What started as a small but promising Indian design industry a couple of decades ago is now a $3.7 billion business. By 2020, India’s off-shore R&D market is expected to reach $60 billion, growing at 18 percent CAGR. The abundance of talent in the country will spur this growth.
The success story of India’s design industry originated in the 1980’s when the economy was controlled and local companies filled the gap in the domestic market for electronic products. Although end-consumers had limited choices, the expectation for quality was high.
While Indian firms were developing computing and telecom products for the domestic market, they gained deep knowledge in all aspects of product development and learned to innovate. The engineering workforce was small back then, but the foundations it built provided the perfect fillip to the industry when the Indian economy went global.
Today, India’s overall semiconductor and embedded industry is growing at a rapid pace. Expertise is expanding beyond the telecom and computing domains to include automotive, industrial, medical equipment, consumer electronics, and mobile devices. Indian embedded firms have learned to leverage the best practices from across the domains.
Semiconductor and VLSI design has also grown over the years to become a significant component of the local design industry. In addition to outsourced design services to India, the number of development centers built by global semiconductor companies has also increased. These design services partners and development centers have demonstrated the capability to churn out leading edge semiconductor designs.
EMBEDDED ‘INNOVATOR’Both India-based service providers and development centers of multinational firms have stepped up their R&D efforts in recent years. According to industry reports, India’s overall embedded exports grew close to 40 percent CAGR over the last six years.
Process improvement tools such as Six Sigma and Lean, along with increased reuse of modules, are known to give IT organizations better reliability, consistency, de-risking skill gaps, and productivity improvement. Companies like Wipro have used this benchmark effectively to deploy productivity enhancement tools to the areas of embedded and VLSI design. Initiatives like this have further helped India achieve the image of an “innovator.” As India works its way up the value chain, the innovation initiatives focused on product development will continue to grow.
Moreover, globalizing product development is increasingly becoming commonplace. Soon it will be hard to find a product in the market that doesn’t have any Indian influence. Take the example of a DVB-S set-top box that Wipro developed for a Korean OEM. Wipro provided the middleware and application blocks for this project and performed the complete system integration in India, conducted the field trials in the UK, and carried out production support in Korea. The final design was deployed by a UK-based service provider in different parts of Europe and Africa.
Considering the highly optimized processes and having gone through the challenges of understanding product architecture requirements, the Indian embedded designer is more than capable of delivering what’s required for the local markets.
UNTAPPED MARKETSIn the 11th Five Year Plan endorsed by the Indian government, there is a clear impetus on the sectors of communication, education, infrastructure, and healthcare.
The communications sector is expected to grow further, with focus on DTV, DTT, 3G, etc. India is known to be one the biggest market for mobile communication devices. However, even as wireless subscribers have been growing at a CAGR of nearly 97 percent for the past few years, the teledensity is at a dismal 14 percent. Compared to other developing nations such as Brazil and Mexico where teledensity is around 60 percent, there is clearly a large Indian market waiting to be tapped. The government expects the number of telephones, both fixed and wireless, to double in the next three years to reach 500 million units, making India an extremely lucrative market.
Meanwhile in the education sector, the government has allocated $1.25 billion to promote the use of technologies in schools. The plan is to widely adopt and deploy computer-aided and remote learning in the near future. The government believes that learning through the use of computing and telecommunication will subsequently encourage students to develop products for these technology applications.
Another huge but untapped market is the agricultural sector, which accounts for 46 percent of India’s GDP. Computing and telecommunications devices, as well as automation equipment, are needed to augment the agricultural industry. For instance, climate control solutions for livestock are already widely used across the world but not in India.
Designing products for the Indian market means more than some minor tweaks on global products. There are many other stringent requirements to be met other than low cost. These products have to work on the power and communication infrastructure available in India, and the user interface will have to be localized for multiple languages.
Apart from technical innovations, there is also a need to evolve business models. For instance, providing products in a “managed services” mode is likely to be more successful than upfront sales.
