Designed in India, sold across the world

What started out as an opportunity to reduce cost has taken on a new meaning in today’s Indian outsourcing scenario. From pocketing back-office jobs such as accounting and call center support, India continues to move up the food chain and take on some of the more complex outsourced tasks such as end-to-end design activities ranging from chip architecture development and design verification and layout, all the way to design tape out.

The design houses in India are working on the 90 and 130nm design rules in sync with companies in the US and Europe. Some companies are also working on the 65 and 45nm experimental lines. Research firm In-Stat forecasts the design services revenue in India to grow from $869 million in 2005 to $2.45 billion by 2010; the number of Indian design starts to grow at a CAGR of 23.3 percent during 2005-2010; and board design revenues to grow from $120 million in 2005 to $240 million by 2010.

So how did India, in 15 years, go from being an impoverished country of massive population to being the “brainy nation” that is going to take the best engineering jobs? Answer: technological agility, strong education network, cost control, and best-of-breed services.

A recent survey, Sharing the Idea—The Emergence of Global Innovation Networks, by the Economist Intelligence Unit of The Economist, London, UK, states that majority of the 300 surveyed global executives (26 percent) chose India as being the best offshore location for R&D, followed by the US, China and Canada. Companies across different industries are increasingly moving sophisticated, mission-critical functions to India primarily because it can provide highly skilled scientific and engineering workers who are in short supply elsewhere. According to In-Stat, the number of Indian design engineers will increase from 12,352 in 2005 to 40, 893 by 2010. And despite an upward trend in salaries, companies are still able to generate a cost advantage typically in the range of 30-40 percent by outsourcing to India.

In addition to technical qualifications, the availability of English-speaking workers is a big plus that enables all forms of offshoring, aided by clearly drawn intellectual property laws. While IP is stolen without blinking in other outsource destinations, India on the other hand supports ownership rights and confidentiality. Hence, design outsourcing to India has been well received and will be driven further by the need to reduce rapidly rising costs while maintaining quality. With these advantages, India is all set to become the next big thing in the design outsourcing industry.