Foundation for Advancing Science and Technology (FAST India) released its sectoral brief on the Software and Services sector for its series on the State of Industrial research and development (R&D) in India in collaboration with IIFL Securities. Using the S&P Global classification for identifying firms, FAST India focused on software and services sector firms and excluded media, communication and service firms from the study. This allowed comparison of similar firms on a global and national level. The latest brief presents an in-depth analysis of R&D trends, innovation outputs, and comparative performance metrics of major Indian software sector firms against their global counterparts. The report underscores significant disparities in R&D intensity, the proportion of PhD employees, patent output, and publication rates, providing important insights for policymakers and industry stakeholders. The report reveals critical insights into the performance of Indian software firms in various domains of R&D and innovation, comparing them with their global counterparts as well as categorising Indian firms into high-revenue and low-revenue clusters to provide a more nuanced analysis:
R&D intensity:
– Shopify has the highest R&D intensity at 26.8%, 15.8x the highest ranked Indian firm.
– Tata Elxsi ranks first among Indian firms in this parameter, though it ranks 11th overall.
– Global firms outperform Indian firms in R&D intensity by 32.0x.
Proportion of PhD employees:
– Global firms have 6.1x proportion of PhD employees compared to India.
– Shopify had 1.38% of employees with a PhD, ranking first among all firms.
– Tata Elxsi ranked first in proportion of PhD employees in India, and fifth overall.
Publications:
– Overall Indian firms produced 2.6x publications per USD billion revenue than global firms.
– IBM ranks first overall with 328 publications by revenue, closely followed by Cyient
which has 298 publications by revenue and ranks first among Indian firms.
– In the high revenue cluster, TCS ranks first with 131 publications, more than 2x that of the next company in the high revenue cluster, Wipro.
Patent output:
– Indian firms significantly lag in patent output, with global firms producing 12.1x the
number of patents per billion USD revenue as compared to Indian firms.
– TCS ranks first among Indian firms for patents by revenue with 654, and fifth overall.
– IBM ranks first overall with 1,451 patents by revenue, 2.2x that of TCS, which ranks first among Indian firms.
Global software firms outperform Indian firms in R&D intensity, proportion of PhD employees, and patents by revenue. While Indian software firms show an impressive performance in publications by revenue, they lag behind considerably in patents and R&D intensity. Notably, while Accenture ranks last among global firms in R&D intensity, it ranks higher than the highest ranked Indian firm, Tata Elxsi. The considerable difference in these metrics highlights the need for increased focus on innovation and intellectual property in order to compete against global firms. For a detailed analysis and further information, the full brief is available for stakeholders and interested parties.