The Hindu Business Line : Moving up the scale

The outsourced product development (OPD) industry in India, which is currently focused on cost arbitrage and process efficiency, is steadily moving into the ‘Built for Manufacturing or Design for Manufacturing,’ stage, says Dr Anand Deshpande, Chairman and Managing Director, Persistent Systems.

In an interview to eWorld, he shares his perspective on the OPD scene and where it is headed. Over to Deshpande:

Have companies in the outsourced product development arena redefined priorities in the last few years? What can they do to better consolidate their space?

Given today’s competitive pressures, companies have been forced to rethink how they manage their product development and engineering functions.

They are now fast recognising that working with third-party specialists through an outsourcing engagement can help reduce design cycle times, achieve better time to market, reduce costs, minimise risks, access the latest technology without owning it, improve product development return on investment, and improve the overall competitiveness of their products.

And this is what companies in the OPD space need to focus on aggressively to be able to market themselves better.

Is IP (Intellectual Property) being developed offshore still an issue?

To some extent, there is concern among independent software vendors (ISVs) when it comes to protection of Intellectual Property Rights. However, over time, the industry has become more sensitive toward this concern and most OPD companies today are deploying and implementing best practices to ensure absolute protection of their customer’s IP.

At Persistent Systems, we have strict processes in place that allow only the appropriate people to have access to proprietary information.

Besides, when we develop products for our customers, we transfer the IP of the product to them.

Where does the OPD industry go from here?

When you look at outsourcing today, it is no longer restricted to the US alone; we have seen this beginning to occur within India as well.

Companies have begun to outsource tasks such as automobile manufacturing, assembly line electronics, hardware, chips, even manufacture of clothes or any of these kinds of things.

We have found that in all of these areas, four very distinct phases of outsourcing occurs. The first is what we call cost arbitrage, the second is process efficiency, the third is design for manufacturing and the fourth is OEM (design and manufacturing).

The software Industry in India has evolved from cost arbitrage to process efficiency where software developers are looking at methods to be more efficient, have their processes in place and in turn reduce costs and time to market and finally innovate on services and offerings.

In the case of Persistent, we are working towards strengthening our position as a leader in this market and want to consolidate and grow this business.

What we are trying to work on right on now is to design for manufacturing in software. It’s our major initiative over the next three years and that is where VCs help us; designing a new business model, a new way that software is going to happen. It’s happened in every single industry, there is no reason why it won’t happen in software. This is our focus. People will buy components, sub-assemblies of software, rather than everyone writing everything from scratch. Clearly, we have got used to a world where we want things more efficient, and less expensive. You don’t go build a car by assembling nuts and bolts anymore.

What are the other evolving trends in the OPD space?

It is increasingly difficult for captives in India to be competitive on a global platform, thus resulting in their opting out of the captive route and moving towards outsourcing.

An independent software vendor might start by outsourcing the development of one component of a product to an OPD vendor. But over a period of time, as he realises the benefits of outsourcing, he will further outsource other components to the OPD vendor as well. This is what is being experienced by OPD vendors in India today as ISVs gradually depend on them for a complete product rather than just a component.

On concentration in the Life Sciences and Telecom space...

For the last eight years, Persistent’s Life Sciences team has been providing leading research institutes in the pharmaceutical and biotechnology industries with solutions and tools to analyse, integrate and disseminate data quickly.

Persistent is currently involved in two projects in this space — caBIGTM and BioIT Alliance. In the caBIGTM project, our contribution is mainly toward enabling the National Cancer Institute (NCI), US, to build the Cancer Biomedical Informatics Grid (caBIGTM ).

caBIGTM is a voluntary network or grid connecting individuals and institutions and aims to enable the sharing of data and tools, creating a World Wide Web of cancer research. Over 800 people from more than 80 organisations are working collaboratively on over 70 projects in this three-year pilot project.

The second project that Persistent Systems is part of is the BioIT Alliance. This is a cross-industry group working to integrate science and technology with a view to shorten the time from discovery to application of new biological knowledge.

The alliance, spearheaded by Microsoft, is exploring new methods of sharing complex biomedical data by encouraging multi-disciplinary collaboration in order to ultimately speed the pace of drug discovery and development.

The Telecommunications Business Unit (TBU) at Persistent is one of the fastest growing verticals, accounting for about 35 per cent of our annual revenue. With a strong focus on the telecom industry, this 750-person business unit currently supports around 25 customers through various phases across the telecom domain.

About your ‘Go-To-Live’, engagement model.

Targeted specifically at emerging software vendors and enterprises, Go-to-Live enables start-ups to quicken their time-to-market and focus on innovation and business growth.

For a start-up independent software vendor (ISV), the primary area of focus is its core competency. Persistent helps such companies take their products to market quickly and save money.

Go-to-Live is a customisable offering so start-ups can access the service they need, at the time they need it.

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 and documentation.

paromita@thehindu.co.in

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