If one sector did not complain too loud about Bangalore's crumbling infrastructure in 2004, it was the engineering design services. In a year when the city's preferred prefix, IT, threatened to desert it, global engineering and technology majors stealthily moved in to set up R&D and design centres.

At last count the city accounted for over 75 per cent of the total Indian research and design work, according to a study by Administrative Staff College of India. Bangalore had about 8,500 of the 11,200 R&D work force in the country. Also, 40 of the 77 global firms' R&D centres are based in Bangalore.

Numbers are set to swell further if recent projections are anything to go by. Predictions are India will have 250 R&D/design centres in the next two years and over 70 per cent of these will be in Bangalore.

Bolstering the claims are announcements by ABB to expand its global corporate research centre's strength from the current 100 to 500, auto major GM's decision to ramp up headcount past 100 from 40 now, truck maker Volvo's plan to start an engineering centre and other expansion announcements by the likes of Timken and SKF.

Another trend in 2004 was the emergence of third party R&D contract centres by several engineering and biotech firms across the country. As expected, Bangalore-based companies are said to be leading the charge.

For instance, many biotechnology firms like Biocon [Get Quote], Strand Genomics, Shantha Biotechnics and Avesthagen preferred the route. However, more clarity is unavailable as firms refrained from spelling out their clients or prospective clients.

This move could set a precedent and seal the debate on the hot R&D destination even before it has started. The city is already home to the captive R&D centres of several automobile and engineering majors including Daimler Chrysler, Delphi, Bosch and Snecma. Besides, what arguably is the largest R&D base in the country John F Welch Technology Center employing about 2000 or 19 per cent of the GE's R&D resources is in Bangalore.

Industry players are not a wee bit surprised though. They say, "Since the establishment of Texas Instrument's R&D centre in Bangalore in 1985, foreign companies have realised the benefits of carrying out significant R&D work in India, especially in Bangalore."

The result -- arrival of firms spanning varied businesses including telecom service providers and equipment manufacturers, semiconductor chip designers, IT hardware companies, medical equipment makers, engineering design companies, consumer durables, automotive products, chemicals, plastics and pharma.

Senior officials of SKF, ABB, DaimlerChrysler and Bosch echo similar views on zeroing in on Bangalore.

Besides factors like 20 per cent cost savings, access to quality manpower, the key differentiator is the presence of research institutions like Indian Institute of Sciences, national research laboratories and corporations like National Aerospace Laboratories and Hindustan Aeronautics, in addition to the clutch of IT biggies which are responsible for integrating processes.

The effects are already there. GE has filed for 77 patents, while GM's one-year old facility has just begun its first series of patent filings. Also GE's billing is said to have grown 10-15 per cent in 2004 over the $ 70-75 million billing in 2003.

As a result, firms are widening the scope of their Bangalore centres' activities. For example Timken has designated India as a global sourcing point for bearings design. The Timken centre currently takes care of the global computer aided design and computer aided manufacturing related development.

At the Daimler Chrysler centre focus will include data reduction in processes requiring a lot of computing time. The centre's work now is restricted to innovative satellite-aided sensors, which could be employed in an Intelligent Traffic Guidance System. The GM centre has now also begun CAD/CAM based development.

The mushrooming of R&D centres in Bangalore will also have an impact on the workforce profile. Typically over 65 per cent of employees have advanced degrees.

Besides there is a large concentration of PhDs and masters degree holders. For companies, these centres work on the future. About 70 per cent of the activity revolves around multi-generation product plans that bring out products and services that typically impact business in 1-3 years.