American businesses are increasingly moving their research and development (R&D) operations to India. Companies such as General Electric and Cisco now have their second largest research centres in Bangalore. Debates rage in the US about whether this will lead to more prosperity or threaten the country’s global economic leadership. But it’s more productive to ask how India is training a workforce capable of handling such complex work.
The global engineering and entrepreneurship project team at Duke University travelled to India several times between September 2006 and May 2008 to meet the executives of dozens of multinational and domestic Indian companies to review their R&D projects and operations. What we found was astonishing: Despite its low science and engineering graduation rates, India is rapidly becoming a global hub for R&D, with a momentum and scale similar to what it accomplished in information technology services.
But how? Adjusting for different definitions of which degrees count as “engineering” degrees, India graduated roughly 140,000 engineers in 2004, about the same as the US. Additionally, it graduated 17,000 at the master’s level and 900 PhDs — a small fraction of the US numbers and not even enough to meet the growing staff requirements of Indian universities. Nor is the quality of its graduates consistent. The Indian Institutes of Technology (IITs), for instance, are equivalent to the MITs of the world, but many other, smaller institutions aren’t even licensed.
So, if engineering education is so critical to global competitiveness, how is India succeeding? It’s picking up on the best practices know-how it effectively imports from foreign firms outsourcing to India, and perfecting those techniques. This isn’t novel — it’s exactly the path Japan followed in the 1970s and ’80s.
A new report by the Kauffman Foundation, which I co-authored, breaks the Indian innovations down into seven key areas.
The firms we studied are innovative not only in how but also in whom they recruit, and where they look for talent. Most hire for general ability and aptitude, rather than specialized domain and technical skills. They rely on training and development to bridge skill gaps. Technology firms such as HCL and Wipro recruit from second- and third-tier colleges, and also arts and science schools. India’s largest call centre operator, Genpact, has recruiting storefronts in 22 cities, without even requiring a resume. It is also targeting retired bank clerks and housewives.