The chocolate factory

Handling wrappers or rolling small candies on the assembly line was the first step, and was yesterday. Today, we are right there with an eye in the oven and a hand in the cocoa. India has been making its way well on the other side of the factory. Offshore Product Development, the next big chapter of India's IT saga, needs no introduction anymore.

The yummy opportunity in the products and technology services space that according to an earlier NASSCOM-McKinsey report, was pegged worth 8 to 11 billion dollars by 2008 with estimates around OPD (Offshore Product Development) exports predicting growth to about seven billion dollars by 2010, is enticing and witnessing a lot of action already. One such player in the top league is Persistent Systems. CyberMedia News tracks the developments, evolution signals, pain points and prognosis for OPD in this interview with Dr. Anand Deshpande, Chairman and Managing Director of Persistent Systems and the spotlight this time is on the subject of components in this factory. Read on.

What is your view of the evolution of the industry in context of OPD?

The 1.0 stage was about cost arbitrage, 2.0 was about process efficiencies. At 3.0 we have Design For Manufacturing (DFM) while 4.0 brings Original Design and Manufacturing (ODM). From process efficiencies and CMM etc in the 95 to DFM in 2008, the next ten years would herald ODM. It is hard to change direction for someone who started at labor arbitrage. That's why it's better to enter directly at a level and so new entrants have a better opportunity. The incumbency factor exists but if one moves smart, they have an advantage.

Can we draw any parallels between OPD and OEM?

Just as tyres or brake systems work in case of cars, ODM components can be used for all kinds of products. And still, the engines of a Rolls Royce or GE cannot work for a Boeing or Airbus. It's a case of sub-systems. Upfront components are feasible but that would happen when there’s adequate interoperability between the subsystems.

But have we at least come to a stage of standard brakes and systems in case of the software factory?

Software is amorphous. It's hard to say till the maturity happens. But it's starting to happen. In cars, for instance, even small components are well defined. Those things won't exist and it will take time to evolve to a level of common components. Otherwise, everything tends to be custom-built.

Could you explain more on the standardized components?

It's like the shirt industry. Would people prefer shirt pieces or readymade shirts? The answer depends on the measurement criteria and respective categories. It will take time similarly to evolve for the same maturity level. And it would be a joint effort and won't happen overnight. Standardization of the factory is very important for the OPD market.

Do frameworks fit in here?

It depends on how one defines them. New terms take time to settle as we saw in case of platforms. The consensus has to ultimately evolve.

So if software is a factory, can we see some JIT (Just In Time) format happening here?

It is happening already. The iteration of milestones has shrunk and it is a six to eight week cycle time now for hosted products, which is much faster than others.

The latest trends in OPD?

SAAS is a pretty big thing and it's a business model issue. Also, cloud computing and virtualization as technologies will have an impact in the next few years.

Talking of India in particular, how challenging are time and distance factors in OPD delivery?

It is a challenge. But we are taking many local decisions on our own. But there's the issue of the same level of granularity. Once there is some standard and explanation of requirements, it's a different case. Today we can take instructions because of maturity of the industry. For anything different to take place, one needs some disruption. People won't change for the heck of it. It's important for disruption to trigger the change.