Industry trend: Finding high quality engineers in the US is a real challenge for companies. With the economic meltdown and the high cost of education in the US, the influx of foreign students has slowed down, which would translate to less engineers available to companies. In conjunction, the cost of doing business in the US has risen, which encourages companies to find alternative locations. As a result of the above two forces, India has become a hotspot for design service companies eager to serve the US market. A word of caution ? there is a big difference between a design service company and an AMS design service company. A high level of commitment along with professional training is required from engineers to be successful in AMS design services. A handful of companies based in India like Cosmic, Sasken, and Wipro are already competing globally in this domain.

As the world knows, software services and digital design services are very mature markets in India. In this domain, work is done from offshore either through companies like Infosys, Wipro, Mindtree, and Sasken or through subsidiaries of MNCs in India. Almost all US semiconductor companies have design centers in India that are located in hotspots like Bangalore, Noida/Gurgaon, Pune, or Hyderabad.

In contrast, there has been more reluctance to outsource analog design, since it is considered a black art. This is changing as the trends favoring the migration of software and digital work to places like India are also relevant to analog design and test areas.

Growth of market: Software, firmware, digital design outsourcing, and local markets have already grown to large numbers in India. The IT and BPO industries of India is expected to have a growth of over 7 percent during 2009-10 fiscal year and to log revenues of $64 billion. According to the latest forecast of NASSCOM, the IT and outsourcing industry will log an export growth of 4-7 percent this fiscal to log $48-50 billion in revenues. Domestic revenue for the industry is expected to grow much faster at 15-18 percent to touch $13 billion, the industry lobby says in its annual survey on the sector.

In the last few years, AMS design services market is steadily gaining momentum. The market stood at about $1 billion in 2007 and the compound annual growth rate (CAGR) is expected to climb by 11 percent from 2006 to 2011, according to Gartner estimates.

AMS Ecosystem: To build a world class AMS design service company, an ecosystem of Analog and mixed-signal services and solutions has to be created. Highly talented engineers are the heart of the company; hiring, training, and motivating them is the key focus of AMS design service companies. Being in the service industry, there can never be enough attention to customer satisfaction. AMS companies put their engineers through rigorous technical and professional training to meet industry quality standards and focus on these services:

• Analog and mixed-signal solutions
• Mixed-signal physical design
• IO solutions
• Board design services
• Test and characterization services

Outsourcing analog design and test work is not as simple as software or digital design since the process is not well defined. Very few companies have succeeded in building a sustainable business model. Such companies have design centers in second tier cities and work closely with colleges there to get access to talent and resources. This approach lets them pass on the cost benefits to the customers and helps to retain talent better. Employees do not have to deal with big city hassles and achieve a better work life balance. Sankalp's approach is even more notable since it already has two operational sites and has a stated goal of having 6 to 8 centers in different parts of India. This gives engineers and managers an opportunity to return to their roots to do more meaningful work closer to their home towns. This approach makes customer projects more manageable as it becomes possible to focus on a particular discipline and or specific customer at a particular site, at the same time protecting IP.

Services strength in numbers: For a design service company, the top line depends on the number of high quality engineers available to it. During the first half of 2010, design services companies have turned down a number of business opportunities since they are low on available bandwidth. From a business point of view, it is a great situation to be in. Companies are tackling the problem by aggressively hiring from colleges and putting the recruits through rigorous training programs. In parallel, they are bringing industry veterans and senior leaders on board as consultants. US hiring is very selective and freelance engineers are used to execute projects, which have to be done onsite.

Values, customer services, and work environment: It is of utmost importance for a semiconductor design services company to protect the client’s IP. At Sankalp, we train our employees to know the significance of IP protection and the measures they should take to prevent any leaks. Honesty and integrity are the values on which the company is founded. Customer service is stressed upon and employee performance is heavily graded based on professionalism and customer service. Semiconductor design is a creative process, and to foster talent employees are given the freedom to make decisions and develop into leaders.

The author is Director of Business Development, Sankalp Semiconductor