Reaching the upper echelon

As the outsourcing continues to create waves in India, more multinational semiconductor companies are setting up shop in India. Though in short term the trend is to provide value added engineering services, our long-term strategy should be to participate in the future R&D efforts, and also meet the global demand to provide quality engineering resources. Today we are far behind in R&D; we are not very good investors in research for future. Be the institutions or big corporations (MNCs including), the amount of money spent of pure R&D is negligible.

The current attraction for MNCs to set up shop in India is predominantly driven by the cost advantage. This situation will not last long, however. There will soon be other countries, such as China, competing for the same business we are in today. The cost advantage alone will not help us in reaching our next goal as a nation in global technology. The semiconductor industry, in particular, is very selective in outsourcing projects to India. Part of the reason for this is that our engineers graduating out of colleges are ill equipped to deal with the industry demand for skills and tools. Barring IITs and some other premier colleges, the curriculum set for engineering degrees, especially for electrical/electronics degrees is obsolete and in need of immediate evaluation and improvement. An electrical/electronics engineer coming out of a college today, either needs intense training or on-the-job training for about a year before he is productive. This problem needs to be addressed since many global semiconductor companies that are either outsourcing or setting up design centers in India need qualified engineers.

The Semiconductor Industry Association (SIA) projects a compound annual growth rate (CAGR) 10.4% for 2007 in sales. According to the SIA, the total semiconductor worldwide sales would be around $250 billion by 2007. With this kind of growth, there will be a huge demand for technical manpower and most of the world will be looking to India to provide the engineering services and resources they need.

Solutions
The solution to these problems is to evaluate our electrical/electronics engineering curriculum and reshape them for next generation semiconductor technology demands. Furthermore, engineering colleges need to tie up with industry to drive R&D efforts. Here the engineering faculty should learn the latest technological advancements and pass them on to the students.

Another area where we lag behind is in the field of research. Very rarely do we see engineering graduates coming out colleges with an aptitude for research. Currently most graduates are happy to land a job in fast growing customer service industry. This could cause the majority of our prime resources to become obsolete in 3 to 5 years. Also, very few companies are actually doing any research in semiconductor space, may it be in the field of semiconductor process, design tools, methodologies etc., At this rate we will always be a dumping ground for the MNCs to get some “grunt” work done in India, where as cutting edge technology development will still be done overseas. India has a tremendous opportunity to go to the next level in technology outsourcing. With a combination of quality engineering education, which will address the needs of the industry, and an infrastructure to support R&D efforts, we will be a prime destination for MNCs to invest in our country.

Drawbacks
The last but not the least of our drawbacks is creating new products. This is not limited to semiconductors but to the software industry as well. The problem here is two fold. Firstly, very few venture capital firms are investing in product-based companies in India. Secondly, young engineers coming out of colleges with advanced degrees are opting for non-related jobs; even experienced engineers are not starting product-based companies.

The prime example of educational institutions supporting the industry is Silicon Valley in California. Of the number of inventions, new companies with breakthrough technologies that were started, a majority of them were located or started out of the Valley. The main reasons for this are the local educational institutions and the culture that exists in those colleges. On some occasions the faculty, along with students from these colleges in the Valley, actually started companies, made them successful and went to back to the college again to teach bringing with them priceless skills and experience.

For such a scenario in India, the venture capitalist community needs to start investing in local product-based companies. We also need a sound education system, and infrastructure conducive for R&D.

TTM (India) Pvt. Ltd has invested in building a quality engineering team in Hyderabad, India. The company’s focus areas are specialized ASIC design and fabrication. Having released more than 120 designs in the last seven years, the company is well positioned to address the global semiconductor outsourcing needs cost effectively.



You can reach Dhananjai G. Paturi at dpaturi@time2mkt.com