R&D Cost-An indicator of risk appetite for innovation Are Indian IT software companies doing enough?

Purpose – The aim of this study is to identify whether Indian IT software companies are innovative. Are they taking enough risk to build new product.of their own? Research and development expenses are one such indicator to know the risk appetite for being innovative. Design/methodology/approach – This paper proposes study of ten year data of Five well know Indian IT software companies. Study limited to their Research and Development expenses and their total revenue. Regression analysis performed to know the depth of R&D expenses on the total revenue , as well as find the predictive model that fit the existing numbers. Also effort are made to compare it with the five IT software companies from other geography (i.e U.S) Finding – This paper purpose was to find if IT software companies are taking risk to be innovative.It seems that Indian IT software companies are not spending enough compared to their peers from U.S. Most of the big IT software companies are from U.S, they are almost spending 10 times in R&D activities compared to Indian IT software companies. Originality/value – Comparison performed in the study will allows Indian IT software companies to recognize that they are lagging in R&D investment. R&D is one of the key Pointer of risk affordability.