India has established itself as the design hub of the world. As per In-Stat, the VLSI design services industry in India generated $1.10 billion in 2006, and is expected to go up to $2.45 billion in 2010. Apart from well-known reasons such as a large and growing talent pool, breadth of experience, and strong IP laws, there are other distinct advantages such as the maturing semiconductor ecosystem, evolved business models of design services companies, and government support.
Strengths
India’s large and growing skilled talent pool is a formidable advantage. India produces around 222,000 engineers per year (ISA E&Y report 2007), thanks to the growing number of private institutions that supplement the established government ones
Technical education system in India is also among the best in the world – the Indian Institutes of Technology and the Indian Institute of Science are cases in the point. In addition to fresh graduates, a trend we have seen in the recent past is the return of expatriate Indians who bring with them vast experience and can integrate seamlessly with both Indian and Western work environments of customers and parent companies. Thus, India has the right mix of experienced professionals as well as fresh engineers who are driven, enthusiastic and innovative.
Over the years, India has built up depth and breadth of experience in leading edge digital, analog and mixed signal design as well as verification, and has a proven track record of delivery and project management experience. There is increasing proof that Indian engineers are moving up the value chain by taking on full chip design and verification at leading nodes as compared to doing only block level design and verification earlier. As per In-Stat, the full design (Spec – GDSII) happening in India is expected to increase from 27% of the total revenue in 2005 to 45% in 2010. This should give companies coming to India the confidence that the teams here are capable of handling complex projects and meet the tight time-to-market windows.
Another advantage is India’s relatively strong IP laws. After agreeing to move towards TRIPs compliance, India has made several amendments to its patents and copyrights laws, and has significantly improved its IPR laws with the introduction of a new patents legislation in 2005. These changes significantly ramped up the enforcement provisions. The IT industry has always been covered by copyright laws, and as India becomes a hub for MNC and R&D investments, competitive pressures will ensure that all innovations are duly protected.
Other advantages
One of the advantages that has come to fore of late is the maturing Indian semiconductor ecosystem. The entire chain, from EDA companies such as Cadence, to ATMP companies like SemIndia, have a strong presence here. Companies outsourcing to India can leverage the ecosystem to get the time-to-market advantage for their product lines. With a mature VLSI and embedded software industry in India, companies can efficiently engage in hardware software co-development and verification.
Design services companies have developed innovative business models that make outsourcing to India highly competitive from a business perspective. Earlier the common models were the fixed price project and time and material models. Now design services companies are innovating with the turnkey model as well wherein companies provide an end-to-end custom solution that encompasses design, pre-qualified IP, fabrication, package, assembly, and test solutions. Coupled with the country’s strength in design services, the ownership of the rest of the supply chain makes outsourcing to India even more attractive.
Add to this the government’s incentives and support in terms of the setting up of software technology parks and special economic zones, it is no surprise that IT in general, and design services in particular, has flourished in the past few years.
With all the advantages that India offers today, the question that companies should ask themselves is, “Can we afford not to outsource to India?”
You can reach Jaswinder Ahuja at communication_india@cadence.com.
