YEAR-ENDER SPL | Opportunity in product engineering

Praveen Kankariya

As markets evolve and mature, the entities involved need to reinvent their positioning, revisit their core focus areas and respond to the changing dynamics of the industry.

We are clearly witnessing such a phase in the Indian IT industry. The off-shoring industry in India began in the early 1990’s with a focus on product development. However, IT services took-off in a big way when India gained credibility in quality consistency and process efficiency.

Today, this growth and widespread adoption of offshore IT services has created a foundation for the maturing of quality and processes which, in turn, is preparing the Indian IT industry for its second generation of growth, that is, in the product development arena.

Markets on the move

As an industry, product development involves a great deal of risk. There is a long ‘investment phase’, typically ranging from 3-5 years, the costs of marketing the products are phenomenal, and the need to be unique calls for an increased spend on R&D. If the products are not in-sync with market requirements at the time of launch, (requirements often change and evolve over the development cycle time) they might just end up as no-shows in the market.

Indian companies certainly bring together the critical components of high-end R&D, extremely talented engineers and the innovative and can do it attitude that product engineering demands. However, they might not always have the marketing muscle to back their vision and ideas and see them through execution and market commercialization.

These limitations with in-house product development have made outsourced product development (OPD) an attractive proposition for many Indian companies. As part of this, Indian companies work on projects to develop products for foreign companies, providing them with access to technology that these companies need, at the same time reducing the time to market their products at a more economical proposition.

Companies involved in OPD get an opportunity to work on cutting edge products that will soon hit the market, with minimal risks involved. Since developing products is a technology intensive process and the method differs from product to product – many engineers learn critical skills and methods they would not have been exposed to otherwise, leading to what we would like to call the ‘Inventorying of Knowledge’.

An OPD company can offer its employees, opportunities to work on varied and exciting products, in a project set up that Indian engineers are increasingly accustomed to. OPD companies have evolved models to work as seamless extensions of their client engineering teams, in order to solve concerns that might arise owing to time overlap, lack of communication, lack of visibility etc.

As an example, we at Impetus work with our clients in a WhiteBox engagement model, wherein the client has 100 per cent visibility into the offshore team. Furthermore, we can offer our employees a wide variety of products to create – ranging from Interactive TV applications deployed on set-top boxes to developing core components of number portability for service providers or even mobile integration platform for gaming applications, etc.

While the employee has a variety of product experiences and a wide range of technologies and domains to work on, the organization gains from the expertise and experience that accrues to it, as a result of being a part of the development lifecycle.

Tip of the iceberg

According to NASSCOM, the increasing traction in OPD Services is supplementing India’s efforts in creation of IP as well. This segment is growing at a rate of around 23 per cent to report $4.9 billion worth of revenues in exports. A report published by Frost & Sullivan says that the R&D outsourcing market for Information Technology in India is estimated to grow to $9.1 billion by 2010 from $1.3 billion in 2003 — a compounded annual growth rate of 32 per cent.

One look at the current markets and one can see that India is high on the agenda of IT companies worldwide: from CEOs to CIOs, Product Engineering Heads to Venture Capitalists, everyone is still clued on to India as a preferred IT services destination – and increasingly, the share of product engineering is only going up. With more companies in India focusing on providing product design and development services, and building competencies to service clients throughout the Product Development Life Cycle, the trend is only going one way – upwards.

Major challenges

Issues like marketing and selling India as a product development destination, finding the right talent for building products, and continuously upgrading their technical skills are affecting OPD’s growth in India.

In addition, companies also need to keep up with emerging technology areas, gear up to provide the entire range of product development solutions, not get restricted to only product testing or product support activities, and put in place systems, processes and rules that are sensitive to Intellectual Property (IP).

The biggest challenge though is the availability of talent in the OPD space. The skill-sets required for product development are significantly different from plain vanilla IT services. Despite having a large pool of engineers with experience in general IT services, companies are realizing that software engineers lack the technological depth, passion for innovation and flexibility needed to build products. Looking for technology architects and resources with the necessary product development and architectural skills can prove to be difficult in India.

Need of the hour

Product engineers are primarily expected to refine the requirements from a high-level product vision. For this, they must have excellent user interface and product documentation skills, apart from a programming and technology background. It is critical to have clear fundamental technology knowledge and also be clued in to new developments in this ever so dynamic space - continuous trainings and skill enhancements are a given in this space.

While IT Services thrives on process efficiency, the early-stage product development involving conceptualization of the architecture and design, thrives more on innovative visualization of product ideas, and providing robust and scalable architecture options.

India's success in OPD depends entirely on its ability to produce quality, innovation-oriented product engineers, and at the same time invest in technology research and exploration to understand emerging paradigms.

The road ahead

Until the year 2003, Indian companies had been able to capture a meager 0.2 per cent of the $180-billion global software product market. NASSCOM predicts that the Indian product development market is estimated to grow to $8-11 billion by 2008 as global sourcing will no longer be an optional strategy for the product companies by 2007-08.

As offshore outsourcing gets accepted as a key strategy to stay competitive in the globalized economy, the production cycle for technology-centered products will require global resources and global delivery.

India has an important role to play in the future of global software products – it is well poised to make its mark. We need to ensure that we overcome the odds and prove ourselves as not just efficient developers, but also innovative and creative engineers of tomorrow.

(The author is the CEO of Impetus Technologies, a company which provides outsourced product design, R&D and related services.)