The Hindu Business Line : More hands to the game

With a good number of product companies looking to India to outsource their product engineering work, Outsourced Product Development (OPD) is experiencing a high growth trajectory and this trend, industry watchers say, could continue over the next decade or so.

A Nasscom-Mckinsey analysis has predicted the opportunity in the products and technology services space to reach $8-11 billion by 2008.

Yet another Nasscom and Booz Allen Hamilton report has estimated the outsourced engineering and design segment to touch the $40 billion-mark by 2020 and creating 2.5 lakh jobs for Indian engineers. The report has also visualised the total offshoring spend to grow to $150-225 billion during this period.

If one takes a look at industries such as electronics, automobiles and manufacturing, one will notice that each of these witnessed similar growth patterns before reaching certain maturity levels. "The OPD space is witnessing a similar growth curve today. It has taken off only in recent years but a lot of companies seem to have joined the fray" says Dr Anand Deshpande, Chairman and Managing Director, Persistent Systems.

Domains such as Web 2.0, open source, embedded solutions, VOIP, mobile, etc have high potential in the OPD space.

If tier II companies had showed great enthusiasm in this space initially, it has since moved to smaller companies.

Wouldn't this make the going tough? What strategies would these small players adopt to sustain a share of the pie in this highly competitive space?

"Our approach is based on the fundamental principles of skills and trust. To match the advanced technologies deployed by our clients, we invest heavily in updating the skill set of our employees. The skills span the whole spectrum of technologies, tools, and processes," says Sridhar Chandrasekar, Director (Marketing), Virtusa Corporation.

Virtusa has built service centres of excellence for its clients and offers end-to-end service.

GlobalLogic, on the other hand, has developed a joint-venture model of partnering with companies to create a dedicated global delivery centre (GDC).

"As a pioneer in Distributed Agile methods, we shorten product cycles while ensuring that the right features are implemented," says its COO and Country Manager, Mukul Jain. He concedes to product development being a complex activity with particular reference to balancing time-to-market and quality pressures, with creative instincts and evolving requirements.

"Support for multiple versions, continuous upgrades, customer specific versioning, country specific regulations, multi-currency and multi-lingual support create their unique challenges. We, at GlobalLogic, are committed to delivering innovation," says Mukul.

Persistent Systems offers its clients the entire product development life cycle (PDLC) with services such as Usability Engineering & Performance Engineering, which, according to Deshpande, are increasingly realised as essential components in the PDLC of OPD companies.

"These two components enable OPD companies to add greater value to their customers. In addition to this, we have initiated a business model for start-up Independent Software Vendors (ISV), called `Go-To-Live'.

It is a flexible, on-demand model that keeps development costs at a minimum. It includes every aspect of product development and support including research and design, quality assurance, maintenance and support, cross-platform development and porting, deployment and integration, documentation and performance engineering.

The basic idea behind this business model is to allow engineering departments and executives meet their release deadlines without having to shed any features, while reducing costs associated with software development and maintenance," adds Deshpande.

The Vice-President of SolidWorks, Ved Narayan, admits to engineers and product designers getting squeezed from different directions.

"They are not only pressurised to design complex products but need to be `very' creative as well. Shorter turnaround time complicates engineers responsibilities."

According to him, for companies partnering with engineering manufacturing teams in India, China and other countries, the issue is not just about saving money but survival.

"Having solid design communication tools makes size less relevant. It lets small companies compete effectively," he says.

Despite these challenges, India has emerged as a hot destination for OPD. Industry watchers attribute this development to the strong engineering workforce in established companies with mature process.

"Clients are influenced by the desire amongst the more qualified and skilled engineers to do more `challenging' and `aspirational' work associated typically with OPD. That's not all.

By offshoring the work here, the client derives cost advantage, 24-hour delivery model, high quality and process focus and above all skilled workforce with English language capabilities," says Chandrasekar.

Virtusa started catering to OPD clients from its inception a decade ago. It serves over 35 OPD customers.

"Our biggest strength is the `product development pedigree', which has helped us create and sustain a culture perfectly aligned to the needs of our product clients," he says.

lnr@thehindu.co.in