The Indian Research & Development (R&D) offshoring market was able to gain over 11% since last year, being expected to raise market values in offshore product development over the US$ 13 billion mark by the end of 2011. A study conducted by Zinnov Management Consulting showed that the growth in market shares was partially owed to R&D offshoring businesses tapping into new markets.

While 50% of R&D offshoring expenditure remains in traditional outsourcing sectors telecommunications, software development and ISV, emerging market like industrial automation and health care as well as aerospace and defense projects contributed to the growth of a market that is remaining strong in the face of global economic crisis. New verticals are supposed to grow by 20% over the course of the next couple of years and even established sectors are expected to continue a steady growth of 6-8%. The figures proclaim offshore product development a healthy industry of global strategical importance.

The report also stated that so-called `macro themes’ are further promoting the market’s growth. Areas like cloud-computing, mobile media convergence and green consumerism open up new opportunities for the market to expand. The need to differentiate oneself from the increasing number of competitors leads many company heads to implement innovative business models, providing the market with new incentives.

While China’s developing outsourcing markets are creeping up on rival India, the subcontinent remains the number one destination for offshore product development. Bangalore-based Wipro Ltd. continues to be the leading player in the country, making it an ideal partner for large global companies wanting to take advantage of its end-to-end approach to product engineering and ability to deal with complex projects.

While US customers continue to look for more and more outsourcing opportunities, Europe is yet to fully pick up on the trend. US universities now even hold permanent collaborations with offshoring providers. The Department for Bioinformatics at Indiana University partners with Pune-based Persistent Systems, while the University of Michigan develops solar powered automobiles in partnership with Defiance Technologies of Chennai. Collaborations like these prove that offshore product development providers are increasingly viewed as long-term strategic partners instead of just a convenient way to save company outgoings.