Off-shore Product Development Moves Up The Value Chain
posted in Outsourcing News and Top Outsourcing deals |Source: www.business-standard.com
In the quite recent past, just a few years back, American and European venture firms had only one simple mandate for their portfolio firms i.e. “Look at outsourcing product development to Indian firms to save costs.”
That old scenario is undergoing a rapid change, as global product firms approach Off-shore Product Development (OPD) firms like Aztecsoft, Symphony Services, Persistent Systems, Aspire and Aditi Technologies for full product life-cycle (from concept to launch) participation. As in IT / ITeS / BPO outsourcing, OPD players have begun to move up the value chain.
That is becoming more than self-evident, as only some six months back, US-based global corporation approached Aspire Systems, a Chennai-based OPD provider to build a ‘concept stage to launch’ product for them.
Gowri Shankar Subramanian, CEO, Aspire Systems confirms: “We developed the concept and built the complete architecture. Finally, we integrated the software and hardware before bringing out the completed products in six months.”
Ajay Kela, Managing Director & COO, Global Operations, Symphony Services, corroborates: “Four years ago, we had to sell to product companies. We had to make a pitch that ‘we can build your products’. Today, they all want to come here on their own.”
As many of these firms graduate to the next phase, Pradeep Rathinam, President of the North American half of Aditi says, apart from driving innovation with new product development, OPD firms in an advisory role for many of their customers, are guiding them from time-to-market to go-to-market.
Take Symphony Services, for example, who is providing product development expertise to many start-ups that comprise approximately 40% of its total customer base.
“We do 80-90% of the engineering works for over 40% of our customers who are in the start-up phase. We also do 30-40% of product development for many of our high-value customers who have large operations in India. It is no more a non-core work,” says Kela, as Rathinam of Aditi Technologies corroborates: “We are experiencing a rapid growth in the number of customers. I am sure the trend will continue in the future.”
Barring a few large firms present in India, Indian product services companies say big players like BEA Systems, Yahoo! and Oracle that have significant operations in India, have also begun to opt for third-party services providers.
Symphony claims 40-50% of its revenue comes from clients with captive centres in India, while both Aditi and Aspire Systems substantiate Symphony’s claim saying about 15% of their clients have captive operations in India.
Sudin Apte, Country Head (India) of Forrester, a research firm, notes: “The industry is around $15-18 billion in India in the product development space. There’s an opportunity to build one more Infosys or TCS in this space.”
