MNCs eye tier-2 cities for engg R&D centres

Sangeetha Chengappa Bengaluru | Updated on March 18, 2019 Published on March 18, 2019

Low attrition rates, growing ecosystem of tech start-ups and support from State governments are also factors that attract MNCs to tier-2 cities

Talent availability, cost arbitrage are main attractions

Global in-house centres (GICs) of multinational corporations in India are looking beyond the top six cities to tier-2 locations to expand their engineering R&D operations.

Cities such as Ahmedabad, Vadodara, Coimbatore, Kolkata, Chandigarh, Thiruvanantha-puram, Kochi and Visakhapatnam are the new favourites.

Attractive features

Increasing availability of talent, cost arbitrage, low attrition rates, growing ecosystem of tech start-ups and support from State governments are factors that have contributed to making these tier-2 cities attractive to GICs.

Automation Anywhere, one of the top five global leaders in RPA (robotic process automation) for enterprises, which has engineering R&D centres in San Jose, Bengaluru and Vadodara, is expanding its presence in Vadodara.

“Our Vadodara centre is very important. We have teams involved in product engineering and innovation, customer success and global field support in the centre. Since Vadodara is a big university town, we are able to attract some of the best talent to work with us. Talent from the centre is currently being deployed across 15 locations globally, including the US, Australia, Singapore, West Asia, Japan, France and the UK, and we will continue to expand our operations here,” Milan Sheth, Executive Vice-President - IMEA, Automation Anywhere told BusinessLine.

Until 2018, all on-boarding of the company’s new employees was done out of Vadodara, which houses 400 of the company’s 1,000-strong R&D talent in India.

Nissan centre in Kerala

Nissan Motor Company Ltd signed an MoU with the Kerala government to set up its first global centre for digital operations last year in Thiruvanthapuram, which now has a team of 500 engineers. The company already has a global alliance R&D centre in Chennai, which employs 7,000 engineers, who are working on projects, including vehicle and technology development.

As per estimates by global management consulting firm Zinnov, there are 976 multinational corporations which have set up 1,257 GICs in India, of which 68 GICs are in tier-2 locations. Vadodara (29 per cent) and Ahmedabad (20 per cent) together account for 49 per cent of installed GIC talent in tier-2 cities. Bengaluru continues to command pole position for engineering R&D GICs with 469 centres followed by NCR (181), Pune (172), Hyderabad (153), Mumbai (125) and Chennai (117).

Vadodara is key city

Pointing out that Vadodara has emerged as a key tier-2 city for MNCs to establish R&D centres in verticals such as Industrial, Chemicals, Software & Internet, Anand Subramaniam, Associate Director, Zinnov said, “Automation Anywhere has its largest ER&D centre, global water technology firm Xylem, which is building innovative technology-first products for clean water and smart cities, and Solvay, which is working on developing new speciality chemicals for various industries, are all located in Vadodara.”

“Kolkata is shedding its image of a non-starter, attracting R&D centres in the software vertical. For instance, Lexmark is working on embedded solutions in printing and imaging products for its global clients and Hyland is building new age enterprise content management/process management suites. Coimbatore is gaining prominence in Tier 2 cities for multiple industry verticals due to low cost of operations and increased ease of doing business. Mobius which provides professional services for e-commerce, travel, real estate clients and Cameron which works on engineering design for oil & gas, energy industries are located in Coimbatore,” Anand added.

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Published on March 18, 2019
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