Despite the inexorable upward trend in employee compensation, companies with captive design operations, and those outsourcing to third-party providers in India are able to realize a cost advantage of 30 to 40 percent, observes Mayank Jain of market research firm InStat. However, it is not just low-cost that is attracting business to India. Clients are increasingly looking for higher quality, quicker turnarounds, total project management and risk-sharing business models.
Take for instance the work done by Noida-based HCL Technologies for a leading semiconductor device vendor. For this project, HCL undertook to design and develop a VoIP-based voice gateway by porting its SIP stack on to the client’s device. The company was responsible for the entire device architecture (hardware, software and mechanical design including thermal design), detailed design, PCB layout, system integration and validation. By leveraging its design skills, HCL was able to deliver a ready-to-manufacture design that met the client’s desired cost targets.
CORE DEVELOPMENT
Similarly, for a North American client, Wipro Technologies took charge of the core development effort, leaving the client free to focus on market development and building channel partnerships. Wipro not only created the ASIC—the heart of client’s solution—but also developed the reference designs and performed functional validation of the hardware. The company also managed prototype manufacturing, test and delivery of reference cards, and EMI/safety compliance certifications for worldwide standards. “When combined with flexible business models that reduce the total cost of ownership of the product, clients are able to introduce products at the right price point quicker, and have the option to develop derivative products to cover a large share of the market,” says A. Vasudevan, Vice President, Semiconductor and System solutions at Wipro Technologies.
Vineet Nayar, President, HCL Technologies describes another instance where his company played a pivotal role in the development of a semantic processor that is embedded in a mission-critical security device for a networking solution provider. “HCL not only integrated its own VLSI IPs, but also performed the entire product engineering. We were involved in architecture design, RTL design, developing fully-functional FPGA prototypes, verification, synthesis and back-end support. We ramped up the design team within two weeks for this project, and helped the client achieve a 30 percent gain in time-to-market, and a 40 percent advantage in effort and cost,” he says.
EXPERIENCES
India-based design companies like KPIT Cummins are able to leverage the experiences and learning from multiple projects when working on an assignment—and deliver greater value. “Unlike before, customers now realize that not everything is IP sensitive—and can therefore be outsourced. Third party companies are in the best position to bring in operational efficiencies and best practices. Co-innovation is possible through development of shared and contract IPs,” explains a KPIT spokesperson. Nayar of HCL says Indian companies can also deliver additional benefits through new business models. “Through our unique partnership models we can share the risk of introducing new products. Our methodologies and IPs also help clients become more process-centric,” he says.
However, the booming Indian economy is experiencing unintended consequences—even for companies that are on top of the design game. The rapidly appreciating rupee and rising pay packages are two factors that are now worrying senior executives at India’s design service providers, and putting a crimp into their bottom lines. To combat these threats companies are making active efforts to take on more complex customer projects and secure a greater role in the product design cycle. They are also gearing themselves to make available agile teams for rapid product development, and entering into joint-ventures (JVs) with clients to share business risks. Nayar makes a persuasive pitch. “The potential benefits of JVs are an estimated 10 percent reduction in overall worldwide R&D budgets, more time to focus on core activities like IP creation, access to critical skills, higher productivity and reduced overheads,” he says.
You can reach Chitra Giridhar at chitra.giridhar@rbi-asia.com
