Research and Development Centers: What is Their Role in Innovation of Software Development? 

The notion of a research and development center (or an R&D center) is quite simple – a team delves into a specific niche and creates a product or technology that fills the gap in the market. For many businesses, the model of a research & development center is more than just an offshoot of their company; It’s the main driver of innovation that can disrupt the entire industry.

By nature, R&D teams are centered around proactiveness and a forward-looking approach. But can a research development center impact technological progress? What are the basics of their approach? How and why should you consider launching one? Find answers to these questions in this article. 

What’s an R&D center?

So, what are R&D centers exactly? An R&D center refers to a branch of a company dedicated to the ideation, exploring, experimenting, research, and development of innovative solutions. This approach is the best way for businesses to achieve a competitive edge and stay on top in the ever-changing market.

An alternative answer to “What is a research and development center?” can be a team of software engineers and other experts based in another country, tasked with developing a unique product for the company. For instance, at nCube, we build nearshore partnerships, launching R&D centers in Central & Eastern Europe and Latin America. This center will be a powerhouse for your organization’s know-how with the degree of autonomy you deem necessary. As your reliable provider, we’ll take care of all the legwork – from organizing office space to sourcing the top 1% of local tech talent.

7 key benefits of building an R&D center

Understanding “what is an R&D center” is impossible without looking at its strengths. Let’s review them.

Discovering new solutions

The primary benefit of an R and D center is introducing new methods, ideas, technologies or products. This ambition calls for outsourcing a team of forward-thinking engineers whose task will be to deliver new products or renovate existing ones to bring the company a competitive edge. As a result of their efforts, your R&D center might deliver breakthrough discoveries, with the potential to transform your business or even the entire industry.

A boost of innovation

Innovation is the core purpose of an R&D center. By investing in research and experimentation, digitized businesses can come up with software ideas that propel them ahead of the competition. Whether it concerns creating an innovative automation solution or a startup application that takes the market by storm, an RD center (in-house or remote) is a good solution. These are the hubs for technology geeks where they can brainstorm, collaborate, and translate concepts into tangible applications. A research and development center is a great way to boost innovation both globally and at the company’s scale. 

Attraction for investors

Investors favor innovation-inclined companies. By presenting your organization as an R&D team with a forward-looking approach, you automatically become more attractive to potential investors. The key point here is to show a clear vision. R&D centers should articulate their long-term goals, showcasing how their innovative projects align with market demands and trends. If you manage to highlight the tangible benefits of your research for various industries, there will be people ready to invest in your organization and ideas. 

Strong potential for business growth

An R&D center can have a surprising impact on business efficiency. Even if a specific company is struggling to sustain the competition, a great R&D team can become a game-changer. A relevant innovation introduced at the right moment can immediately drive business growth. By being ahead of the curve, companies can improve their efficiency and profitability. Also, technological innovation is a great opportunity to attract new customers and expand into new markets. Even if the company is struggling to implement the promising idea properly, it can always raise money by selling the concept to other organizations. 

Tighter collaboration among professionals

R&D centers often bring together diverse experts from various fields, such as scientists, engineers, designers, and data analysts. In this case, great ideas can easily go beyond traditional software development. The collaboration between different professionals boosts progress and removes borders between different domains. Most IT companies work on traditional software solutions that provide specific functionality to specific professionals. With a research and development center, you can come up with an idea that provides unique value and responds to the challenges of many domains and teams. 

Enhanced product quality

An R&D team can help you uncover the optimal production method for the product. It can also come up with innovative testing methodologies ensuring that no issues will tarnish the final result. A research and development center can cover your product’s compliance with various standards and its fit with the customer’s demands. As a result, you will deliver a product devoid of bugs and other issues ruining customer experience. 

Your own center of excellence

Many businesses view R&D as centers of excellence. When teams are dealing with complex tasks, it can be a go-to place to receive consultancy on best industry practices. An R&D center of excellence can act as a source to upskill software engineers and other professionals, gain insights, adopt new technologies, or establish processes. It can also be a place to nurture tech leaders with an innovation-inclined mindset.

Research and development centers: What are their tasks?

A research and development team (be it an offshore or in-house one) can handle a wide array of responsibilities. Typically, R&D team tasks are as follows:

• Analyzing industry gaps and demands
• Analyzing customer data
• Research and analysis of customer experience
• Market research and analysis
• Product tests
• Market tests
• Product research and development
• Implementing product updates
• Ensuring product quality control

Research and development centers’ role in software development innovations 

New software appears on the market daily. In many cases, it’s the result of the efforts put in by teams working at research and development centers. Let’s consider EdTech as an example. The industry has come a long way from merely putting content online to remarkable transformations, with some of them courtesy of R&D centers:

• AI-driven platforms: These tools create personal learning experiences based on the student’s learning style.
• Gamification: Research and development centers have pushed student engagement further by integrating game-like elements into learning tools, making them highly interactive.
• Virtual classrooms: A staple of modern Edtech, modern virtual classrooms closely resemble traditional in-person classes, with real-time video interaction between teachers and students. 
• Data-driven skill assessment: These tools effectively identify students’ weakest concepts, providing personalized solutions for quick upskilling.

Standing on the shoulders of research & development centers, EdTech is becoming more and more interactive and personalized. Consider our success story where through offshoring, our team has helped an E-learning company, Helliwood Media, meet market demands and develop an innovative solution.  

How much does it cost to open a research and development center? 

An R&D center is a talent-driven area, so most expenses are tied to the salaries of software developers. With that in mind, considering software development rates around the world plays a key role in choosing a location for your research and development center.

Based on our research, you can count on the following rates when building R and D centers in various corners of the world.

R&D center location	Average software developer salary (per year)
Poland	$90,000
Romania	$70,000
Czech Republic	$100,000
Ukraine	$60,000
Mexico	$60,000
Argentina	$80,000
Colombia	$50,000
Brazil	$70,000

Please note that the price of the research & development center may not always fall within that expected range. The cost varies based on factors such as the developer’s experience, location, skill set, and additional vendor fees.

Apart from team member salaries, there are also extra costs related to the maintenance of an R&D centre. Our approach assumes covering all the amenities associated with running a remote R&D branch, including:

• Office space rent
• IT Infrastructure
• Legal entity establishment
• Supporting teams (HR, Accountment, Office maintenance, HR, etc)

At nCube, your R&D center will be under full operational management so your team can focus on innovation.

Best location to start an R&D center 

When choosing a location for your R&D center, you should consider several factors: a pool of available specialists, cultural fit, language proficiency, and cost. Let’s consider the most skilled innovation hubs around the world where you can set up your center for research and development:

Poland 

R&D hubs: Warsaw, Kraków, Wrocław, Gdańsk

Software development rates: $50–$99 per hour 

IT landscape. Poland is a prominent European tech hub with an IT talent pool careening towards 500,000 experts, making it the region’s most numerous IT talent repository

Top skills. #1 for Java programming competence. # 3 globally for software development expertise. Strong expertise in Algorithm JavaScript, SQL, Python, C#, PHP, IoT

English proficiency. Very High: 15th globally and 13th in Europe on the EF English Proficiency Index

Czech Republic

R&D hubs. Prague, Brno, Pardubice

Software development rates: $50–$99 per hour 

IT landscape. A robust tech talent pool of over 130,000 skilled software developers

Top skills. #2 for Mathematics, #4 for Security-related competences. Local developers excel in Python, C#, SQL, JavaScript, HTML, and CSS

English proficiency. Very High: One of the strongest pools of English speakers, ranking 25th out of 116 in the EF English Proficiency Index

Ukraine 

R&D hubs. Kyiv, Lviv, Odesa, Dnipro

Software development rates. $25–$49 per hour

IT landscape. A significant player in Eastern Europe’s technology sector, boasting 350,000 software developers, the second-largest market in the region

Top skills. High-level competence in Java, C++, JavaScript, C#, Python, PHP, Swift, and Kotlin. #4 globally in, #1 in Security expertise, #11th globally for software development skills

English proficiency. High: 35th out of 113 contenders on the global scale for English proficiency, with very high proficiency in Kyiv and Lviv

Romania

R&D hubs. Bucharest, Cluj-Napoca

Software development rates. $25–$49 per hour

IT landscape. A community of 140,000 skilled software developers ready to join an R&D center

Top skills. SQL, Java, JavaScript, and Python are the most common skills among local developers

English. Very High: 12th place out of 116 countries worldwide on the English Proficiency Index

Mexico

R&D hubs. Mexico City, Guadalajara, Monterrey

Software development rates. $25-$49 per hour

IT landscape. A substantial tech workforce, with IT professional estimates reaching 700,000

Top skills. C#, SQL, JavaScript, Python, and C++, data science, machine learning

English. Low: Mexico ranks 87 out of 116 countries in the EF English Proficiency Index, with high proficiency in Monterrey

Brazil

R&D hubs. São Paulo, Rio de Janeiro

Software development rates. $25-$49 per hour

IT landscape. Brazil is ahead of the pack in LATAM, boasting a substantial tech workforce of 759,000+ software developers

Top skills. Cloud, data, JavaScript, Node.js, Java, SQL, PHP, Python 

English. Low: Brazil ranks 81 out of 116 countries in the EF English Proficiency Index

Colombia

R&D hubs. Bogotá, Medellín, Cali, Bucaramanga

Software development rates. $25-$49 per hour

IT landscape. A growing pool of technologists, careening towards 100,000+ milestone

Top skills. Data analysis, statistics, mobile development, Python, Java, C++, Ruby

English. Low: Colombia ranks 74 out of 116 countries in the EF English Proficiency Index, with high proficiency in Bogotá, Bucaramanga, and Cali

How to build an R&D team

If you are considering building a team for your research and development center, a good idea is to start by going over some key questions addressed by experts. The most important factors are the price, R&D risk management, legal considerations, and, surely, the talent pool. A common approach is opening research and development centers in countries with a strong focus on IT offshoring. In this regard, Eastern Europe and LATAM prove to be one of the most popular destinations. 

An essential member of your R&D team must demonstrate the following qualities:

1. Strong programming knowledge and experience
2. Proficiency in various programming languages
3. Comprehensive knowledge of data structures and databases.
4. Skillful handling of cloud computing
5. Proficiency in web development
6. Extensive familiarity with integrated development environments
7. Outstanding teamwork and collaboration skills
8. Exceptional problem-solving capabilities
9. Advanced analytical and critical thinking skills
10. Profound planning and execution capabilities
11. Excellent organizational proficiency
12. Proven leadership skills

How nCube can help with opening a software R&D center? 

When building a software R&D center, it’s important to find a trusted provider. At nCube, we have the right processes and expertise to launch an R&D center in Central & Eastern Europe and LATAM. During 16+ years operating in the field of software development, we’ve served over 120+ companies worldwide, launching tailored R&D centers. Here’s what we offer:

Talent sourcing targeted to your requirements: When building an R&D service center, our HR team prioritizes candidate experience, tech stack proficiency, domain expertise, and cultural fit. Your R&D center will be fueled by skilled dedicated development teams, built on your terms.

Fully furnished R&D centres: We’ll help you acquire, customize, and set up all the needed infrastructure for your remote innovation hub.

Operational management. Our team will deal with the management of your software R&D center on various levels – from recruitment and employee support (payroll, accounting, legal, HR) to office management. Meanwhile, you’ll retain full control over key decisions, like R&D budget planning, day-to-day operations, and project direction.

Legal support. We’ll assist you with setting up a legal entity in your chosen location and ensure it meets the local labor and tax regulations.

Team retention services. We don’t stop at launching your software R&D center. We’ll ensure you work with a sustainable team, providing competitive employee bonuses, professional development plans, team-building events, and generally caring for your employees’ comfort.

In conclusion

Launching R&D centers brings undeniable and wide-reaching benefits. They foster innovation and learning culture within organizations, driving the development of new products and services. R&D centers help businesses stay competitive, attract investors, and form strategic collaborations for long-term growth and leadership. A centre for research and development is a smart investment that is very likely to pay off if handled properly.

Contact us and let’s discuss your need for an R&D division. 

Frequently asked questions on research and development centers

R&D center meaning 

When it comes to R&D center meaning, it refers to an office aimed at innovation, discovery, and creation of new technologies, software, processes, or services. The purpose of an R&D center is realized through experimentation as well as collecting insights and know-how that will be further applied to elevate existing products, develop cutting-edge solutions, and enhance business processes.  

What does an R&D center do? 

The key job of an R&D center is to discover new or improve existing solutions pertaining to a business or industry. Some typical tasks for an R&D center are:

• Market research
• Conducting experiments
• Software development
• Designing new features for an existing product
• Testing the quality of the final product

How do R&D centers drive innovation? 

In the age of rapid technological advancement, R&D centers are key for companies to stay competitive. In particular, an R&D center lets businesses craft unparalleled solutions to beat competitors who lack similar capabilities. That way, an R&D center is a way to boost innovation both at the market scale and company level. 

What are R&D centers of excellence? 

An R&D center of excellence is a division of a company that harbors specific expertise and serves as a know-how hub within an organization. Thus, your R&D center of excellence can be a source of best practices, skills, and expertise in your domain.  

Why are research and development centers important? 

Research and development centers can push the boundaries of existing technologies and reinvent entire industries. Moreover, they give companies a competitive advantage by creating unique products capable of putting other companies behind.