India will no more be low-cost destination for IT R

Bangalore, Mar 13 (UNI) India should become a "differentiator" as its tag as a low-cost destination for R and D offshoring business would be wiped off within two years due to continuous cost escalation, according to Zinnov CEO Pari Natarajan.

Addressing a press conference here on the backdrop of a two-day conference titled 'Offshoring R&D 2008 - Collaborate, Strategise, Innovate,' which began here today, he said rising wage pattern, cost escalation and impending scrapping of STPI scheme would take away the cost advantages from the USD nine billion R and D offshoring business of the country, Mr Natarajan said.

The conference, organised by the managing consulting company Zinnov and supported by Ness Technologies, Sonata Software, Celstream and Symphony Services, would form a common platform for over 400 senior executives from the verticals like software and embedded product development and engineering services to share their ideas.

''The cost factor of the R and D of IT products in India will vanish as it will shoot up by nearly 50 per cent within two years.

This is also due to the high attrition rate in small scale R and D units,'' he said.

It was the right time for these product development units to step up their performance by making innovation as core of their growth.

''India should now look towards its own market to sell the products,'' he said.

Smaller captive centres owned by Indians would find it difficult to scale up their business while large companies like Cisco and Microsoft would continue to grow in the R and D offshoring spectrum.

The growth of captive centres had fallen to 15 units in 2007 compared to 75 in 2004. Changing economic climate, increasing scale of operations and competition in the IT service sector demand new strategies, he said.

Ness President Shashank Samant said India had consistently beat the rising bar of value expectations in the IT R and D sector.

''Product innovation will never go out of style and the partnerships among captive leaders and product development providers will lead to global advantages,'' he said.

UNI RS SJ 1635