'India Inc' is moving from services to innovation, and both it and China are becoming world intellectual property (IP) hubs, believes Prof. Phanish Puranam of the London Business School. According to Puranam, if research and development can be done in a distributed, outsourced environment, then there is no limit to what can be delivered offshore.

The global IP picture is changing, and measuring “innovation as an outcome” is something that can now be quantified and explored in a statistical model, the professor told delegates at the FT Outsourcing conference this week.

So do the facts support this claim? Today, China and India account for two percent of the world's IP activity, and that figure will soon increase to five percent – arguably low for countries representing perhaps 20% of the world's population.

That said, the picture is, of course, massively distorted by the 'elephant in the room' of the rampaging US patent machine. So the fact that Indian inventors, designers and engineers are developing and registering so many patents, whether for domestic or international companies, is a significant and encouraging development. Dozens of US companies now figure strongly in the client list for India Inc's innovation, including IBM, HP, Texas Instruments, GE, and Intel.

Nearly every patent that has come out of India in the past five years has been in such lucrative areas as organic chemistry, IT, pharmaceuticals, and telecoms, said Puranam, and these are often developed locally with global cooperation – what he called “the globalisation of knowledge production”.

Unsurprisingly, the picture in China is different: domestic firms are dominant in Chinese patenting activity, and in areas that complement their Indian counterparts. However, Puranam claimed that Indian patents have greater impacts relative to Chinese work in terms of forward citations – a claim that may itself be distorted by India's more open outlook to, and cooperation with, the West.

So how does distributed knowledge work happen in terms of R&D? Puranam discussed research carried out by the London Business School across 17 firms and 120 projects, saying that the fundamentals are the same whether you are looking at call centres or high-end knowledge process outsourcing (KPO).

One model is so-called 'black boxing', where companies partition work into independent modules that can operate intensively with very little interaction, reducing the need for coordination – by implication, a hothousing approach. Puranam was critical of this model for many types of work: “You can't really run an assembly line model with creative work,” he said.

The other, more effective strategy, said Puranam, is rooted in strong communication, where the main driver is not technology, but common knowledge and a shared mindset.

Certainly this year's conference seemed to showcase a dialogue between two – unshared – mindsets: first, technology solutions solving technology problems (minus the hard evidence of their efficacy for human beings) versus a softer, more people-focused approach (which seemed, paradoxically, to be more grounded in fact and technological innovation). Needless to say, it is the latter that tends to suffer in a recession; a lesson our industry sometimes signally fails to learn.

Puranam's presentation was one of the most interesting and challenging ones from the conference platform, but it did beg a question in this delegate's eyes: if something as core as research and development to any (traditional) business is joining the ranks of manufacturing, customer service, back-office processes, marketing, communications, technology infrastructure management, knowledge process outsourcing, and applications development as a potentially offshored, third-party function, then what will the client company of the future consist of – and who will pay the CEO's wages?

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