In 1996, German software giant SAP set up a R&D centre in Bengaluru. It was not meant to do any path breaking research. The centre, with a team of 100 engineers and none with a PhD degree, had a simple task — tweaking SAP’s global products for the Indian requirement.

More than 20 years later though, the R&D centre's role in SAP's strategic map has transformed. The India centre has not just contributed to creating almost every single SAP product, but is taking ownership of the multinational's biggest future bets.

Take for example Internet of Things (IoT), which is a strategically important topic for SAP worldwide. SAP Labs India has the ownership for Asset Intelligence Network, which provides a cloud-based collaborative asset management platform that lets companies take full advantage of the IoT. SAP India is also the development hub for strategic business applications like S/4HANA (SAP’s flagship product) Procurement.

“Over a period of time, people realised the capability and strength of this location and the talent that exists here. Over time, we saw development being done for much broader scope of products. Now, in 2017 we have close to 7,500 R&D people who sit in Bengaluru," said Dilipkumar Khandelwal, Managing Director at SAP Labs India.

"India is the second largest R&D location for SAP, second to its headquarters in Germany," adds Khandelwal who is also the Executive Vice-President Global Head of enterprise cloud services, SAP. The company has 19 Labs in 16 countries.

The sprawling campus of SAP in Bengaluru’s suburb of Whitefield houses data scientists, user experience designers and product architects. Eighty per cent of the employees here work in the core development of products. And their numbers are increasing, at the rate of 1,000 researchers a year.

“Purely from the size and scale, this has has become the most strategic location. There is no strategic product built in SAP where India is not contributing or playing a big role,” says Khandelwal.

Some examples of the products and solutions that originated from SAP Labs India for the world include the SAP Business Objects Mobile App, a product that got worldwide acclaim. It also includes the Fashion Management Solution , targeted at manufacturing, retail, and wholesale businesses of the fashion industry.

Beyond IT



Similar to SAP, scores of companies opened their R&D setups in Bengaluru in the late 90s, primarily harping on to the cost arbitrage bandwagon, which had seen the massive boom of the Indian IT services sector at the time. Almost all of them are now turning the so-called back-office R&D facilities into real centres of innovation, leading their product development efforts globally.

It is not just the technology companies who see India as a hub of innovation. Companies ranging from conglomerate GE to elevator company Otis to technology driven power & automation company ABB have all built up a massive R&D base in Bengaluru. Their facilities in India are among the top three innovation labs for them. “Our Bengalurufacility is one of the biggest centres for ABB globally with over 2,500 technologists, including 56 per cent of them holding PhD degress in corporate research,” says Akilur Rahman, Chief Technology Officer, ABB India and Head of ABB Corporate Research Center, Bengaluru.

ABB’s Bengaluru research centre designed and manufactured the world’s highest voltage 1200 kV transformer and circuit breaker, one of the most promising products for ABB worldwide. This 1.2 million volt transformer represents the highest alternating current voltage level in the world and is installed at the national test station at Bina, Madhya Pradesh, as part of a collaborative initiative by the country’s central transmission utility, Power Grid Corporation of India Limited (POWERGRID).

The India centre is also driving the company's shift to Internet of Things by developing smart sensors and related technologies in India. This smart sensor solution connects low-voltage electric motors to the industrial Internet of Things, allowing them to be monitored continuously.

The solution, which can be easily affixed to a motor, transmits data on vibration, temperature, loads and power consumption to the cloud. Alerts are generated as soon as any of the parameters deviates from the norm, allowing the operator to take preventive action.

Early indications are that the smart sensor solution leads to a reduction in downtime of motors by up to 70 per cent and extends their lifespan by up to 30 per cent.

The most important factor in making India a hub for high tech R&D is its growing affluence. The country is not just a big export market for technology but also a large consumer today. And with that comes complexities. For example, the mobile phone wave in the country made it the second largest market in the world.

Aadhaar, the 12-digit identity number, is the world’s largest UID project. Therefore, the kind of complexities and scale seen in India is often not available anywhere else in the world, giving researchers enough unique problems to solve.

This proposition has brought back many Indians who left the country in the 90s to work for R&D firms overseas. “In the past, we used to only try and solve problems given to us by our global R&D teams. But now with India becoming a big market itself, our researchers get the opportunity to meet customers and understand their pain points. This has enormously helped us take ownership of several products,” said Rudramuni B, Vice President and Center Head for Dell EMC India.

Researchers are also returning to their home country because of the attractive roles on offer, including pure research position independent of managerial roles. The salaries at the highest levels in research in India have already crossed ₹7 crore, at par, and in some cases higher than what several managing directors get.

The growing clout of R&D centres in India means that researchers from facilities in other regions report to their seniors here. That’s the case with the Dell’s centre in India.

The talent crunch



Although India has the third largest developer ecosystem, and is the largest IT services provider in the world, talent required for research is always in short supply. “The bigger issue is that new areas in technology such as Big Data and analytics require more inter-disciplinary research. At university levels, mathematics, electronics, computer science departments have to work together to solve the problems. You need programming as well as mathematics background. Although that is beginning to happen, the skill-set is still in short supply,” Rudramuni said.

The number of PhDs in India are on the rise. In the 2015-16 academic year, 24,171 PhDs were awarded across the country. But only a few hundred were in computer science.

Due to this, research units of most MNCs are closely working with university students to ensure that they are trained on upcoming technologies and can start working on research projects even before they decide to take up PhD.

The shortage has seen many Indians coming back. There are many foreign nationals too. Half of the researchers at IBM’s India Research Lab have come back after working in the West.

Similarly, of the 80 engineering directors at Cisco India, about 50 joined from large research organisations in the US and Europe to come and solve problems in India.