The Role of Research and Development (R&D) in Software Industry
The term research & development, or R&D usually refers to the type of activity that companies or entrepreneurs undertake to create or improve products and processes. In a broad sense, R&D definition covers the scope of scientific research, the fundamental processes carried out in scientific laboratories, such as testing products before release or use. The effectiveness of R&D is also highly valued and tested in areas such as management, economics, and other socio-cultural areas. Companies, countries, and management often allocate a large part of R&D expenditures, since this area is an indicator of a company’s innovative performance.
In a nutshell, R&D meaning is directly related to innovations in the public and private sectors because the R&D engineering indicators allow the company to be highly competitive in the field of innovation and creativity. In today’s world, it is believed that without a clear R&D program, a company will not be able to productively develop independently, and it will have to undergo such methods as mergers and takeovers of other companies, as well as find new partnerships in order to create new products. Thanks to the research and development team, the company can research and develop new products and improve existing offers without outer help.
If R&D abbreviation sounds new to you, we’ve prepared research on the most common outstaffing and outsourcing acronyms. Check the image below to find out R&D and BPO meaning, RPO, ODC, PEO definition and many others:
How Does Research & Development Work for the Company?
Usually, the research & development department is independent and is separate from other operational processes of the corporation or company. This sphere does not imply direct and instant profits. However, this department is supposed to be a long-term and promising area, which will contribute to the development of the company’s prestige and profits in the future. The contribution to the research and development sphere gives the company the opportunity to obtain patents, copyrights, trademarks that will help create a unique product.
Potentially, large corporations seek to create entire departments of research and development, investing a significant part of the resources in these efforts. They usually evaluate critically potential risks by losing their own assets, since this area does not promise instant and guaranteed profits for the company, and the investment return is not clear. The risk of capital is directly dependent on the size of the investment invested precisely in the area of research & development. Some companies give their research and development to outsourcing, wanting to save on this area. Another reason for the outsourcing of their research and development, since they do not have the necessary personnel for their needs. The duties and activities of R&D themselves depend on the area of work of the company and are very different for each of them. However, standard R&D models have a clear classification and exist in various fields and related organizations.
Software Research and Development – Does Your Company Need It?
At the moment it is difficult to imagine that the software company has no approach to developing and improving a software product since this determines the success and stability of the company. For any software product, its success and the duration of its success can be described in three categories – innovation, quality, and technology.
These three aspects are always considered in the context of the time frame and the experience of the company. To create a new product, developers must consider the need, relevance, and changes in the current market. In this case, the idea turns into a concept that will be directed to a specific market niche. For a software product company, the product itself often determines the activities and scope of work. Therefore, the success of the company directly depends on the quality and constant adaptations and improvements of the product to meet customers and durability through the relevance of the product.
In the case of companies with software, R&D plays a very important role and is part of strategic business planning. If the software research and development department is productive and focused, the organization itself will be more successful. Sometimes the R&D department is separated from the software development department, but there is not much of a visible difference. Of course, the value and importance of product development for both departments are undeniable. However, the goals of these departments are very different.
If R&D focuses on experimenting with new ideas and ideas for developing a potential product, research and development in software work with an already finished product that is needed by a certain audience and is in demand. Often, R&D pays attention to solving a social problem, although the end result is unknown, whereas software development deals only with specific problems related to the company’s business, and the goal is to have the product or service work smoothly.
What Are the Main Research and Development Systems?
Although many companies believe that R&D is unclear, associated with a high degree of uncertainty of revenues and a time frame, the area that makes it difficult to manage a company. In fact, those companies that are the first to commercialize a new product or technology are discovering the possibility of gaining popularity and greater market coverage, premium prices, which leads to status and competitive advantage. Correctly involving in R & D work processes, the company has a high potential in order execution accuracy, product quality, and can also reduce development costs. In general, any company can enhance the competitive advantages of its services through the careful use of R & D.
Often, all the ambiguities associated with development and research are related to the fact that specialists often do not have a clear understanding of various approaches and research systems. There are three such systems – basic, applied research and development.
- Basic research
Usually, this type of system is aimed at the study of the basic and integral understanding of the product and the study of its qualities. This type of research is not strongly associated with commercial or practical use. This is usually the potential interest of the company.
- Applied research
This type is directly related to IT research and development. Applied research has specific goals and is aimed at satisfying customer requests or requirements. The second model facilitates the development of new products, as there are scientists and researchers in the team whose task is applied research in a technical field closely related to the company’s production. As a result, the research and development in software industry provide the company with the improvement of existing products and the development of new products.
This system is aimed at studying the current product, to improve it, both in terms of production and materials, and designing new ideas for this product. There is also a division of development and production. The development explores and generates ideas for the project, when, like engineering, uses this research in the production of the final product.
A separate from others model is business incubators and accelerators. In such a case, corporations sponsor startups and provide financial assistance for the development of small entrepreneurs, with a plan that there will be new innovations that they can use.
At the same time, mergers, acquisitions, and partnerships between companies are also forms of research and development systems. In this case, the companies join their efforts to contribute to the development of the new, using the knowledge and talents of other companies.
What Are the Advantages of Research and Development Companies?
Why do companies, in principle, give attention to research and development? The most common reasons for introducing R&D into your company are:
R&D is not limited to any particular department and can affect both development and operations, marketing, or cost management. Although R&D tools for your company can be quite a laborious process, this feature has unique advantages.
Nowadays, the research and development area is extremely popular all over the globe. Such big countries as the US, China, Japan, Germany spend more than $100 billion annually on R&D purposes, according to HowMuch chart. But probably, every company is interested in developing innovations and leading software products.
How to Create a Skilled Research and Development Team?
Although it is believed that only large corporations need R&D, as they spend huge sums on research and development, R&D can benefit even small companies with a small team of specialists. There are many informal directions for creating a research and development team.
Using the example of such actions, you can implement R&D in your process:
- be aware of the trends of your target market;
- exchange ideas and knowledge with employees about what changes have occurred in the market;
- collect feedback and ideas from your customers.
The R&D team act a huge role in the development and success of your future product. Although in the basic model this department is independent and separated from other departments, most often R&D software team needs to directly cooperate with sales and production units. In addition to creating new products, updating and improving an existing product is the central goal of any company that wants to lead the market. The research and development is needed for improving, evaluating, and working the product. There is also an ability to outsource research and development companies that will meet your firm’s needs.
Research and development team can also conduct product quality checks. In this case, the department must have in-depth knowledge of the requirements and specifications of your project. If the company already has a quality assurance department, R&D engineering department should work closely with the research and development department.
It is extremely important for the all research and development companies to assemble a research and development team, which will include not only R&D engineer, but other specialists who have skills in design, manufacturing, finance, and marketing. Such diversity among the staff in the department will help to discuss ideas for improving existing products and develop ideas for new products.
In addition, top research and development companies can also attract support from other organizations. Business partners and suppliers can give you access to new technologies or processes that will help you in product development.
How to Calculate Approximate R&D Costs?
Every company struggles with coming up with the estimated R&D costs. There are many factors that influence the R&D costs of future projects, but there are common approaches for calculating the estimates. Here is a 6-step strategy on understanding the estimated costs:
- All company directors should be involved in R&D discussion.
- Decide on the budget you can give for R&D.
- Discuss all additional costs of R&D (hire more people, outsource development team, contact outsourcing company).
- Agree on the time frames of each development stage.
- Agree on responsibilities and R&D revision plan.
- Set up the final budget.
Usually, R&D costs can be divided this way:
- low (up to $25,000)
- medium (up to $100,000)
- average (up to $250,000)
- high (from $250,000)
According to Jeff Desjardins’ research, the list of research and development companies that put the most efforts in R&D is led by product ones. Here are the top 5 research and development software companies:
- Amazon ($17 billion)
- Volkswagen ($15 billion)
- Alphabet ($14 billion)
- Intel ($12 billion)
- Samsung ($12 billion)
Thanks to HowMuch report and the Global Economy statistics, we can assume approximate spending on R&D in different countries:
- United States ($476 billion)
- China ($370 billion)
- Japan ($170 billion)
- Germany ($109 billion)
- South Korea ($73 billion)
- France ($60 billion)
- United Kingdom ($44 billion)
- Brazil ($42 billion)
- Russia ($39 billion)
- Ukraine ($0.69 billion)
These numbers depend not only on the number of R&D projects in each country but on the research and development cost as well. However, it is сlearly shown that the US, Germany and leading Asian countries such as China, Japan, and South Korea are the most dedicated to R&D and are ready to dedicate the biggest research and development costs.
Discovering R&D Engineer Salary Rates in Different Countries
If you decide to outsource R&D specialists, the next step you take is probably considering R&D engineer salary rates in different countries to select the best one at the planned cost. Below you can see research and development engineer salary scales in the biggest programming countries, according to PayScale:
- the US – $99,730
- the UK – £41,259 ($53,333)
- Canada – C$65,161 ($48,466)
- Switzerland – CHF 106,645 ($104,556)
- Australia – AU$67,314 ($47,348)
- Germany – €51,646 ($57,885)
- Ukraine – $24,824
It is easy to notice how research and development salary rates of Ukrainian specialists are half the size of European programmer salaries and a quarter of the size of American and Swiss developer rates. An important note should be made that R&D salary scales vary not because of different knowledge and experience of workers but because of his country of origin and his country of work. Thus, when it comes to Ukrainian coders that proved to be one of the smartest developers over the globe, Ukrainian R&D salaries can surprise you pleasantly. Taking into consideration Ukrainian R and D engineer salary rates and the innovations you can receive hiring Ukrainian experts for research and development purposes for your company, it is obvious that it more than worth it.
How Should Research and Development Resume Look Like?
There are a lot of research and development resume examples to take into consideration, for example, at VelvetJobs, BestSampleResume, JobHero, LiveCareer, etc. Also, we recommend reviewing job offers at Glassdoor to understand what requirements companies write usually and what R&D engineer salary rates are offered on the market. Based on this information, you will be able to compose your own concise job description and clearly state all job requirements for your R&D project.
For instance, when you take a first look at a research and development resume, you check the following information:
- Education (Bachelor’s or Master’s degree in Mechanical Engineering, Programming, Software Development, etc)
- Professional skills and knowledge
- Working experience
If we talk about professional skills, strong research and development resume should contain the following:
- experience with mechanical engineering tasks
- successful research and development activities
- solid knowledge of engineering applications, production, and testing activities
- working in packaging and safe environment
- portfolio of launched and maintained products
- troubleshooting experience
- strong analytical, multi-tasking, and communication skills
The experience-describing part is equally important as it shows what tasks and what projects the programmer has been working with. As successful research and development example, the resume may contain such lines:
- participating in creating and updating the research and development strategy of the company
- working on targets and priorities according to the implemented strategy and company policy
- making product research and fulfilling further development activities
- providing required technical insights at every development stage
- handling testing activities
- preparing R&D reports and guidelines for company owners and other departments
- administering all R&D activities in the company
- analyzing R and D costs and effectiveness of completed activities
- providing reasonable recommendations regarding R&D activities
Not every resume will contain a specified R&D engineer salary; however, there are a lot of programmers who prefer to state their rates from the very beginning. You can set an approximate salary rate in your job description, so the potential candidates will be aware of the amount of money you are ready to provide for research and development.
Where Can I Find a Demonstrative Research and Development Example?
Software research and development usually has a different weight and manages software development for companies of different sizes, and its weight in a company depends on the size of the company and its customer base.
The research and development engineers focus on specific company size and depend on current company requests. A distinctive feature of R&D is that the research and development teams don’t have clear time frames for the process and research. The plan for the development of one project can go years. Different from this, research and development engineers have a clear deadline. In a limited predefined time frame, the specialists need to develop, design, and provide an end result.
If you are looking for real research and development example in the world, it is hard to provide you with the exact one because such projects are usually kept secret by the companies. However, as a general research and development example, R&D provides such developments as automatic driving, virtual reality games, and other augmented reality products. For more detailed information, you can check out this useful article on the trending industries and R&D projects in the US.
Do You Have Experienced Research and Development Engineers at Mobilunity?
After reading this article, now you have a complex understanding of how R&D works and how software research and development can contribute to your company’s needs. If you are looking for professional assistance at an affordable R&D cost, here at Mobilunity, you can find reliable specialists. Being one of the most prominent Ukrainian research and development companies, Mobilunity has managed a number of successful R&D projects for companies from the US, Canada, and European countries. Our research and development engineers will gladly assist you with your R&D project, so you don’t have to worry about the great outcome. Delegate your research and development tasks to our team and we won’t let you down!