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Location as a key driver for delivery strategy for ER&D enterprises
Location as a key driver for delivery strategy for ER&D enterprises

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This blog is first in the series of blogs on the NASSCOM- KPMG Engineering R&D Global Location Analysis report

In the post Covid world, companies across the world have faced various disruptions, which led them to accelerate their digital transformation processes, optimise costs, re-assess their supply chain strategies, and enhance product innovation to better prepare for any future disruptions.

While companies are undergoing these changes, they are also constantly looking for suitable locations, which can act as engineering and R&D powerhouses for them, reduce supply chain dependencies on one country, help in expansion and growth of the company, offer newer, diversified markets, give them access to newer talent, save costs, and ultimately provide a competitive advantage.

The ER&D ecosystem has evolved over the years and the ER&D centres have also progressed from executing low complex work to becoming innovation and product partners.

 

Location 3

 

Gone are the days when global companies only used their global capability centres to do less complex, backend engineering work. Now these centres are developing new products, taking responsibility of end-to-end product development, and driving global innovation. This transition has enabled GCCs to bring in high-value work, transforming offshore locations into global innovation hubs, driving IP creation, and functioning as a true extension of the parent organisation.  Over the years, the GCCs have transitioned from offshoring centres to growth partners, with talent capabilities, evolving skills-sets, investment opportunities, and conducive business infrastructure and they are moving up the maturity curve towards higher product ownership and encouraging innovation at an enterprise level.

Over the years, ER&D companies have followed different types of location strategies as each company has different business objectives, that need different resources, processes, and approaches.

 

Location 4
  1. Traditional hub and spoke models are suitable for those organisations which include a base location and a few offshore locations to support the main base location. It allows for workspace mobility and the choice of the de-centralised satellite locations depends on the nature and complexity of work.
  2. Service based models include setting up of locations based on proximity to market, stakeholders (customers, suppliers, partners, employees, and investors), delivery channels, and customer-specific offerings.
  3. ER&D companies have also adopted Hybrid models, which are a mix of physical and remote working. These enterprises are leveraging advanced digital technologies to virtualise the ER&D atmosphere and work in controlled settings.

There are many reasons and parameters which are explored while choosing a location and every ER&D company has a distinct array of business objectives, resources, and processes that need to be addressed in a customised approach. The choice should be made based on the individual company’s needs, company’s long-term and medium-term business strategies, resources, and other objectives.

 

Read more about this in the report “Engineering Research and Development – Global Location Analysis” from the links below –

NASSCOM Website – https://nasscom.in/knowledge-center/publications/engineering-research-and-development-global-location-analysis

NASSCOM Communityhttps://community.nasscom.in/communities/engineering-research-design/engineering-research-and-development-global-location

 


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Vandhna Babu
Principal Analyst - Research

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