NASSCOM GIC Conclave 2012: The need to create Industry transformating innovations - Pari Natarajan (Session 6b)
The need to create Industry transforming innovations - Pari Natarajan 15th March, 2012This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted, orreproduced for distribution outside the client organization without prior written approval from Zinnov
2The last 3 years has been relatively quiet in the R&D landscape in India. Number of companies with R&D centers in India (FY 1980 to FY 2011) CAGR: 5.4% 757 781 709 CAGR: 21% 667 614 545 476 392 302 196 237 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 MNC R&D Talent Pool in India 2,28,700 1,88,767 1,91,940 2,04,196 2008 2009 2010 2011E
3However, world over there is been a re-acceleration in technology andbusiness model innovations and new disruptions Modern IT has changed IT adoption patterns among consumers and enterprises It is not enough to just build a product but it is important to build an ecosystem around it Software is Everywhere Product companies are shifting to service oriented business models New paradigms in user experience and user interfaces
4 Companies that have leveraged the various technology trends have exponentially grown their revenue and market cap Increment in Apple revenues Market Capitalization of Facebook (in Bn USD) (in Bn USD) 180.0 80.0 108.3 50.0 65.2 37.5 42.9 4.0 10.02007-08 2008-09 2009-10 2010-11 2011-12 2008 2009 2010 2011 (E) Launched in May 2010 Tesla Roadster - first production Electric Vehicle Valued over USD 1 billion with a range greater than 200 miles (320 km) per charge Payments through square Since 2008 Tesla has sold increased from USD 4 Mn to more than 2,100 Roadsters in 110 Mn per day in the last 7 31 countries. Base price – USD months 110,000
5 Major technology disruptions are re-inventing the current industry landscape Increment in Google Ad revenues and Number of Digital Cameras and good Decrement in Print Ad spend in USA (in Bn USD) quality camera phones sold (in Mn) 174 275 142 135 125 130 125 119 28.2 55 21.1 22.9 2008 2009 2010 2008 2009 2010 Google Ad revenues Print Ad spend in USA Digital Cameras >= 3 MP camera phones Comparison of Blockbuster and Netflix Comparison of Borders and Amazon revenues (in Bn USD) revenues (in Bn USD)8 86 64 42 20 0 2004 2005 2006 2007 2008 2009 2010 2004 2005 2006 2007 2008 2009 2010 Borders Amazon (Books, CDs. DVDs in N. America) Blockbuster Netflix
6 The future of MNC R&D centers in India cannot be taken for granted! The Parent company might not be doing well Bankrupt financially due to fast change in technology and results in layoffs Outsourcing Rebadged 500 Rebadged Companies in order to reduce costs further might outsource the development work to Rebadged 400 service providers The R&D talent in the country might drift to AutoTalent Exodus other industry verticals which produces appealing products and pays more Consumer Semiconductor Electronics
7India centres have an opportunity to play a key role in guiding thecompany through this transformation due to its distinct ecosystem Large presence of both global and Indian SIs Presence of most of the Global 500 R&D spenders companies in India through their captives Presence of companies across the entire technology stack Large businesses are making use of information technology to transform themselves and achieve internal efficiencies Research investment is becoming increasingly viable even for private institutes
8MNC R&D centers of the future should be re-imagined Leverage ecosystem to create next-gen connected devices Create products that cannot be envisioned in developed markets Leverage the value chain to create cross-BU products and solutions Hi-tech companies can influence future product roadmap across industry verticals
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