IT firms spend more on R&D to offer new services

Top-tier IT firms are increasing their research and development spends as they gear up to offer newer services such as cloud computing and platform-based offering as part of their non-linear growth strategy.
Infy leads

Infosys Technologies has stayed ahead of its rivals Tata Consultancy Services and Wipro in investing in R&D. Infosys’ R&D expenditure grew ahead of its revenue growth in fiscal 2009 at 33 per cent to Rs 267 crore, followed by Wipro at 21.4 per cent to Rs 49.2 crore and TCS at 13.25 per cent to Rs 43.92 crore.

For the past four years, Infosys has sustained its R&D spend at over a per cent of its total annual revenues, while TCS and Wipro have maintained it at 0.20 per cent of their total earnings.
Revenues from Solutions

“We are focussed much more on non-linearity of revenue. That includes creating solutions and leveraging them to get better revenue productivity,” said Mr V. Balakrishnan, Chief Financial Officer at Infosys.

The company is working on creating solutions for different verticals such as retail, financial services and others. However, it would take some time for revenues from such solutions to kick in, Mr Balakrishnan said. The company’s R&D spend would increase going forward, he added without giving specific details.

Besides continuing to invest in its banking solution Finacle, Infosys has stepped up its focus on new engagement models such as the solutions based offering, platform-based Business Process Outsourcing (BPO) and software-as-a-solution (SaaS) platform. I

n fiscal 2009, Infosys launched its Digital Convergence Platform that currently powers Airtel Digital TV and ShoppingTrip360, a platform that enables a suite of managed information services to create a 360-degree view of real-time in-store shopper and shelf activity.
plan forward

Infosys plans to collaborate with national and international universities, product vendors and technology start-up companies with increasing focus in areas of software engineering, network and design convergence, mobility, grid computing, cloud computing, knowledge engineering, information management, security and privacy.
Wipro’s Excellence centres

Wipro’s R&D focus is to strengthen its portfolio of Centres of Excellence (CoE), Solution Accelerators and Software Engineering Tools and Methodologies. Through CoE, Wipro incubates new business practices by creating competencies in technologies such as SaaS, Unified Communication and Green IT, the company said in its annual report.

In fiscal 2009, Wipro incubated an Applied Research Group in fiscal 2009 to investigate and analyse the impact of technology in earlier stage of adoption lifecycle and has chosen Enterprise Information Management as current focus area.
TCS’ focus on verticals

TCS, which established its first software R&D centre in Pune in 1981, now has 20 R&D innovation labs with specific focus on technologies and verticals. TCS has also set up 46 CoEs to ensure that all its offerings incorporate the latest products and services capabilities from the company and its alliance partners.

TCS will continue to invest in technologies that enhance productivity and operational efficiency to create savings for its customers.

“Cloud and ubiquity computing will gain focus, while energy, life-sciences and security domains will be of prime importance,” the company’s latest annual report said. Though the R&D investments by the top three firms have seen a year-on-year increase over the past four years, the R&D spends as a proportion of their total revenues have remained flat.