GlobalLogic: Engineering Product Dreams
Date: Thursday , August 23, 2007
When GlobalLogic co-founder and president Sanjay Singh picked up best selling business author Jim Collins’ book ‘Built to Last’ from the Borders book store near Washington DC, it was clear he needed to change the direction of the company. Singh urged the other founders of the company—Manoj Agarwala, Rajul Garg and Tarun Upadhyay—to read Collins’ book as well. From this experience the four founders agreed that if they were going to grow a company the right way, the blueprint articulated in ‘Built to Last’ would be a lasting influence.
What followed was a rigorous effort to integrate the principles expressed in Collins’ book into the GlobalLogic mission. Singh explained: “We will partner with the world’s emerging and established technology leaders to help them deliver great products to market in less time and at less cost.” To keep the momentum going, Singh defined the company’s vision as “By the year 2010, we will dominate the worldwide market for global product development.”
Once the vision was set it was just a matter of execution. Having worked in the IT services marketplace previously, GlobalLogic’s founders had first-hand experience meeting the needs of the chief information officers (CIOs) at their clients. They had seen what an effective global delivery model could deliver in the way of customer satisfaction. They also learned quickly that when an attempt was made to replicate the model to meet the product research and development (R&D) needs of client chief technology officers (CTOs), there was a disconnect.
Singh and his team recognized the opportunity to create a business which met the specific needs of CTO’s, and the leaders of the engineering and product development departments. The GlobalLogic team’s insight into the dynamic nature of the product development business and the rapid changes that occur during the full product lifecycle, led to the creation of GlobalLogic in 2000.
Unlike IT services firms, which focused primarily on an outsourced-based, low cost proposition to the client, GlobalLogic’s conversation with clients revolved around the challenges facing the CTO, engineering and product development leadership. As Singh and his team talked about rapid time-to-market, optimal product quality, collaborative workflow, shared goals tied to risk/reward, and a virtual R&D partnership, it was possible to actually see the client’s eyes light up.
Singh elaborated: “The new model for global product development is insourcing. Insourcing involves working with a global services firm who delivers core product development through contractually-committed teams in dedicated engineering centers.
The globalized insourcing model delivers the best attributes of today’s outsourcing models, while taking R&D to new levels of productivity, quality and cost effectiveness.”
It is this message that has helped GlobalLogic expand rapidly in a fast growing market. The analyst firm IDC estimated the market for global product development services had grown from $300 million in 2001 to $3 billion by 2006. GlobalLogic, with annual revenue growth of 80 percent and nearly 2000 employees, offers a portfolio of software product life cycle solutions such as product market analysis, product conceptualization, product realization, product testing and QA, product maintenance and support, product migration and extension, and professional services. This combination of comprehensive product development lifecycle services, a virtual partnership model, and specialization with technology clients, has helped the company realize partnerships with more than 120 technology firms.
It is this focus on entering into virtual partnerships with technology companies that separates GlobalLogic from the crowded IT services market. The global product development market (sometimes referred to as outsourced product development/OPD) is at a relatively nascent stage. According to India’s software industry body National Association of Software and Services (Nasscom), the market is set to grow to $8-$10 billion by 2010. GlobalLogic, already a leader in the sector, is positioned to capture a significant portion of that market.
To make faster inroads in the booming global product development market,
GlobalLogic has executed a two pronged approach, involving both organic and inorganic growth. To fuel its acquisition strategy, the company raised $12.5 million in funding from Sequoia Capital India, New Enterprise Associates (NEA), and Draper Fisher Jurvetson.
GlobalLogic has so far acquired two companies, the latest acquisition the New Jersey-based Bonus Technology, a software engineering services company with significant operations in the Ukarine. “Bonus not only has a specialized workforce of 300 employees with average experience of 12 years, but its clients include leading OSS technology providers,” says Singh.
Last year, GlobalLogic acquired the Nagpur, India-based Lambent Technologies, a provider of wireless software product development services to ISVs in the mobile space. “Lambent is very accomplished in the mobile communications market, which complements our global product development offering. We have a strong position in the telecommunications space, and Lambent will help enhance it,” notes Singh. The agreement with Lambent has enabled GlobalLogic to add 300 mobile professionals as well as more then 20 leading mobile clients.
The company’s appetite for inorganic growth continues. “We are aggressively expanding our global product development centers to multiple markets,” explains Singh. The company is reviewing the potential for further expansion through acquisition in China, Latin America and other Indian cities.
Commitment to Core Values
What we find at GlobalLogic is that it has remained true to its core values. Integrity, Openness, Teamwork and Innovation are the company’s four guiding principles. They have become an important part of it’s culture. “While we believe our core values give us a competitive advantage, that is not the primary reason we have them,” admitted Singh. “We have them because they define what the company stands for. Whether collaborating internally with colleagues or externally with our client partners, our core values act as a roadmap for conducting business.”
The core values are immediately visible to any candidate who interviews at GlobalLogic. During the interview process the candidate and the GlobalLogic interviewer discuss the company’s core values. All potential new hires are assessed, in part, with how they respond during the interview to the subject of the company’s core values. While it is not the only qualification reviewed, it is an important one.
Once on board, all new GlobalLogic employees, irrespective of position or department, are encouraged to seek out the company’s management team to discuss the company’s strategy. “Information about GlobalLogic is not limited to your position in the company,” says Singh. “We have worked hard to build a culture of openness.” Singh is right. When the company conducts its annual employee survey, the one area that employees consistently rate highly is the openness of management.
It is interesting to note that, more than most businesses, GlobalLogic employees appear to represent a collection of entrepreneurs. Strong evidence of this fact surfaced when the global analyst firm IDC surveyed thousands of people across more than 50 companies in India recently about risk. GlobalLogic was ranked first in creating an environment where people are willing to take risks.
Singh commented: “Our employees are encouraged to take measured risks, to take the initiative and seek out new and innovative ways to deliver to their goals. Our clients benefit and GlobalLogic and its employees benefit. It is a win/win proposition.”
GlobalLogic management encourages everyone in the company to follow this set of core values. Technology companies considering entering into a partnership with a global product development firm often rank employee retention, motivation and commitment as key decision criteria. The core values within GlobalLogic are a powerful inducement for entering into just such a partnership.
Aligning to Progress
GlobalLogic management determined early on that in order to purse its vision of helping technology clients realize their product strategy it was important that its engineers were properly aligned with those clients in a virtual partnership.
Utilizing the insourcing model, GlobalLogic helps its client globalize product development by collaboratively delivering core product development through contractually-committed teams in dedicated engineering centers. After an engineering team is identified and built, team members are not rotated. The widespread concept of an “engagement” where team members are engaged for two or three months, and then re-engaged at a later date is avoided.
GlobalLogic believes that core product development is too critical. The global services engineering team should appear as if it were a virtual subsidiary to the client. At GlobalLogic, though the engineering team members are under its employment they are viewed by the client as actual members of the client's team -- not just a “badged” vendor. This globalized insourcing model delivers the best attributes of today’s outsourcing models, while taking product R&D to new levels of productivity, quality and cost effectiveness.
To reinforce tight alignment while working with clients, GlobalLogic follows a ‘white-box’ model for product development. In this model, client collaboration is paramount. The client is involved in each and every step of the software development process; including analysis, design, architecture, technology and framework selection, reviews, and project management. Through the application of ‘GlobalLogic Velocity’, the company’s distributed Agile method and open source platform for product development, clients receive total visibility.
Singh shuns single-threaded communication: “Building sophisticated software products requires that every member of the GlobalLogic team works directly and collaboratively with the client’s team. Our engineers show the same commitment to product quality and delivery as that of our client. In fact, we advise our client partners to view their GlobalLogic teams as part of the client’s own captive development center.”
GlobalLogic has experienced great success around creating this alignment. There have been many instances when clients visited the company’s Centers Of Excellence in Noida, Nagpur or Pune to positively recognize the efforts of the GlobalLogic engineering team. A growing number of clients have also added financial incentives, including their own company stock options, to GlobalLogic engineers for over achievement.
The Velocity of Delivery
While designing, developing and supporting software products has been the DNA of the company, GlobalLogic has overcome the challenges faced with distributed product development by combining new collaborative methods, adaptive processes, applications, tools and management techniques.
GlobalLogic has developed a distributed Agile product engineering methodology—‘GlobalLogic Velocity’—that is used to manage and control product development using iterative, incremental practices. The method is a blueprint for the process whereby diverse, globally distributed teams come together to achieve a common goal. And in doing so, they apply agile principles across the complete software product lifecycle. The company leverages ‘GlobalLogic Velocity’ to establish and continuously evolve each team’s work practices to create agile teams that can effectively develop and distribute the product irrespective of physical and cultural distances. As a result, teams using Velocity achieve greater efficiency and visibility, and produce high-quality products without incurring additional overheads.
“What differentiates Velocity from other distributed agile methods are features such as team communication planned around short meetings, disciplined tracking of product requirements, and intense, detailed design processes,” says Singh. “By combining a proven distributed agile method with state-of-the-art open source-based tools, the Velocity platform lets software product companies rapidly create high-quality products using geographically distributed teams.”
‘GlobalLogic Velocity’ has enabled the company to achieve 95 percent on-time product delivery with its clients. “The most important criteria for success in the global product development market,” says Singh, “is the on-time delivery of the product, the quality of the product delivered, and the economics of that delivery.”
The engine of growth has been set in motion. Judging by the number of new technology clients the company attracts, ten in the month of June alone, the company’s annual revenue growth, 80 percent in 2006, and its acquisitions record, growth continues. It appears GlobalLogic is ‘Built to Last’.
PANEL: Business 101
Since its inception, GlobalLogic has focused its efforts on providing global product development services to both start-up and established technology companies. The company offers deep experience across the full product development lifecycle for the following technology domains: mobile, telecom, VoIP, Web 2.0, open source, SaaS, financial, business intelligence and QA.
A significant portion of GlobalLogic’s global product development business comes from wireless/mobile and VoIP product development. The company has invested in building expertise in embedded systems, session body controllers, voice technology, and handheld applications. “The mobile communications market is very exciting and offers tremendous growth opportunities over the next three to four years” explained Singh. “We have made a commitment to this area by setting up global centers of excellence for mobile/wireless in our India facilities.”
Another key area of the company’s growth includes global product development for
consumer internet portals, travel portals, and networking portals using the latest Web 2.0 technologies—including Ruby On Rails. Quality assurance and testing is another fast growing domain within GlobalLogic.
While the company serves large, established technology clients such as AOL, Autodesk and Motorola, the majority of its 120 clients have come from small and mid-size technology companies. GlobalLogic divides its service offerings between established and emerging technology companies. Singh commented: “It is apparent that the product development priorities of a start-up technology company are often different from those of a more mature, established technology company. Recognizing that, we have organized our global product development offering to maximize the value we deliver to each.”
“Captive acquisition is one of the fastest growing segments of our business,” explains Singh. “There are hundreds of captive development centers in India with engineers that range from 50 to 150 per center. Managing these captives is a challenging task. In fact, Forrester Research recently estimated that more then 60 percent of these types of India-based captives owned by the U.S. or European technology companies are failing. While remote management and infrastructure costs have risen dramatically, the main problem is recruitment and retention. The attrition levels of the smaller captives are very high, resulting in the slippage of product releases. The cost economics of running a small captive doesn’t work out. As a result, acquisition of these captives is a prime growth market for GlobalLogic.”
Last year, GlobalLogic acquired the captive R&D units of both a leading enterprise software solutions company specializing in semi-automated data extraction from financial statements and other unstructured documents; as well as a company that provides solutions to address risk and regulatory requirements in anti-money laundering, trading and broker compliance.
In order to build market share, GlobalLogic has introduced a number of innovative revenue models. One example is a $100 million annual revenue telecom client in the U.S. North-Atlantic Region active in the VoIP space that wanted to build a handheld product as an extension of its existing product. While the client wanted to introduce the new product quickly, it did not want to invest in engineering resources to support that introduction. “As this is an established company, with rapid growth metrics, we were ready to share risk,” said Singh. “We entered into a revenue sharing arrangement where-in GlobalLogic invested all the cost of engineering. Our revenues are tied-up to the actual number of product introductions.”
Headquarters: Vienna, VA
Management: Peter Harrison, CEO; Sanjay Singh, President
Centers of Excellence (Delivery Centers): USA (Vienna, Virginia), India (Noida, Nagpur, Pune), Ukraine (Kiev, Mykolaiv)
Employees: 1,700 professionals worldwide
Revenue: 70% year over year growth
Customers: AOL, Autodesk, Avolent, Electronic Arts, iFlex, NexTone, Sony Digital, Motorola and Trimble.
Milestone: 300 major product releases in the last 12 months