MUMBAI & BANGALORE, INDIA: The total chip design services market in India was estimated to be $6 billion for the year 2007, with an estimated workforce of 130,000 as per the 2008 India Semiconductor Association – IDC (ISA-IDC 2008) report.

This market consists of both Indian and multinational VLSI design companies, board design companies and embedded software companies. The design market is likely to grow at a CAGR of 21.7 percent to almost 11B USD in 2010. Similarly, the workforce is likely to grow at a CAGR of 18.8 percent and is expected to be 218,800 in 2010 (ISA-IDC 2008).

The emergence of the Indian embedded software industry started with the Defence Labs and the public sector players like Bharat Electronics (BEL), Indian Telephone Industries (ITI), HAL, BHEL, etc. These public sectors and government labs employed large number of engineers working on the embedded platforms in early 70s and 80s. Today, we have more than 500 companies working on the embedded platforms, which include both the multinationals and Indian companies.

Growth of embedded
One of the key reasons for this growth is due to fast growing economy and a huge domestic market. India's electronic equipment consumption, which was $28.2 billion market in 2005, is expected to reach $363 billion by 2015, growing at a CAGR of nearly 30 percent. This would account for 11 percent of the world market by 2015 from a mere 1.8 percent in 2005. India's electronics equipment domestic production was $10.99 billion in 2005 and is projected to grow to about $155 billion in 2015, according to ISA estimates.

The initial work in India was of the type derogatively called ‘body-shopping’, whereby developers would go on-site for the length of the project. However, Indian companies have come a long way in building expertise in project management to deal with condition of separation, in new technologies and articulating new models for pricing and profit sharing compared to the “time and material” approaches of the past.

Offshore development centres – which is one of the key contributors to this large workforce are also moving from the traditional “time and material” mode to innovative business models based on deliverables.