Applying IP

What Wipro once called the "silent revolution" sweeping Indian IT

is now official. The push towards value-added services has never been so IP

studded. Telecom, automotive and finance sector clients have taken the initial

lead in the Indian IT services R&D movement. Tier 1 companies TCS, Wipro,

Infosys and Satyam were among the first to close in on the new differentiator

and carve out their niches in the worldwide engineering and design services

space.

Says Wipro COO Dr A.L. Rao, "The rate of change in providing services is

accelerating, while the time to respond to maintain competitive advantage is

diminishing. Engineering services are the new differentiators."

Wipro's technology training currently comprises four streams covering 78

courses. Its automated assessment center caters to over 30 technologies. The

project and architect readiness programs ensure a readily available pool of over

4,000 Six Sigma trained employees at any point of time. Its team of over 700 PMI

certified consultants is now the highest in India.

The track record is lengthening with the number of IPs and "invention

disclosures" which Wipro has gathered down the years. The company filed 24

disclosures last year alone for point and framework solutions as well as IPs,

with two patents pending in the optical networking and wireless spaces.

"Yes, most IPs generated by us still belong to the customer," says

Ramesh Emani, Wipro's president for Product Engineering Services (PES).

Wipro had formed the PES practice after the departure of CEO Vivek Paul in

June this year, by merging its Telecom Solutions and Embedded Product

Engineering groups.

Wipro and competitors like TCS, Satyam, Infosys and 3i Infotech have also

exercised the option to reuse IPs in similar innovation environments for other

clients. "Reuse of IPs is high on our agenda. Reusable IP blocks from our

portfolio of networking, wireless and wired communications solutions are helping

to reduce time-to-market for our clients. We update our Reusability Index

constantly, as we study the sustainability of an earlier IP for every new

product or software tool which we develop further down the line," says

Emani.

Significantly, what has happened up the line is substantial. PES's Consumer

and Mobile labs, under Emani's supervision, have special focus on verticals

like computing, storage, consumer electronics, automotive electronics,

industrial automation, semi-conductor and mobile devices.

IP-eratives



A multitude of IP blocks PES built in recent years include standards like

IEEE 1394, WLAN algorithms and BPM solution Flow-briX to manage complex workflow

systems, besides hands-free telephony solutions, video-over-wireless,

Linux-based mobile phones, and digital TV circuitry.

Take the 5,000 channel digital set-top box which the Consumer Lab designed

for semiconductor company Renesas Technology. The set-top box with 2 MB of flash

memory and 16 MB of SDRAM has wide distribution in European markets, and is

designed to deliver TiVo quality sound and seamless analog-to-digital

conversion.

The ubiquity of development conforming to open source standards has been a

singular quality of Wipro's IP delivery engine.

The over 500-strong Mobile Lab delivers a range of Linux-based application

for mobile phones. Mobile Lab has developed entire GUIs running embedded Linux

apps - via projects like 'Aqua', Wipro's Linux-based mobile platform —

featuring Web and e-mail clients, ringtones, WAP browsers and phonebooks.

Leading telematics products supplier IxFin Magneti Marelli (IMM) turned to

Wipro when it wanted to provide its client Fiat a fully integrated infotainment

system featuring a global navigation system, GSM phone, audio, Internet access

and climate control. The human-machine interface was developed in time for the

launch of Fiat's new model. Insurance and pensions supplier.

The excellence which characterizes engineering IP delivered by Indian IT

services vendors has attracted increasing attention from technology management

thinkers like Keith Goffin, Professor of Innovation and New Product Development

at the Cranfield School of Management. Prof Goffin who featured Wipro's

product development methodology in his bestselling book "Innovation

Management Strategy and Implementation using the Pentathlon Framework",

says, "Today, most companies recognize that they can't do everything by

themselves - the sum of X+Y amounts to more than X+Y. Clients know what they

are looking for. They come to India not just to develop products and services,

but are also looking for help to develop the process of how they do that."

Even as Wipro deploys over 150 buses to ferry its over 40,000 employees to

its Sarjapur Road and Electronic City campuses every day, the rigours of R&D

and design innovation are equally challenging. "Yes, infrastructural issues

do persist and the whole world knows the issues involved, but consider the

thrill of being part of a global innovation landscape which makes up for all

this," says a Wipro insider. He reveals that many of the innovations

pioneered by a company, which is known to be the world's largest third-party

outsourcer, have already hit the US and European markets.

Leading Edge



In fluorescent-lit, cluttered rooms housing a tangle of LCD monitors and

wires, Wipro engineers have for over four years been designing tech blueprints

which are changing the very paradigms of how handset applications will work.

"The open source effort has been significant for us, because apps can be

designed with minimum proprietorial issues to contend with, and also reach the

market faster," says a Wipro engineer.

Wipro's over 10,000 strong R&D workforce caters to over 120 clients in

the US and Europe, and is fast helping reduce the company's dependence on

onsite revenues. Revenues from R&D in the telecom, embedded software and

services segments currently forms 36% of Wipro's total revenues.

While R&D reduces dependence on onsite contracts, reducing the onsite

component is now also a validation of the vendor's ability to handle larger

contracts by its offshore workforces. Remote infrastructure management is a key

horizontal which is enabling quicker and cost-effective client servicing out of

India. Currently, Wipro remotely manages client datacenter processes out of its

Bangalore facilities. A diverting twist to the above is: the growing product IP

volumes, in combination with remote networking capabilities, will help IT

offshoring vendors deliver proactive services to clients, even deliver design

prototypes directly to the customer's clientele, and assess how they would

work on third-party facilities. This could further shift the geographical

equation in favor of offshoring, say industry experts. Navi Radjou, Forrester

Inc's VP for Research, who coined the term "adaptive supply

network", says, "Extended engineering will help collect the voice of

the customer, and companies like Wipro can use their market and engineering

prowess to encourage customers to participate in the global innovation

network."

Forrester estimates that outsourcing in the global electronics industry alone

is growing at 20% annually, even as Indian IT providers aim to capitalize on

this trend. Dataquest estimates a potential $24-billion market for automotive

design outsourcing alone. According to Nasscom, India's engineering and design

services market is poised to grow to $11 billion by 2008-2010. While, McKinsey's

2004 Global Survey of Business Executives found that more executives of large

companies say that they plan to invest in R&D facilities in India than in

China.

Embedded Linux work has been a key component in Wipro's wireless and

automotive design efforts. Customer names like Cisco, Lucent, Morgan Stanley,

Nokia and General Motors have only recently entered the public domain.

To romance a dragon...



Significantly, time-to-market margins will be reduced further — from

months to weeks - as India's services vendors climb the value chain through

detentes with manufacturers. Radjou says that further reducing the time to

market by tieing up the manufacturing end will be among the key challenges in

evolving the global "innovation network" — a product value system

comprising overseas financial sources, the outsourcer, R&D groups, and

manufacturers. "Indian IT services vendors are scaling the value chain

rapidly through their R&D efforts. It's something which we couldn't have

imagined a few years ago. Innovation networks are the next wave and through

outsourced engineering projects, India is spearheading one end of it. The other

end of the rectangle will firm up when production JVs between Indian R&D

vendors and Chinese manufacturers begins to happen."

Analysts agree that China's manufacturing capabilities will be key to

transforming Indian inventions into innovative products. Their optimism is

rooted in the fact that the outsourcing boom has value-adds embedded in the

delivery mechanisms which makes it possible — a process which feeds on itself,

and which analysts like Radjou and Prof Goffin believe, is unstoppable. Just

that "the really high-end work we all expected is happening right now, and

it's a far cry from the days of back-end processing and sundry help desk jobs

which Indian outsourcing vendors were saddled with," Radjou notes.

"Innovation is now a formal business practice, and we would like to

stimulate innovation beyond just specific product development projects,"

adds Emani.

The "consultant" armies of TCS, Wipro, Satyam and Infosys now run

into thousands. Engineering services personnel with these companies will be

crucial to supporting consultant prescriptions for customers and implementing

bleeding-edge engineering design solutions out of India. Innovation now feeds

the Brand and is the revenue stream of the future; in Premji's words,

"The basis for both survival and success."

Ravi Menon