Integrate Globally, Innovate Locally: The Thought Ecosystem
Date: Thursday , January 01, 2009
The business mantra in today’s semicon world is to ‘Innovate locally and Integrate Globally’. The strategy is to innovate, using the right technology at the right time with the right talent.
The Indian design market has witnessed a high growth in the last few years and continues to grow from what we see in the VLSI and the embedded design space. India’s design market is set on a double-digit growth trajectory until 2010. This growth is witnessed mainly due to the emergence of companies in the product business coupled with an increase in demand for outsourcing by IDMs. The local board design outsourcing is also catching up as the demand for new designs coming out of India is growing. The design and development services outsourced are mainly in the areas of VLSI and embedded systems design. North American and European countries are increasingly turning to offshore outsourcing services in the product engineering space from India to innovate products, cut costs and achieve their profitability goals.
The OEMs in India are in the process of innovating and developing new products in the areas of telecom, medical electronics, personal computing, etc. Moreover, these OEMs are modifying the existing products for new functionality and features with an objective of giving the price advantage and compatibility to the consumer. These factors are prompting the OEMs to develop new designs and modify the existing ones. So, all these factors have had a considerable impact on the flow of projects to India. The growth in business for the semi design services companies is also because of the outsourcing done by IDMs to third-party board design firms in India. Alternatively, they are also outsourcing the same to their respective captive centers here. Usually the captive centers focus on advanced technologies and help in the development of products for the global market.
Many of the Indian OEMs coupled with the captive design centers of MNCs have led to increased outsourcing of the captive design centers that outsource projects throughout the year to these companies to get the price advantage and to minimize risks associated with board and system design.
Was Yesterday a Better Today?
Over the years India has witnessed a sea change in the mindset of product and design companies across the globe. Previously, the companies would work on the main design at their home base and outsource only a part of it, which was not critical in their entire design cycle. But now, India is given equal or more importance due to the technical competency of the skilled engineering talent pool. The outsourcing companies have shown a lot of trust in the capabilities of the talent pool and compare them with the best due to their inherent capabilities to innovate and bring world class designs out of India. By doing this they are motivating the companies to innovate locally and this innovation would be integrated finally to come out with a world class product or application or technology.
Also, the growth in business for the design companies is mainly because of the partnerships entered into by IDMs with third-party board design firms in India for new products and technologies. Alternatively, these companies rely on their respective captive centers for design and development of innovative products using next generation technology. Usually, the captive centers focus on advanced technologies and help in development of products for the global market.
Designs are, most of the times, led by consumers who want additional features as per the latest fad at low costs, causing design companies to have complex products aimed at small market windows, while ensuring control over design costs.
The Great Thing in India is Not so Much about Where We Stand
India’s design market is in a growth phase with the emergence of captive and non-captive design centers and startups. These centers were predominantly started with the objective of cost gains, but now the focus has turned on quality of work and innovation. These companies are focused on niche technologies in design, and are spearheading the marathon of innovation that is set to take place in the future. These service companies have created a niche in the worldwide market when it comes to product engineering and innovation.
With higher levels of design capability and technical competency, the usage and dependence on the skilled engineering talent has increased by leaps and bounds in India. Many IC and PCB design companies, which offer top quality services at highly affordable rates, have surfaced in India. These companies from India have succeeded in gaining the trust and confidence of international businesses due to consistent excellence in service output. India is the outsourcing services market share leader amongst countries around the world, particularly in VLSI design and development.
Given the demand and support requirements for design firms, there are several organizations like Mentor Graphics present in this ecosystem that offer multiple programs to assist the firms at all stages. These include training, flexibility in tool usage, and making the cost of ownership of tools affordable. Along with affordable cost of ownership of electronic design automation tools, Mentor Graphics works with service companies and startups to provide flexibility of tool usage. There are several models, where the customer can get access to Mentor Graphics technology based on the phase of the design cycle. The company works with the customers to create a flexible training program, so that the engineers’ skill set can be augmented.
A Vital Phenomenon
A trend towards establishment of product startups could gain momentum, as the circumstances are becoming conducive for startups. For a healthy design company with focus on innovation, five aspects are VITAL:
V – Vision to perform
I – Ideas to Innovate
T – Team that is world class
A – Agile business model
L – Leading from the front
India has always had engineering talent, and years of working with the extension arms of multinational corporations and large Indian service providers have provided Indian engineers the vision to perform, ideas to innovate, strength of experience with expertise, agile business model, and understanding in addition to the attitude of leading from the front.
Growing Consensus on Innovation
The most essential ingredient in today’s design services business is a growing consensus that innovation is vital and will be a spring board for every rupee spent. Innovating locally with global integration is catching up in India with focus on a model wherein the global network of partners is helping to create future products using the latest technologies. This model will take a giant leap in terms of speed, accuracy, and efficiency of hardware development in the years to come.
Steady Start to Great Finish Approach
That ‘steady and a long haul’ approach is viewed as a key advantage for India. Many top level management personnel and leading entrepreneurs note that India’s technology boom is driven by a demographic bubble that will be difficult to match for other nations. India has a large population of young people who are driven, well educated, and willing to work for relatively low wages. For the first time we can tell that we had a good yesterday, great today, and will have an excellent tomorrow. Indian companies have established themselves as key providers for offshore software development, and are now gaining greater momentum in the hardware development space, including the integrated circuit design and board design. The engineering talent pool in India is growing and is a major support to the Industry. The outsourced business here is thriving because of the capability of this talent base and the innovating capability associated with them.
Core Competency Will Lead to Innovation in Outsourcing
Of late, a lot of companies in the subcontinent are talking about core competencies being a logical reasoning for innovating locally. That means the design centers should focus on or develop what they are very good at and outsource the rest to a third party if they are very good at it. Conversely it is like the ‘egg before the chicken or chicken before the egg’ logic wherein the determinants of business model vary from time to time and this often would lead to core competencies varying at different points of business cycle. Also the business model should decide the set of core competencies that are needed for integrating glocally. If the company wants to enjoy the benefits of innovation it will have to make conscious decisions about core competencies that optimize the degree of innovating locally and integrating globally.
Let’s not wait till everything is just right. It will never be perfect. There will always be challenges, obstacles and less than perfect conditions. So what? Let’s get started now. With each step we take, we will grow stronger and stronger, more and more skilled, more and more self confident and more and more successful. ‘Innovate locally, integrate globally’ is a thought that will help India create next generation products and technologies. Don’t ever think it’s an afterthought!