Yahoo! produces 30% of its intellectual property from India
India’s role in global R&D has increased steadily in the last decade. My colleauges and I have directly participated in educating and encouraging North American and European corporation to include India and China as part of their global R&D ecosystem, through the Amritt Global Innovation Practice. Our clients are working with universities, national labs, private product companies, small inventors, and with many of R&D specialists who offer global engineering services using technical labor from Asia. Virtually all of our work is confidential so we are unable to share many examples of our clients success on this blog.
Yahoo! Inc however is not our client; The India Expert can report that its India R&D center’s contribution to intellectual property (IP) filed by Yahoo globally has increased to almost one-third the past two years, from 10-12% previously. While the company setup its Bangalore facility in 2000, Shouvick Mukherjee, vice-president of Yahoo India R&D, says innovation and product development from India have now started adding to the company’s overall revenues. “The major differentiator is the responsibility of handling end-to-end products that we have compared to any other R&D center in India,” he claimed.
For example, Yahoos run an ad exchange a for which a product called Predict was developed in Bangalore. This product forecasts which online advertisement will get what level of click. This fundamentally improved the return on investment for advertisers, according to Mukherjee. Another example is an internal platform product codenamed Helion, which made it possible to launch multiple websites in parallel.
Yahoo has used a captive center model, primarily because most of its users are located outside the USA “There are companies that are outsourcing work and Yahoo is not in those section of companies. More than 50% of our user base is outside the US. And hence, it is very important for Yahoo to be global in its R&D” says Mukherjee.
In the United States, Yahoo has been under revenue and stock market pressure and reduced its workforce by 4% in an across the board cut in December , after prolonged rumors of a 10-20% cut focused largely on Blake Irving’s product development organization.
Only a few global companies have achieved a third of of R&D coming out of India and many companies don’t need to aspire to that goal. But it is valuable for all of us who struggle with running a global engineering organization to note that some have crossed this threshold.And its important to remember that the Yahoo approach of a captive center driven by market need is only one of many ways to succeed in India.