The Hindu Business Line : Product firms taking organic route to grow

Faced with a competence deficit in emerging technology areas like WiMAX, Web 2.0, wireless, and search, among others, the Indian outsourced product development firms are seen taking the organic route to build skill sets.

Companies like Aztec Software and Wipro Technologies have set up teams in these niche areas recently and plan to scale them in the near term.

Though a number of start-ups are developing software in emerging technologies, none of them are willing to be acquired at present and prefer to stay as start-ups to scale up later.

As a result, there are hardly any skills available in the marketplace in areas of emerging technologies, said Mr V. Chandrashekharan, Managing Director and CEO, Aztec Software.

Over the past one year Aztec has built a 150-engineer team on its own to focus on emerging technology areas such as WiMAX, search, Web 2.0 and convergence. "We plan to double this team in a year," Mr Chandrashekharan said.

"Organic route is the preferred way to build capabilities in areas of emerging technologies," said Mr Ramesh Emani, President (Product Engineering Services), Wipro Technologies. The division has a workforce of some 13,500 engineers.

In the recent past, Wipro set up a small team to focus WiMAX. "This is basically to understand what the technology is all about and what we should be doing," he said.

Wipro has also built a 40-member team in the areas of digital consumer space, especially IPTV and set-top box, to understand the space, he added.

Wipro has set up close to 400 competency centres and centres of excellence in various areas, half of which are in the product engineering space.

Fastest growing

Despite being small in size at present, product development is one of the fastest growing segments of the offshore services market.

As companies across a range of verticals from aerospace to medical instruments grapple to add more value-added software to their products while cutting overall R&D costs, this offshore segment is seen expanding dramatically.

According to Forrester, spending in India in this area has seen a 10-fold growth in five years to around $3.1 billion in 2005 from $300 million in 2001.

Mr Bharat Ahluwalia, Vice-President (Engineering), Aditi, said that the company is largely focused on building horizontal skills rather than taking a verticalised approach.

Aditi has a dedicated technology team, which scans new technologies. This team imbibes the technical knowledge across the company by training the workforce, Mr Ahluwalia added.

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