E 2017E 2018E 2019E 2020E R&D Installed Talent Growth in MNCs in India 1 Software/ Internet 121,650 2 Electrical & Electronics 33,057 3 Telecom & Networking 31,043 4 Automotive 30,757 5 Semiconductors 23,333 Top 5 Verticals with R&D Talent in 2015 1 Bangalore 155,000 2 Pune 40,300 3 NCR 31,000 4 Hyderabad 30,700 5 Chennai 27,900 Top 5 Locations with R&D Talent in 2015 No of MNCs with R&D Centers in India* Headcount is in ‘000s Key Insights • 928 MNCs and 1165 R&D centers in India employ 323,000 R&D workforce (which is around 55% of India’s total R&D Installed Talent Base) • In 2015, 15 new MNCs entered India, some of which included Twitter, Gionee, Mapr, Kellogg’s, Sealed Air, Cleo etc • India’s MNC R&D Talent Pool has been growing at a steady 10% CAGR even though Service Providers and Tech Startups are eating a sizeable chunk from this pool • Software/ Internet vertical employs over 37% of the total MNC R&D Installed workforce • Bangalore continues to be the most preferred R&D destination for MNCs since almost 50% of the installed MNC R&D workforce resides in Bangalore The increasing focus of MNCs on R&D in India is reflected in the rapid growth of installed talent Source: Zinnov Research & Analysis
- 5. 5 Aerospace & Defence Automotive Biotechnology Chemicals & Materials Diversified Electrical & Electronics Energy Engineering Services FMCG Industrial Media & Entertainment Medical Devices Others Pharmaceuticals Semiconductors Software/ Internet Telecom & Networking Travel & Transportation 323,000 MNC R&D Talent Pool 928 MNCs With 1165 R&D Centers VERTICALS 3,356 13 30,757 62 1,040 07 6,219 39 26,350 11 33,057 90 6,958 18 11,535 21 1,895 22 15,742 57 2,550 09 202,980 04410 4,115 25 23,333 58 121,650 392 31,043 76 04315 The software vertical employs approximately 37% of the total R&D talent. Telecommunication/ Networking, Semiconductor & Automotive verticals employ approximately 10% each of the total MNC R&D talent pool respectively. ‘Make in India’ and ‘Digital India’ are expected to drive the R&D talent intensity in the Automotive, Industrial, Software, Semiconductor and Engineering Services verticals. The requirement for talent in the software vertical shall continue to increase due to software eating the world. India continues to attract Software R&D Offshoring – A testimony to this is the setting up of 37% of all R&D centers in the past three years. The Smart Cities initiative is going to attract investments that shall drive the setting up of new R&D centers across verticals. Larger MNCs are looking at India for strategic partnerships/ M&A activities with a focus on Indian startups/ SMEs. MNCs in IndiaMNC R&D Talent Pool Initiatives such as ‘Make in India’ and ‘Digital India’ are expected to drive the R&D talent intensity in the Automotive, Industrial, Software, Semiconductor and Engineering Services verticals Source: Zinnov Research & Analysis
- 6. 6 Installed Talent Distribution Across Locations Tier – 1 Cities Talent View National Capital Region : Increasing pollution levels coupled with higher operations cost will be a factor of concern for newer MNCs intending to set up operations in the NCR area Pune : Pune is becoming a hub for the automotive vertical. Cheaper operations costs will drive MNCs entering India to choose Pune as a preferred destination Hyderabad : The Telangana government’s efforts to build a tech capital by investing in infrastructure and ecosystem is going to result in more R&D centers being set up Bangalore : Increasing pollution levels, infrastructure demand-supply gap, along with the sudden population inflow will act as negative drivers for MNCs entering the tech capital of India. However, ease of access to R&D talent is going to be the major driver for Bangalore towards becoming the most preferred destination for MNCs Chennai : The recent floods in Chennai will significantly impact investments into Business Continuity Planning, which will result in re-distribution of talent in MNCs Others include the following cities: Chandigarh, Jaipur, Ahmedabad, Baroda, Kolkata, Vishakhapatnam, Mysore, Coimbatore, Kochi, Madurai, Trivandrum 96% of MNCs are set up in Tier-1 Cities with Bangalore and Pune accounting for the highest concentration of R&D Talent Source: Zinnov Research & Analysis
- 7. 7 Installed Talent Distribution Across Locations Tier – 2 Cities Talent View Tier-2 Cities are able to provide higher cost arbitrage to MNCs in comparison to Tier -1 Cities Growth of educational and research institutions in Tier-2 cities is helping in the growth of the R&D talent pool. Colleges in Tier-2 have started establishing their own Centers Of Excellence or have partners with MNCs based on focused technologies A lower attrition rate is being witnessed in Tier-2 Cities when compared to Tier-1 cities, which is a major driver for MNCs from a talent-retention point of view Quality infrastructure coupled with lower operations cost has become an important driver in MNCs’ decision to set up R&D centers in Tier-2 Cities The startup boom and penetration of IT Service Providers in Tier-2 cities has helped in upskilling of local talent in these cities Others include the following cities: Chandigarh, Jaipur, Ahmedabad, Baroda, Kolkata, Vishakhapatnam, Mysore, Coimbatore, Kochi, Madurai, Trivandrum Quality infrastructure coupled with lower operations cost has become an important driver in MNCs’ decision to set up R&D centers in Tier-2 Cities Source: Zinnov Research & Analysis
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