India becomes R&D hot spot as high-tech firms cut costs

At Microsoft's research center in a leafy lane in India's tech capital, a new generation of researchers are being groomed half a world away from the software giant's sprawling headquarters in Seattle. Complete with beanbags and coffee served in steel tumblers, the center is helping change the perception that India is no place for top-end research and development. Staffed with about 60 full-time researchers, many of them Indians with PhDs from top universities in the United States, the center is at the cutting edge of Microsoft's R&D. It covers seven areas of research including mobility and cryptography. Its success, including developing a popular tool for Microsoft's new search engine Bing, underscores the potential of R&D in India at a time when cost-conscious firms are keen to offshore to save money by using talented researchers abroad. Showing off the Bing tool which enables searches for locations with incomplete or even incorrect addresses, B. Ashok, a director of a research unit at the center, said the innovation would never have taken root if the R&D had been done in the United States. "It was completely inspired by the Indian environment, but is applicable worldwide," he said. While India might seem like a natural location to expand offshoring into R&D, it is hampered by some serious structural problems that range from not enough home grown researchers to a lack of government support.