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Outsourcing Info-Tech - Trends `Product development space hotting up' Vishwanath Kulkarni
About two-to-three of the five top-tier firms have sought Forrester' advice on formulating their strategy for the OPD space. Almost all of them have exposure to the product development/engineering space.
Bangalore , Nov. 29 Lured by the massive growth potential, top-tier Indian IT services vendors could soon take a major plunge in the outsourced product development (OPD) space. These firms may acquire specialist vendors to strengthen their presence in the OPD arena, the fastest growing segment of the outsourcing market, predicts research agency Forrester. "OPD will be the major growth driver for Indian services firm going forward. We expect Tier I vendors to buy out specialist firms to enhance their capabilities over 12-18 months," said Mr Sudin Apte, Country Head and Senior Analyst Forrester India. OPD is considered to be the next big thing in the IT industry as an increasing number of software, hardware and technology-based companies such as the aerospace, automotive, telecom and other manufacturers are leveraging the cost advantage and using the Indian resources to design, develop and maintain their products. Further, the independent software vendors and product manufacturers are driven to offshore outsourcing to improve their time to market, optimise working capital and reduce cost structures to remain competitive.
Nasscom estimate
Nasscom estimates that OPD exports will grow from the current $ 2 billion to over $7 billion by 2010. About two-to-three of the five top-tier firms have sought Forrester' advice on formulating their strategy for the OPD space, Mr Apte said without disclosing the details. At present, almost all the five top tier IT vendors have varied degree of exposure to the product development/engineering space. While Wipro Technologies, HCL Technologies and TCS have a greater degree of exposure to the product development space, Infosys Technologies has relatively a small exposure while Satyam has a strong presence in the engineering services space.
Product engg space
Wipro, which has an R&D team of around 10,000 engineers, derives revenues of close to $ 700 million (about 36 per cent of Wipro Technologies' total revenues) from the product engineering space. Similarly, HCL Technologies derives 46 per cent ($ 250 million) of its total revenues from the product development space. However, specialist vendors such as Symphony Services, Ness Technologies, Persistent Systems, Aztecsoft, Hexaware, who have been developing software products and managing the product releases for a host of global clients, are seen more prominently positioned in the OPD arena. "With the Tier I services firm getting aggressive, we could see some shakeout and consolidation in the OPD space over the next 2-3 years," Mr Apte added.
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