The world’s technology offshoring haven

India is of key interest to global electronics companies these days, as it is now world ranked as the 4th largest economy on a purchasing power parity basis, and the 12th largest at market exchange rates. India’s GDP was $648 billion in 2005 with growth averaging 6% per year over the last 10 years, and forecast growth of 8% in 2006. Foreign direct investments are about $10 billion per year. With a population of 1.2 billion, India is now a leading offshore destination for Fortune 1000 companies.


India’s semiconductor total market was $2.7 billion in 2006, and is forecast to grow to $5.5 billion by 2009 according to a Frost & Sullivan Report (Sep 2007). This would cover major product categories such as DSPs, microprocessors, memory, ASICs, discrete, analog and sensors. Of the approximately 74,000 engineers employed in 2005, 11,000 were in VLSI design, 3,300 in PCB design, and 60,000 in embedded software design

Advantages
India’s Centers of Excellence are fundamentally based on the availability of engineering talent:

· 120,000 engineers graduate with a BSEE every year
· 40,000 engineers graduate with a MSEE every year

Looking at various regions, Bangalore has several multi-national companies and local companies such as Wipro, and Tata. Many trained IC designers with IP and EDA experience are available. However, overall cost in Bangalore is the highest in India, and employee retention is difficult.

New Delhi is similar to Bangalore, but extreme weather conditions may impact productivity since temperatures from April to October range from 30 to 45*C.

Pune, an emerging software center that’s just 100 miles from Bombay, offers overall cost of about 60% that of Bangalore and New Delhi. Many universities in the local area make it easier to recruit cost-effective engineers, and employee loyalty is relatively high.

There are a host of multinationals doing business in India, such as Texas instruments, Freescale, Intel, etc.

Design services companies
India’s design services companies have a strong international reputation, and these include:

· eInfochips Limited: Founded in 1994 and focused on chip design, verification and embedded. The comapny did $10.4 million in 2005-06, and its design centers are located Pune and Ahmedabad. It employs over 500 design engineers.
· Tata Elxsi Ltd: Part of the multi-billion USD Tata Group, the company was incorporated in 1989. It has over 3000 person years of VLSI and system design expertise in design/synthesis of high-speed multi-million gate systems deployed successfully in products.
· SysChip Design Technologies: This front-end ASIC design & verification specialist company offers differentiated services to customers working on large/complex chips with challenging timelines. The company was recently acquired by Axiom Design Automation.
· Wipro Technologies: Provides complete product engineering solutions meeting critical time-to-market demands of customers with design reliability, scalability and upgradeability.
· Sasken Technologies: Helps design houses focus more on their core competencies enabling them to provide better value to their customers through shorter development cycles, reduced costs, and first-time-right products.

VLSI Designs
There were an estimated 300-plus design starts in 2005, many of which made notable contributions to the development and advancement of WiMax, GSM chips, airbag controls, mixed-signal and analog, DSP, low-power processors, modem chip designs for cellphones, and IP building blocks.

The EDA tools market size in India is estimated at $100 million (commercial plus captive) in 2004, and is expected to be hit $1 billion by 2015.

Challenges
Challenges to successful offshoring of SoC design include:
· Hidden costs of worldwide distributed R&D.
· Increasing costs over time.
· Attracting and retaining employees.
· A shortage of mid level managers.
· Infrastructure in India such as water for fabs, roads, electrical, communications, etc.
· Rupee appreciation against the dollar. This is going to be an extremely critical issue. The rupee appreciated by about 20% just in the last 9 months, thus increasing the cost of outsourcing for multi-national companies.
Despite the challenges, we expect India to become the center of SoC design as China emerges as the center for manufacturing. Pundits predict also that India will be one of the world’s top economies by 2012.



You can reach Vic Kulkarni at vkulkarni@sequencedesign com