The Hindu : Maturing in software development

Online edition of India's National Newspaper
Wednesday, Dec 03, 2003

Opinion

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Maturing in software development

THE SETTING UP of a development centre in Bangalore by General Motors, the world's largest car maker, is another pointer to the way multinational companies are looking at India as a Research and Development hub for their global operations. The centre, which will focus on software to make its automobiles lighter and more fuel-efficient, is the company's first such facility outside the United States and also the first in India to be set up by an automobile company. India is already benefiting from its strengths in the areas of software product development. Many renowned multinational companies that have started development centres are a testimony to Indian capabilities. While there are multinationals with more than one such centre, some of these are the only ones outside the foreign companies' country of origin. The confidence reposed in Indian capabilities has not gone unrewarded. Texas Instruments' R&D centre, the first to be opened in India, has developed many products and secured more than 200 U.S. patents. There are more than 20 patents filed by the world's biggest chipmaker Intel's India centre, which began its operations four years ago.

The multinational companies tended to launch their development centres with a relatively lean staff. However, once they overcame their reservations, most of them went on overdrive to recruit local talent in large numbers, open more centres of excellence or take up new technologies for development. There has been a paradigm shift in the way the maturity of the Indian software industry is perceived by the multinationals. Starting with low end maintenance and bug-fixing jobs in the 1990s, the software industry has today graduated to developing parts of products and even complete products. Complete product development as in the case of chip design is a high-end complex work. Intel India, for instance, is working on a next generation microprocessor. A few years ago, Indian companies and the development centres of multinationals lacked the technical expertise and personnel to take up such challenging projects. But the slowdown in the U.S. economy after the 9/11 tragedy and the dotcom bubble burst forced American companies to tighten their belts. Offshoring even complex work to India suddenly became attractive as India had a low-cost labour advantage. Most multinationals are choosing the "offshoring" model by setting up their own subsidiaries to outsource development work to pre-empt any intellectual property problems.

With more and more multinationals keen on outsourcing, India has become attractive for experienced non-resident Indians willing to relocate. Starting as a trickle two years ago, the number of highly skilled Indians returning home is in the process of gaining critical mass. In a way, it is becoming an unprecedented reverse brain drain. This is an added advantage for foreign companies — the availability of a vast talent pool with international exposure and hands-on training in high technology areas. The "move to India" initiative undertaken by i2 Technologies to relocate many of its personnel from the U.S. to its Indian development centre is an example of how the world perceives India. All this has helped the Indian IT industry take crucial steps towards maturity. Although a preferred alternative destination, India needs to do a whole lot more before it becomes a global software development hub in the true sense. Though globally recognised as a hub for software development, few Indian companies have ventured into software product development. The contribution of Indian companies to global software product development is a meagre 0.2 per cent of the $200 billion market compared with 1.5 per cent of the $330 billion market in software services. The lack of expert hands in certain key domain areas is of serious concern. There is thus no room for complacency even as the outsourcing bandwagon rolls on.

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