Pragati Simlote
NEW DELHI: The outsourced product development (OPD) market has changed
dramatically overtime. The percentage of companies willing to outsource R&D
as well as the percentage of work they outsource has also been on the rise.
As per the National Association of Software and Services Companies (NASSCOM)-McKinsey
analysis, the product and technology services opportunity is poised for rapid
growth and could reach $8-11 billion by 2008.
Induslogic, provider of outsourced software development services, is all set
to make further inroads into this burgeoning OPD market. The company has seven
excellence centers and has pioneered the Distributed Agile Methodology that
helps shrink the software product development life cycle and reduce TCO.
Currently, Induslogic is close to about $30 million in revenue and plans to
grow to $100 million in the next two years. The company employs approximately
1,000 people today, primarily in India, and plans to up its headcount to 2,000
by this year-end.
Ninety percent of the company's business comes from the US and it plans to
maintain its current focus on this market.
Induslogic recently announced its first all-stock acquisition of Nagpur-based
Lambent Technologies Pvt. Ltd, provider of outsourced wireless software product
development services. The company has also raised $12.5 million in its latest
round of funding and is now ready to take the M&A route.
The company is looking at acquiring companies in the OPD. Induslogic CEO
Peter Harrison said, “We are looking at companies with a special focus. Our
roadmap involves expanding our offerings both in terms of lifecycle and domains.
We provide services right from researching new products, designing products,
developing products, testing products, porting products and supporting them. We
could look at acquisitions to help expand these offerings.”
Induslogic is broadly looking at acquisitions in the telecom and finance
space to reinforce its strength. It is looking at companies based in cities like
Hyderabad, Chennai and Pune. “We do not rule out tier 2 and 3 cities if they
have the right focus, domain and technology know-how. Scalability issue is very
important for us. We are also excited about storage, security, open source, on
demand software, business intelligence, etc. In these areas we can have a good
fit,” said Harrison.
The company is not looking only at acquisitions as its major growth driver.
Harrison said, “We are not looking at acquisition as our major source of
growth. We are looking it as a complement to our organic growth and expect 70
percent of our growth to come organically.”
Throwing light on the recent trends in this market, Harrison said, “The two
big changes include the trend of partnering with companies having the specific
domain knowledge as opposed to building one's own captive. Also the stage at
which companies start outsourcing has also undergone a change. Nowadays
companies don't wait till version 2 or version 3 to outsource. They start
outsourcing right from the first version. For 20 out of our 80 odd customers, we
are building the first version of their products.”
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