Pune is destination R&D

The Mumbai-Pune Expressway has already opened up the floodgates for Pune’s flourishing IT sector. Lately, companies are increasingly shifting their research activities to Pune. Chitra Padmanabhan says that Pune is gearing up to adorn the mantle of India’s preferred R&D destination

It pays to set up an R&D centre away from the commercial hub so that business considerations do not interfere with hardcore R&D activity, says Mathai Joseph

Our first impression of Pune comes straight from school textbooks: the seat of the Maratha empire in the eighteenth century, and its most famous remnant, the Shaniwarwada fort. Look at Pune today and you will still find monuments that give a historic aura to the city. But that aura does not diminish the strong entrepreneurial ambience that is inducing global majors to set up shop here and look for innovative talent. No longer is Pune thought of as a pensioner’s paradise or a sleepy town—it is now the most happening place, not only for IT services majors, tiny start-ups, but also corporate giants looking to set up research and development (R&D) operations.

Take a look at the list of companies which have invested in Pune for doing R&D work. The big boys of the Indian software industry—TCS, Infosys, Wipro, Satyam—are thinking of scaling up their existing investments in Pune. They are followed by other major names like Geometric Software, KPIT Cummins, Patni Computer Systems, Mahindra British Telecom and Tata Technologies. Multinationals like Cognizant, Kanbay and Veritas also do a lot of R&D work at their Pune offices. The Centre for Development of Advanced Computing (C-DAC)—the organisation that built the first supercomputer in India—is located in Pune. In addition, 27 companies have registered at the Software Technology Park of India (STPI-Pune) this year itself. And few would know that Nasscom was among the first to aggressively promote IT in Pune, the first time the software association pushed any city.

Engineering hub

"Pune was known as an entrepreneurs’ town in the late ‘60s, not so much in the retail sector but in the engineering field where a lot of automotive designs and components were being prepared. It is this strong engineering culture that has spilled over to the IT sector," explains Anand Khandekar, founding chairman of the software committee of the Mahratta Chamber of Commerce Industries and Agriculture (MCCIA).

Adds Ravi Pandit, vice-president, MCCIA, "Old Economy companies like Bajaj Auto, Kinetic, Tata Motors, Daimler Chrysler and Greaves all have their engineering divisions in Pune." The IT sector has benefitted a great deal from their engineering culture, and this can be seen from the fact that CAD/CAM companies like Parametric Technologies, Geometric Software and SDRC conduct their research activities in Pune. In short, Pune has become a test bed for developing innovative applications and products.

Take for instance Siemens Information Systems (SISL), which set up its Scientific Applications Centre (SAC) at Pune in 1998 in order to establish new algorithms for its security solutions. The company has done extensive research on its products in Pune, including the Intelligent Digital Passport that uses three biometric scans (speech, face, fingerprint) for the verification of the card-holder. Another example is BioLock, a biometrics-based door lock system, and BioLogon, a biometrics-based computer log-on system. The company’s JPEG-2000 Toolkit, which is used for image compression, has been developed at SAC. "About 40 people are engaged in R&D work in Pune," informs Sunder Rajan, head, corporate communications, SISL.

Start-up company Nihilent Technologies has established two R&D centres in Pune. Nihilent has patented its MC3 Holistic Management Framework and implementation methodology, based on which they undertake consultation work in knowledge management and enterprise transformation. "In the last two years we have spent around 16 man-years of effort in the R&D centre at Pune," says L C Singh, president and chief executive officer, Nihilent Technologies.

Incubation facilities are not intended for commercial gain but to encourage technocrats to successfully move their projects towards commercial viability, says Sushil Gupta

Why Pune?

It has been observed that R&D efforts take precedence at the companies that have set up their centres in Pune. Every year, these IT companies set aside funds to specifically carry out R&D work. This R&D constitutes hardcore technology-oriented work that goes beyond the purview of routine work. The centres carry out high-end work that is critical to the company’s sustenance and determines the standing of the company in the market vis-à-vis its competitors.

"Companies prefer to set up their R&D centres in Pune because of its proximity to Mumbai, which is the commercial capital of India," says Mathai Joseph, executive director of TCS’ Tata Research, Development and Design Centre in Pune. "It pays to set up the R&D centre away from the commercial hub so that business considerations do not interfere with hardcore R&D activity," he adds. Which explains why TCS has its R&D centre in Pune though it is headquartered in Mumbai. TCS, which boasts of being India’s first global billion-dollar software company, does extensive R&D work at its Pune centre. The centre works on various areas such as real-time embedded systems, security engineering, software testing, algorithms, artificial intelligence, process modeling, and computational fluid dynamics for the manufacturing and process industries.

The preference for Pune is also driven by financial considerations–it makes more financial sense to set up a company’s R&D centre in Pune than in Mumbai. Marketing offices may be set up in places of high business activity in order to be more approachable to clients, but no such consideration arises in the case of research centres. For example, the R&D centre of Veritas in Pune is considered to be a core and strategic initiative that substantially improves its competitiveness. Over 24 percent of the company’s global R&D is done at Pune, and this is the only R&D centre which contributes to nearly all the company’s products, which number more than 50. "In the past 18 months, 35 percent of the patents filed by the company have originated from Pune engineers," says a proud Shirish Deodar, vice-president for India Development at Veritas Software.

Pune’s IT manpower

One of the major reasons why companies set up R&D centres here is the ready availability of manpower; Pune scores above others in this area. Traditionally known as a centre of learning, Pune is home to some well-known engineering colleges such as Bhartiya Vidyapeeth, D Y Patil and the 150-year-old Pune Engineering College, besides many others. While the presence of these colleges is indicative of the ready availability of highly skilled manpower, other factors also contribute to the high quality work in this field. "One great advantage of Pune is that we can source our manpower from within the city since there is a good base of IT professionals here. We have grown from 40 engineers to nearly 475 in four years," says Deodar of Veritas. There is a significant difference in the manpower required for software development work and research work. While software services work is largely seen as routine work, R&D needs technological creativity in a person, so he/she is required to have an innovative bent of mind.

"This is not to say that such professionals are available only in Pune, but the city definitely has a culture of technology and product orientation," observes Deepak Shikarpur, executive director, Computer Society of India (CSI). Mathai agrees, and says that R&D professionals operate with a sense of pride in their creativity, irrespective of their remuneration.

Pune’s strong engineering culture, reflected in its automotive design and components base, has spilled over to the IT sector, says Anand Khandekar

Encouraging innovation

There are also a lot of institutes which encourage students to work on product technology. For instance, the Pune Institute of Computer Technology conducts a yearly exhibition of technology products. This event is meant to provide an opportunity to students to try their hands at product technology. Representatives from various technology companies visit these exhibitions to get a feel of the awareness of technology amongst the student community. "The projects done by students are on future-oriented technologies because they are not limited by economic considerations," says Khandekar. Recently, as a voluntary effort, Pune University adopted 10 doctoral guides from various companies to assist its PhD students with the intricacies of technology. The Finolex group’s International Institute of Information Technology at STPI is operational since the last one year, and has students from various countries including Sudan and South Korea. STPI plans to set up research labs on the campus in association with companies like Microsoft, Intel, Sun, SAP and Lucent, and also focus on software development for SAARC countries.

The Pune chapter of IEEE, a non-profit technical and professional association with more than 3,80,000 individual members in 150 countries, conducts various technology seminars and exhibitions, which results in an exchange of technologies worldwide. Similar work for the student community is being carried out by organisations like CSI.

Government initiatives

If IT has to flourish in a particular region it cannot happen without strong support from the government. Right from setting up the infrastructure to sourcing quality manpower, the government plays an important role by laying down favourable policies. Every new initiative tends to come under its purview. However, as far as IT is concerned, the government has been quick to spot the opportunity, and has opened the floodgates for more companies to open shop in Pune. Simultaneously, Pune’s engineering and manufacturing units act as a source of strong domain knowledge that further encourages research activities.

According to the IT and ITES policy report brought out in 2003 by the Maharashtra government, it shall issue directions to all municipal corporations, including Pune’s, to exempt from octroi or entry tax all capital goods purchased by IT units. "We have a policy to divide various areas in the state into A, B & C categories, depending on the potential of the region. Pune city falls under the A category," explains Milind Mohod, industry inspector, IT cell, government of Maharashtra. He also points out that the government provides 100 percent exemption in stamp duty to all IT and ITES units in public IT parks, with 100 percent additional FSI (floor space index) to all IT units in all public IT parks.

Being a manufacturing hub, Pune provides the necessary base for CAD/CAM research, says Shashank Patkar

Technology incubator programme

Just as a prematurely-born baby is kept in an incubator (which has controlled air and temperature conditions) to help it survive, many start-up IT companies have an option to go through the incubation phase. Incubators in technology jargon are entities that provide infrastructure support to individuals to set up a company that could then work on its products and services till it got sufficient funding to move out and make way for the next start-up. The results of incubator programmes worldwide have been quite encouraging. STPI Pune, a central government initiative that houses big names like Infosys, Cognizant, Wipro and Veritas, is also providing similar facilities to start-up companies.

"Our incubation facilities are not intended for commercial gain but to encourage technocrats to successfully move their projects towards commercial viability. The incubation programme is designed to provide entrepreneurs with financial, managerial and professional support to commercialise innovative ideas," says Sushil Gupta, director and chief executive, STPI Pune, who was recently felicitated by the Group of American Businesses for facilitating the smooth entry of American IT companies into Pune, and for spearheading the hi-tech incubation process.

The average technology incubator provides working space, furniture, air-conditioners, UPSes and Internet connectivity. These incubators, which act as institutes for the creation of cutting-edge technology through technology transfers from entities like Kresit in the IIT Bombay campus, have become a part of the government initiative in Pune. There is a clear-cut difference between traditional IT parks and incubator facilities: the latter offers intellectual and financial support through a select consortium which provides strategic advice regarding all business-related issues.

In the Pune STPI park, companies like Extenprise (Extended Enterprise), First Insight, Isoft Labs, In Realty and Insumbra have all moved on to form independent start-ups. "Companies currently housed in the incubators include Integrated Design Support System and Elite Cosmic," says Gupta. The rates levied on these incubators are on a per terminal basis, i.e. Rs 15,000 for first three terminals and Rs 10,000 for every additional terminal. A flat rate of Rs 10,000 is charged if a start-up is willing to set up 10 terminals at one point of time.

In the past 18 months, 35 percent of the patents filed by Veritas have originated from Pune-based engineers, says Shirish Deodar

The most important advantage, say industry professionals whom Express Computer spoke to, is that the incubation period can also serve as a crucial decision-making phase. During incubation, entrepreneurs have an opportunity to assess the viability of their project. Based on the progress made by them during this phase, the people involved can make a realistic estimate of how successful their commercial venture will be—all this with very little cost incurred.

STPI-Pune has also devised a Transit Programme, which is specifically meant for companies in expansion mode. The STPI provides a temporary set-up that accommodates about 80-100 professionals before the company is ready to move into its new premises. The transit arrangement does not affect normal flow of work, and the companies are charged on the basis of the area allotted to them. This facility has been used by many companies which have shifted their R&D centres to Pune. For instance, the US-based company SDRC used this before they set up their full-fledged R&D centre in the city.

The incubation centre also encourages start-ups to own the Intellectual Property (IP) within India. Till now, most of the IP developed in India has been owned by American companies. STPI’s Cyber Park provides the right environment for start-up companies, and encourages them to own the IP and create India-centric companies. All the infrastructure and communication facilities are ready, so entrepreneurs can focus on core knowledge development.

Conclusion

Pune, already home to a strong automobile and engineering industry, promises to become fertile ground for IT organisations too. While Pune in the past was called the ‘ideal place to retire,’ the current R&D invasion can change this to ‘R&D hub of the future.’