When my brother-in-law was starting his first company a decade ago, he outsourced some of the development to India through a friend of his on the east coast. Outsourcing to India had two big advantages -- it significantly cut development costs and it meant the company could run on a 24 hour development cycle which would drastically cut time to market. The jobs he shipped overseas were at the low end of the hierarchy, mostly basic coders and some development managers. He didn't feel confident that any of the architecture work could be moved.
Times have changed. If anyone had any doubts that globalization simply meant that low value jobs in manufacturing and textiles would move overseas those should now be laid to rest.
India in particular has been doing an excellent job of moving up the value chain. It started with software development and consulting. There are now some impressive software products being conceived and manufactured completely in India.
It doesn't stop there. With a rapidly growing pool of highly trained white collar workers graduating from quality universities India is quickly moving into other sectors. Last year SunLife of Canada moved many of its actuarial positions to India. And now it seems legal work is being outsourced. While it is encouraging to see India rapidly emerge as an economic powerhouse, it raises an issue that will have to be addressed sooner than later.
How do you encourage continued progress in developing countries without significantly eroding the quality of life in the Western world? Corporations are perfectly mobile, they can move anywhere in the world, and are increasingly doing so to reduce costs and increase shareholder value. Longtime employees are victims of this strategy and are increasingly left with only McJobs as an alternative.
Certainly continued and increasing investment in education will help. Government spending tax policies to increase investment in basic R&D and commercialization of discoveries will also help. At some point as well we may want to consider the possibility that rather than fully embracing the mantra that globalization is inevitable and good for everyone, we should be moving to a model of regional economies.
India is no where close to countries like US, Japan and China, when it comes to filing patents. But it still does a significant bit in the IP space. A lot of it’s happening through patent service outsourcing in India. This means, a lot of background work for the numerous patents that are being filed by other countries, are being done out of India.
Experts say, patent services outsourcing, the high value work of legal process outsourcing (LPO) has been a fairly new phenomenon here, hardly four to six years old. According to estimates last year, more than 1.8 million patent applications were filed worldwide.
And the filing costs for these was between $30 billion to $32 billion. But what’s driving growth in the worldwide patent outsourcing market is: Increased off-shoring of R&D activity, lack of manpower and the impact of the US Patent Reform Act of 2007.
A study by ValueNotes, a Pune-based research firm shows, revenues from the Indian patent services offshoring industry are estimated at $46 million for 2007. It’s expected to reach $206 million by end 2012. The study reveals the current addressable value of the patent services offshoring market is estimated at $2.2 billion.
“We believe that the Indian patent offshoring industry will grow 35% per annum over the next four years. As for the number of employees, our estimate is that about 6,950 people will be employed by the end of 2012,” says Subha Kalathur, senior analyst with ValueNotes.
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