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Sanjeev Arora, Executive Vice President, Product Development, Innovation and Growth, JCB India
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NASSCOM – Engineering Summit 2014Panel Discusion
Is India an Engineering hub?
Sanjeev AroraExecutive Vice President Innovations, Growth and Product DevelopmentJCB India Limited8 Oct 2014
Overview
• 700+ R&D centers in India delivering solutions to the world.
• By 2020, India will exceed US in producing R&D professionals.
• 46 of Global Top 50 Organizations have R&D presence in India.
• India R&D has moved from “Cost” to “Strategic Value”.
• Cost arbitrage advantage sustainable to over two decades.
• India ranks 76 (of 143) in Global Innovation Index. 2012-2013 no. patents 43,955 (vs. China 6,52,777)
• “R&D spend: US still remains world’s biggest engine for Innovation – 2011 R&D spend: US$ 366 bn (China: US$ 160 bn, EU: US$ 275bn)
• However, organizations integrating India in their global innovation networks for affordable solutions for Global Markets.
• “Relevant” Skills and Talent growth rate to match aspirations.
3
R&D Intensity
Source: IMF, World Bank, OECD, CIA Fact Book, Battelle
4
R&D Globalization Drivers
• Market
• Talent & Skills
• R&D Productivity
• Ecosystem
• IPR Security
5
Comparative Analysis
MarketR&D
ProductivityDomestic Demand
Design & engg. skills
Manufacturing skills
Manpower Cost
Supplier Base
Commercial Environment
Raw Material
Infrastructure
Korea 9 1 1 7 3 1 2 1
Ecosystem
East
Asia
Talent & Skills
China 2 4 4 1 3 12 1 4
East
Asia
Thialand 8 8 11 7 6 1 11 2Indonesia 9 8 7 3 7 5 11 11Vietnam 14 13 13 7 12 5 15 11Czech 9 1 1 7 1 5 6 3Romania 6 13 13 7 14 10 13 15Poland 8 8 9 15 8 3 13 6Slovakia 14 11 4 7 10 5 6 5Russia 1 5 11 3 14 10 3 8Hungary 2 3 9 7 13 12 10 8Turkey 9 13 7 6 8 3 5 8
Brazil 2 6 4 7 3 15 9 6
Mexico 6 12 13 3 10 5 4 13India 2 6 3 1 1 12 6 13
LATA
MEa
ster
n Eu
rope
East
Asia
*Source: Ernst & Young
6
GIC Landscape
India China Brazil
10%25%
50%Local R&D hub
India China Brazil
5% 10%20%
Center of compe-tence
India China Brazil
55% 55%30%
Engineering nucleus
India China Brazil
30%20%
0%
Off shore Unit
High
Low
GlobalLocal
Au
ton
om
y fr
om
glo
ba
l R&
D c
en
ter
Project responsibility
Share of OEMs and suppliers operating in each type of R&D setup
Source: Secondary Research
Key Insights
R&D setup in India is majorly of two
types
► Engineering nucleus-Adapting
worldwide product to local
requirement
► Offshore unit –
Development of specific
contents for product utilizing low
factor cost
Localized R&D centers in EMs are of four types
India to be destination for R&D investment to develop products for global markets
Source: BCG report on “Winning the BRIC Auto market 2012
7
2006 2007 2008 2009 2010 2020P 2020B 2020O0
5
10
15
20
25
30
$1.7b $2.4b$3.6b
$2.6b $3.3b
$19.3b
$22.7b$24.8b
India CE Market
Source: ICEMA Accenture Report 2011
Bas
e
Pes
sim
istic O
ptim
istic
19.3%CAGR
22.4%CAGR
US
$ b
illi
on
21.3%CAGR
Country
Ranking
USA 1
China 2
Japan 3
Germany
4
Spain 5
France 6
Italy 7
S.Korea 8
India 9
UK 10
Country Ranking
China 1
USA 2
India 3
Japan 4
S.Korea 5
Germany 6
Spain 7
Russia 8
UK 9
Canada 10
2009 2020Global Construction Market Ranking
JCB: India Product Dev./R&D
• Business – High expectations of Growth.
• Opportunities to broaden R&D/Product development efforts :• Access to local talent• Frugal Engineering / Emerging Market mindset
• Lead by Innovation• Staying Relevant to Market.• Leveraging Frugal Innovation
• Focus – better access to customer insight
• Structure – Product focus teams; Central core functions; Connect seamless to HQ/BUs; Dedicated captive design center; Freedom to Innovate
Product Development Scale
• Ground-up development for consumers in local market Level- 3
• Global platforms derivatives – Adjust features for emerging markets
Level- 1
• New Product Development – Leveraging known platforms/technologies
Level- 2
Level 2 & 3 – Opportunities for other Emerging Markets
“Reverse Innovation”
Excon 2007 Excon 2009 Excon 2011 Excon 2013 2014 YTD0
5
10
15
20
25
30
35
9 10
15
24
31
JCB Portfolio Growth
Product Line: 4
Product Line: 8
Product Line: 5
Product Line: 5
Product Line: 7
Innovation Wave Front
Innovation Maturity Roadmap
Nurturing Innovation Culture
Robust Innovation Process
Live Innovation Programs
Innovation Ecosystem
Invest in People
Reward and Recognition
Celebrating the Innovation
1
2
3
4
5
6
7
8
JCB Innovation Wavefront
IP
InnovationPipeline
IP
Implementation Strategy
Kaizen
Futuristic(parked)
Innovation Projects
Eva
luat
ion
by
Inn
ova
tion
Co
unci
l
Idea Assessment
Intel
Intel
Intel
Intel
Innovation Process @ JCB
Intel – Innovation in Technology for Leadership
Intel
Intel
Hopper of Opportunities
Innovation Hopper of Ideas
Impact Assessment
New Products
Technology Pool
Intel
40+Patents
250+Design Registrations
Convergence –Thru’ Innovation
14
Opportunities & Challenges
• Innovation as a growth engine for India (1/3rd of US GDP is derived from Quantum technologies)
• Substantially change India’s perception to the world – “Offshore Back Office” to “Center of Competence”
• 2011 study by CII and INSEAD, France had 52% responses yes for ‘India as Innovation Hub’ while 45% were negative.
• Key changes required to accelerate India’s attractiveness as key innovation hub
• Quality of infrastructure and research centers.• Integration of industry and academic / research
institutions• Relevant Talent and Skills• Specific Government policies and incentives.
15
Summary
• Globalization of R&D driven by globally interdependent economies – Global offshoring business worth US$ 120 bn in 2012.
• R&D Industry in India has grown and also projected to grow @ CAGR of 14-16% to reach US$ 40bn by 2020.
• Right ecosystem is a key to sustain R&D growth in India.
• Leverage India strength – Market, Talent and R&D Productivity.
• Innovation across the sectors is crucial for the next level of growth.
Opportunity to ride the 3rd great wave of innovation and economic disruption.
… Being set off by technological advances…Machine intelligence,
Advanced Robotics, Life Sciences, Ubiquitous web….The DIGITAL revolution
The challenge […] is to develop an “Inclusive model of Innovation”.
Thank You
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