''OPD is ripe but not being harvested yet''

How comprehensive are OPD orders? Is work coming on the product upgrade side as well?

Yes, at Symphony over 50 per cent of our work is around the high-end category. From cost arbitrage to process efficiencies the OPD space is moving to more maturity in technology. Symphony is innovating in PLC area where we are participating at every stage. We are not only defining a product, but executing and even sustaining it.

So has the OPD industry evolved satisfactorily for India?

From initial stages of piecemeal jobs, the industry has reached an inflexion point. In 1999-2000, cost pressures led to outsourcing of application development, which graduated to enterprise development and then to infrastructure work. Same is potentially happening in the OPD space. Companies are realizing the value that can be harnessed by reducing R&D costs, which even otherwise form a significant chunk of product costs. Venture funds have started looking at the India story in OPD too. It’s the same model as in the automotive space. Just the way a car company outsources work to an OEM by giving design specifications so that it can concentrate on its core expertise of marketing; an ISV conceptualizes a product and gives it to an OPD vendor based on certain specifications.

Has the confidence moved from peripheral work towards core development work?

Yes, previously companies used to transfer legacy products but there is an improved sense of confidence in Indian capabilities. We are not doing menial jobs but significant development work.

How is IP sharing arrangement worked out?

As OPD vendors, we cannot own the end product IP but we do have CoE (Centres of Excellence) centered around technologies like Java where our core expertise can be harnessed. We can not compete with our customers but can provide them value through a CoE by telling how a certain aspect can be done in a better way.

So if Indian vendors are delivering expertise on product development, can the transition from OEMs to ISVs be expected?

Indian industry had lagged on many fronts and thus hasn’t been able to come face to face with markets. To be an ISV it’s important to know your end customer. It’s a good possibility though and some company might think over it. However at Symphony our business is services. We are enablers and we consciously won’t venture in that area.

How is the OPD market growing in light of investments in captives?

In case of a captive center, there’s no pressure to innovate. On the other hand vendors like us are under a constant innovation imperative to add value to our services and differentiate. The only apprehension from a company’s point of view that works in favour of captives is the concern of risk when they transfer their crown jewels and core products. Non-captive are better equipped to ensure employee growth, map career paths, add value and deliver a better service. Hence, most captives turn to white elephants after losing their initial rationale and eventually many companies close them down.

Is the available talent compatible to OPD requirements?

The main problem is the entrenched service mindset with manpower here. Initially, we hired people from product companies in US. It’s not a cakewalk though, but so far we haven’t missed our scale requirements.

Are BOT (build-operate-transfer) models being used to serve clients?

In general, contracts have this clause as an insurance against a possibility of relationships being soured between the client and the vendor. And every company is justified in asking for such an assurance. However practically, we have delivered numerous products and there was only one occasion when this option was exercised and that too because the company in question was acquired by a large company.

What in your opinion, is the biggest impediment to OPD market in India?

Apart from concerns over talentpool, awareness is a major concern area. Many companies are oblivious to this facet of the offshoring market. While 60 to 70 per cent of IT services offshoring market is ripe, only 16 to 19 per cent OPD work is being outsourced. The industry is very fragmented and most of the OPD work is going to Russia etc. Also, even Indian companies are not aware of this market’s potential and of what they can deliver.

Symphony Services chose the OPD route in the early stages? You could have chosen the beaten track of IT services?

It was our founder’s vision to be a leader in a virgin territory, which also gives the advantages of better margins and longevity of contracts. Today we operate across verticals like CRM, business intelligence, storage and are moving to embedded systems and SAAS. Today, the pie is big for everyone but as leaders we enjoy a larger share.

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