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Japan could emerge the next big destination after US and Europe, for the Indian offshoring industry. A new study by Zinnov says Japanese firms could drive the next phase of growth for the Indian offshoring industry Out of 1000 global companies, about 19% are based out of Japan, which appears to be a largely untapped market for the Indian companies.

In a study on Global 1,000 R&D Spenders: India Opportunity Identified , conducted by Zinnov Management Consulting, a management consulting firm brings to light the global R&D landscape from the perspective of the total number of dollars that are being invested by the top 1000 global companies from various geographies.

Praveen Bhadada, engagement manager of Zinnov Management Consulting said, “The offshoring potential from Japan is largely untapped and more and more companies are now looking to outperform their US and EU competitors. Besides this, while R&D offshoring to India from the US markets is reasonably high, given the current economic situation, the recession hit US market is likely to be overcautious on any new R&D offshoring commitments, which makes Japan the next desired destination to look forward for Indian companies.”

With home to about 190 global R&D spenders, Japan has witnessed high growth in R&D investment as well as R&D as a percentage of sales in 2007-08, the report said.

The study found that R&D companies based out of US and EU accounted for about 75% of the total R&D spend of $530 billion by global 1,000 companies in 2007-08, followed by Japan. It highlights that the opportunities to the Indian offshoring community to look at Japan as the next destination to get more work offshored, said Bhadada.

The report highlighted that the top 1,000 global R&D spenders accounted for about 53% of the total global R&D spend of about $1 trillion during this period. It also said that though the R&D spend has increased year on year, the total R&D spend as a percentage of revenue has decreased for the mega spenders over the last four years. US and Europe based companies together account for around 75% of the R&D spend of top 1,000 companies.

The study said that global R&D companies based out of Asia have witnessed a rapid increase in R&D investments over the last three years. However, the Indian R&D landscape has witnessed a decline in the trend of number of new centers opening has only 281 of the top 1,000 R&D spenders, which provides them with huge opportunity of growth.

Detailing on industry sectors that have witnessed the maximum amount of R&D spending globally, the report said that automotive has indeed been the single largest R&D spender, followed by pharmaceutical and hi-tech. It also added that R&D spend in computer software is dominated by the US market, while the European Union leads in pharmaceutical, telecom and automotive sectors.

As for the R&D investment, the report said that the telecom sector has registered the highest R&D investment growth followed by automotive. Additionally, among the top 10 verticals, pharmaceuticals has witnessed the highest R&D investment to sales ratio of 15.4% with a R&D growth rate of 13.8%.

TOKYO (AFP) — The Japanese cabinet has approved a 4.8 trillion yen (54 billion dollar) second extra budget to finance a massive stimulus package, according to government officials.

Prime Minister Taro Aso’s cabinet plans to submit the budget, for the year to March 2009, to parliament early next year, the officials said.

The budget, exceeding the 1.81 trillion yen first supplementary budget, is intended to fund cash handouts, a job-creation scheme and other economic measures in the 26.9-trillion-yen stimulus package unveiled in October.

Separately, the finance ministry announced a draft state budget reaching an all-time high of 88.5 trillion yen for the year to March 2010, giving up its belt-tightening policy amid the global financial crisis.

“I would like to compile an audacious and practical budget aimed at recovering the economy and securing people’s life,” Aso said in a statement.

The total amount of national bonds issued in the 2009-2010 financial year will reach 33.3 trillion yen, marking the first rise in four years.

“The rapid deterioration of the economy is far beyond our projections,” Finance Minister Shoichi Nakagawa told a news conference. “It is our important task to take flexible measures for the people and the economy.”

The government plans to adopt the draft budget on Wednesday following minor revisions. It will then be submitted to parliament in January.

The Japanese government on Friday forecast zero growth for the year to March 2010, battling to stave off a prolonged contraction in the world’s second-largest economy.

It was Japan’s first zero growth forecast in real terms in seven years as Asia’s largest economy is battered by slowing demand overseas for its exports and a slump in domestic demand.

The global economic crisis has plunged Japan into recession in the current year to March 2009, despite earlier government projections of growth.

India’s second largest software and services exporter Infosys Technologies is keen on acquisitions in Europe and Japan and in the areas of consulting, SAP implementation and BPO. Senior officials of the company said that they would be comfortable with a deal size of $600-700 million (around Rs 2,930-3,420 crore).

“More than the price and valuation of the company, its profile is important and it should help in our growth. Besides, we will continue with our expansion plans. We are committed to regions like China, Mexico and Eastern Europe,” said Kris Gopalakrishnan, CEO, Infosys at the India Economic Summit being held in New Delhi.

The company’s December quarter revenue will see an adverse impact due to the rise of dollar against other currencies. “Definitely, currency movements will have an impact but it is difficult to say what exactly it is,” said Kris. About 40 per cent of the company’s revenue comes from non-US markets.

During its second quarter results ended September 30, 2008, Infosys management revised its full-year dollar guidance down to 13.1 to 15.2 per cent — perhaps its lowest revenue growth since inception — from 19-20 per cent. It also cut earnings per share to $2.24 from $2.32-$2.36 projected in July.

Kris said that while there were indications that IT budgets in 2009 would be lower than this year, the offshoring component will be higher.

Despite these conditions, the company is on track to add 25,000 employees in the current fiscal. “We have not revised our salaries downwards. The utilisation has come down and the bench is higher but that is alright. We are taking this opportunity to train employees and we are increasing the R&D spend,” added Kris.

As for cost cutting, the company didn’t share the internal targets but cuts can happen in discretionary spending like travel and entertainment.