Zinnov releases OCB 2011 report

Zinnov Management Consulting has released the latest report in its series on operations cost benchmarking for MNC R&D centers in India. The released study titled, 'Operations Cost Benchmarking (OCB) 2011', analyses the changing cost paradigm observed at MNC R&D centers in India as they invest for accelerated growth and value creation. 

Zinnov reveals in its OCB 2011 study that FY 2011 witnessed numerous changes in the operating cost dynamics for MNC R&D centers in India as net cost increased by 9% in INR terms and 13% in USD terms. This was after two years of declining input costs. The attrition rates for the industry hovered around 20% in the last fiscal. MNC R&D centers in India also witnessed salary increments in the range of 10-15% at an average in FY 2011. While these were some of the key factors that led to increase in operations cost, the mood at MNC R&D centers in India has not dampened as they are looking at ramping up operations and continue to invest in value creation and innovation from India.

Chandramouli CS, Director, Zinnov Management Consulting said, "While most preferred Tier 1 R&D locations in India witnessed an increase in the operations cost, the R&D ecosystem around Tier 2 cities in the country benefited from the change. Tier 2 locations have started to mature and these locations are catching up fast by offering up to 40-50% savings on cost compared to Tier 1 cities." 

Praveen Bhadada, Director, Zinnov Management Consulting said, "The R&D subsidiary centers in India offer significant cost arbitrage even with the current cost inflation. The fact that R&D centers in India have helped the parent organizations save a cumulative of USD 44 billion for the last 3 years is testimony to that. The focus is now shifting from cost to innovation, competency creation and leadership roles as the centers look to sustain and grow their operations in India. Centers are looking at further investments and innovation which will ensure that India retains its competitive advantage over other emerging countries. With an average of 5.7 years of experience at MNC R&D centers, India is better placed compared to Chinese, Eastern European and other R&D destinations."