Innovation in India
Also by Suseela Yesudian INDIA: ACQUIRING ITS WAY TO A GLOBAL FOOTPRINT (edited, Palgrave Macmillan 2012)
Innovation in India The Future of Offshoring Edited by Suseela Yesudian Executive Director, Aditya Birla India Centre, London Business School, UK
Selection and editorial content Suseela Yesudian 2012 Individual chapters the contributors 2012 Foreword Phanish Puranam 2012 Softcover reprint of the hardcover 1st edition 2012 978-0-230-30067-5 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No portion of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, Saffron House, 6 10 Kirby Street, London EC1N 8TS. Any person who does any unauthorized act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. First published 2012 by PALGRAVE MACMILLAN Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited, registered in England, company number 785998, of Houndmills, Basingstoke, Hampshire RG21 6XS. Palgrave Macmillan in the US is a division of St Martin s Press LLC, 175 Fifth Avenue, New York, NY 10010. Palgrave Macmillan is the global academic imprint of the above companies and has companies and representatives throughout the world. Palgrave and Macmillan are registered trademarks in the United States, the United Kingdom, Europe and other countries. ISBN 978-1-349-33646-3 ISBN 978-1-137-26855-6 (ebook) DOI 10.1057/9781137268556 This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. Logging, pulping and manufacturing processes are expected to conform to the environmental regulations of the country of origin. A catalogue record for this book is available from the British Library. A catalog record for this book is available from the Library of Congress. 10 9 8 7 6 5 4 3 2 1 21 20 19 18 17 16 15 14 13 12
Contents List of Tables and Figures Notes on Contributors Foreword by Phanish Puranam Acknowledgements vi vii viii xi 1 Symphony Services Playing a Different Tune 1 K. Balakrishnan 2 Globalisation of Research and Development Centre: How GE does it in India 18 Barnali Chaklader 3 Quatrro BPO Solutions: Developing Outsourcing Solutions Innovatively 30 Rajat Gera 4 The Offshoring Industry in India: Moving Up the Value Chain? 49 Doris Rajakumari John 5 Dr Reddy s Custom Pharmaceutical Services: A Tailor-Made Breakthrough Strategy in Pharma Offshoring? 74 Ananthi Rajayya 6 Legal Process Outsourcing Opportunity and Cobra Legal Solutions 90 Sathyanarayanan Ramachandran 7 einfochips: Product, Delivery and Service Differentiation 103 Vrajlal K. Sapovadia Bibliography 117 Index 124 v
List of Tables and Figures Tables 1.1 Symphony s main competitors 2 1.2 Symphony product and organisational innovation 11 1.3 IRP scheme 15 1.4 Symphony Innovation Program results 16 4.1 Innovations at JFWTC 59 5.1 Dr Reddy s major global generic brands 78 Figures 1.1 Drivers important for global development 5 1.2 Impact of global software development on company financials 5 1.3 MNC business models 8 1.4 Symphony organisational structure in January 2007 9 1.5 Symphony organisational structure in January 2009 10 1.6 Symphony PDLC ideas pipeline 13 3.1 Quatrro model: Value innovation 39 3.2 Quatrro s new product development process 41 3.3 New service development model 42 7.1 Amplified Offshoring Model 108 vi
Notes on Contributors K. Balakrishnan is Professor of Marketing at the SDM Institute for Management Development, Mysore, India. He researches contracting and corporate management. Barnali Chaklader is Associate Professor of Finance at the Institute of Management Technology, Ghaziabad, India. She researches accounting and control, corporate finance and strategic cost management. Rajat Gera is Associate Professor of Marketing Management at the Institute of Management Technology, Ghaziabad, India. He researches service quality and its consumer consequences, e-learning, sales force automation, innovation and technology, services marketing and product management. Phanish Puranam is Professor of Strategy and Entrepreneurship and Co-Director of the Aditya Birla India Centre at London Business School. He is also Chair of the school s Ph.D. programme. He researches and consults on the design and management of strategic relationships between organisations. His first book, India Inside (2011), co-authored with Nirmalya Kumar, was published by Harvard Business Review Press. Doris Rajakumari John is Professor of Marketing at Chennai Business School, Chennai, India. She has specialised in developing case studies as pedagogical tools for management education. Ananthi Rajayya is Lecturer at the Albertian Institute of Management, Cochin, India. Sathyanarayanan Ramachandran is Professor of Marketing at Chennai Business School, Chennai, India. He researches brand management, advertising and cross-cultural marketing. Vrajlal K. Sapovadia is Professor of Finance and Accounting at IIM Indore, India. He researches business strategy, corporate governance and management accounting. vii
Foreword To many readers, offshoring and innovation may seem like strange bedfellows. While India s success at becoming the world s hub for offshored services is now common knowledge, it remains less clear whether the country can make the transition from being the world s provider of fairly standardised knowledge work done to other s specifications, to becoming a genuine locus of innovation that has global impact. The challenges seem fairly obvious: distance from customers in the developed world, a surprisingly shallow pool of high-skilled talent and an Intellectual Property (IP) regime whose robustness is yet to be proven. On the other hand, the potential talent pool remains deeper than elsewhere in the world, and if the global delivery model (the workhorse of the IT and BPO offshoring industries) could be extended to higher-end innovation-related work, then talent in India could yet generate innovations for the world. While the employment opportunities generated in an innovation as a service sector must necessarily be smaller than those in commodity services, there are nonetheless several reasons why developing such a sector in India may be worthwhile. Greater value added, and therefore potentially greater profitability, may well generate large diffusion-of-wealth effects. There is also a potential incubation effect as individuals in the sector move on to become entrepreneurs. In some sense, building an export-oriented innovation ecology may prove to be an alternative to the existence of strong research-oriented universities as breeding grounds for innovators, and such an ecology would effectively be subsidised by global customers. Finally, an innovation as a service sector is less likely (though not immune) to be a hostage to wage arbitrage opportunities that arise elsewhere in the world. My own interest in the offshoring of services dates back at least to 2003 when I began investigating early attempts by Indian firms such as Dr Reddy s Labs and Biocon to replicate the success of the IT services industry in contract R&D in the life sciences sector. A talented doctoral student (and now a professor at the Indian School of Business), Kannan Srikanth, helped me learn about the viii
Foreword ix global delivery model as an organisational innovation. In our academic papers, we have analysed how this model takes work that was formerly performed in one location and one firm, distributes this work across multiple firms and locations, and specifies the means to reintegrate the results. In more recent work with Saikat Chaudhuri (Wharton), we have been exploring how the model transfers to R&D services. A parallel stream of research uses patented data to understand the nature and impact of innovation originating in India, and involves coauthors Tufool Al-Nuaimi (Imperial), Gerry George (Imperial) and Suma Athreye (Brunel). Some of this research is discussed in my book India Inside (Harvard Business Review Press, 2012) co-authored with Nirmalya Kumar, my colleague at London Business School and Co-Director of the Aditya Birla India Centre. The key point of the book is that products that are Made in India are not the only form of innovation with global impact that India can produce; much innovation that may occur for global customers and consumers may be invisible to them unless Intel s approach to branding its microprocessor ( Intel Inside ) were also to be applied to these Indian contributions hence the title. I am thus particularly pleased to see this edited volume, in which Dr Suseela Yesudian pulls together several cases that explore whether and how the services-offshoring sector in India is making the transition towards greater value added and innovative work. These cases were developed by academics in India as part of a case study project titled Innovation: The future of offshoring? hosted at the Aditya Birla India Centre at the London Business School in 2009. The Centre was funded through the generosity of an alumnus, Mr Kumar Mangalam Birla, in memory of his father, one of India s pioneer globalisers. I have had the honour to serve as Co-Director of the Centre for several years now. One of the mandates of the Birla Centre is the development of case studies that showcase Indian business developments and enable these to be discussed in B-school classrooms around the world. I congratulate the authors of the cases contained in this volume. Writing a case study using in-depth data from both secondary and primary (interview) sources is a time-consuming task, but if done well can result in a context for simulated problem solving by students, as well as a documented slice of business history that can be useful to the
x Foreword analyst or curious reader. Dr Yesudian has worked to weave together the various cases in this volume to ensure interoperability and I can assure the reader this is no mean task. It takes countless hours of editing, fact checking and synthesis, which result in a creative output that is not to be valued any less than any of the cases themselves. Indeed, if this collection of case studies means more to the reader than the sum of the parts, the credit is Dr Yesudian s. Phanish Puranam London 2012
Acknowledgements A special thanks to Professors Phanish Puranam and Nirmalya Kumar. The research costs for this book were supported by the Aditya Birla India Centre at London Business School. The Centre and London Business School are grateful to Kumar Mangalam Birla for generously funding the Centre and supporting its work. xi