IMPORTED…but manufactured in your backyard

"Psst, Doesn’t matter if he messes it up. It’s not that important
anyway…"

What happens to a green-horn in a team? On Day I at his workplace, he is
assigned no work. On Day II, he begins scouting for work and lands some
peripheral tasks. On Day III, when the boss sees that the rookie has done those
tasks diligently, he is assigned some more work, stuff which no one else wants
to do. The youngster does that well too, but the boss would rather not have him
face the client.

But then, the client notices the rookie’s contribution and our man is
elevated to being the Big Boss’ left arm and then his right. Our man now works
on par with the boss and speaks his language…our man sure has grown!

Except in the case of software product development in India, the greenhorn
came of age long ago. It is only now that he has been ushered into the central
scheme of affairs. It has been well over a decade since global IT companies
started setting up development centers in India. What began as a destination for
back-end activity restricted to support, maintenance and quality functions, has
blossomed into the hot-bed of high-end research and development that is central
to the core of work done by its global parents.

For instance, the original model of i2 had all the product development taking
place in the US. "The thinking would happen there and the coding and
quality assurance would happen in India," recalls i2 President (Solutions
Operations) Pallab Chatterji. Chatterji informs that now, entire product lines
are anchored from Bangalore with the Indian team doing the thinking process and
the product management here. i2 committed a $10 million investment for India in
calendar year 2002. Set up in 1988, i2 has over 1000 employees in India.

Established in 1999, the Sun Technologies’ India Engineering Centre (IEC)
has over 1000 employees and 39,000 worldwide.

"From those early days of fixing bugs, we are now fully integrated with
the global group and work on the entire suite of products," says Murali
Subramaniam, VP-E Business Development (India Operations), Oracle India.

Oracle, which boasts of one of the largest developer forces in India among
the MNCs (2000+ with plans to scale it to 4000), has 70% of its people working
on e-business and development of new software. 20% of people work on software
maintenance like fixing issues with code and the rest of the 10% on operations
and infrastructure.

	“India plays a major role in IBM’s global Linux initiatives, and it also works on networking protocols, firewalls and file systems”
Dr Uday Shukla director, IBM India Software

"As is usually the case with new operations, the biggest challenge used
to be to get some good work. Now, there is so much work coming our way, we want
to just digest this and ask them to not send us more," smiles Pradeep
Kumar, country director, S T Microelectronics. Started in 1991 with 40
engineers, ST at Noida currently has over 1000 people.

ST Noida specialises in developing IP’s for various end applications, SOC’s
and embedded software to be utilized by ST worldwide.

Infogain, India Development Centre MD Abhay Sinha explains that earlier, all
non-client facing activities with higher turn-around time were sent offshore.
"Now we are focusing on long-term client associations like multi-year
outsourcing deals with level 1/2/3 support for products and applications,"
says Sinha.

Impetus Technologies’ CEO and president Praveen Kankariya informs that the
focus of the Indian arm has been on designing and developing software. "We
are seeing more of the design and architecture component also moving to
India," he says.

Up on Volumes

In the past, while Indian software services companies boasted of huge state
of the art complexes to house their army of software developers, MNC operations
were restricted to a much smaller number of engineers often operating out of
elegant but rented offices.

As the MNCs ramped up the headcount in India, "our own premises"
with swanky buildings full of engineers became the order of the day. The last
three to four years have seen a flush of activity in the setting up as well as
expansion of development centers here.

In 1991, Motorola Global Software Group set up its first software development
center with a dozen professionals out of a hotel room in Bangalore. Today, GSG-India
is the largest software center for Motorola with 900 professionals. The focus is
on R&D efforts in next generation wireless infrastructure and subscriber
products especially in CDMA. In the offing is a $13 million investment. Motorola
GSG has over 3000 professionals worldwide.

Intel’s India development center too started with 10 people in 1999 in
Bangalore. With 960 people on board currently, the company plans to grow to 3000
people by 2005. Intel worldwide has 80,000 people.

	“It took 2-3 years and an internal overhaul to meet Sun’s standards. Now, key work comes to India”
Vijay Anand MD, Sun Center

"The Bangalore R&D Centre is an extension of Cisco’s R&D
efforts in San Jose. With Cisco staff and the dedicated resources of our
outsourcing engineering partners, HCL, Wipro and Infosys, there are
approximately 2300 engineers working on Cisco projects in India," informs S
Devarajan, vice president and head, Cisco India Global Development Center.

"We have strong skill sets in areas such as IOS, voice-over-IP, mobile
wireless, network security, DSL, and ASIC development," says Devarajan.
Cisco has 34000 employees worldwide.

Set up in 1998, Adobe’s India center now has about 200 people as against
3500 worldwide. Managing director Naresh Chand Gupta explains, "We started
with component technology development. Over time we got responsibility for the
development of entire product. In fact, the India center is responsible for the
development of Acrobat handheld readers on Palm, PocketPC, and Symbian platform.
PageMaker 7.0 was developed out of India and now the India team has ownership of
FrameMaker."

SAS Global Services (SGS), a subsidiary of business intelligence company SAS
Inc was incorporated as an independent entity in 2000, with headquarters in Pune.

Started in October 1996 with 30 people, Infogain’s India development center
has 170 people. The company plans to increase the strength to 500 by the end of
financial year 2003-2004.

"Initially the Indian center started with only software development
work. Within weeks, the software testing team was added and a year later, the
Software Product Support — 24X7 center, was operational" says Ashok
Belle, Managing Director, Novellus Systems (India).

Hewlett Packard’s R&D laboratory in India currently has about 1000
people. HP has approximately 140,000 employees world wide. Established in 1989
in Bangalore, HP-ISO has two centers — one focusing on activities related to
product development for the enterprise business of HP and the other for HP’s
Services business to deliver software solutions.

Analog Devices Inc’s India product development center has 90 employees and
8500 employees worldwide.

The INS India Development Center (IIDC) was set up by the Integrated Network
Solutions (INS) division of Lucent Technologies in 2000. IIDC started with 15
engineers and its current strength is approximately 380. Lucent Technologies has
over 40,000 employees across the world.

Network Programs began its operations in US in 1992 and then in India in
1996.

"From a subsidiary set up the Indian operations have recently acquired
the status of being Network Program’s headquarters. With this shift, India is
going to be the hub of activity and decision making for the company," says
Network Programs CEO Vipin Tyagi.

Invensys’ India Development Center started operations in Mumbai in 1989 and
Hyderabad in 1995. Invensys has about 600 people today and plans to recruit
another 100 in the next few months. Its subsidiary– Baan has about 3000
employees worldwide and Invensys about 58,000.

	“Great communications facilities have ensured that our people are wholly integrated with the global organization and have equal opportunity and work”
Pradeep Kumar country manager, ST Micro

The Canon software development center has 40 engineers now. Additionally 75
engineers (in other Indian software companies) are working on the outsourced
software projects. Canon has about 75000 employees globally in total and about
5000 in design and development of products.

Impetus Technologies, started in 1991 has 150 employees currently and has
plans to grow to 200+ by the end of 2003.

The India Development Center of Divine was established in 1999

Up the value chain

Even as MNCs keep up the numbers game, rapidly ramping up employee numbers
and lay down infrastructure to simulate "near US-like" work
conditions, what’s more important is the kind of work that is being done in
these centers.

"So far, development centers in India were being used to drive
bottom-line savings. But there is a quantum jump in ROI if they use the same
investment to make a difference in the top-line (that is develop new products
and features that will generate revenue)," says Srivibhavan Balaram,
R&D Lab Director, Hewlett Packard, India.Approximately 35% of the worldwide
R&D for HP-UX is done in India.

For Storage and Openview Software, approximately 18-20% of the worldwide
R&D is done in India. ISO has R&D ownership of several product lines
within HP — it conceives, architects and releases products out of Bangalore.
HP ISO totaled over $40million in the past year on these three categories of HP-UX,
Storage and Openview software.

"Almost 25-30% of software in Motorola phones is developed and tested in
India. We have spearheaded WAP, Bluetooth and IP telephony technology in
Motorola and developed the GPRS software," says Soumitra Sana, MD, GSG
India. The center also developed Motorola’s WiLL system in 1997.

	“Intel has a uniform incentive scheme. An invention disclosure fetches you $100. If it gets selected for a patent, you get a well-deserved $1,000”
Ketan Sampat Intel India

Vijay Anand, MD, India Engineering Center, Sun Microsystems describes the
shift to high-end work as a natural evolution process. "It took 2-3 years
and several internal initiatives to develop our people to meet the high
standards within Sun and now we are beginning to see key work being allocated to
India" says Anand.

Novellus’ India center works with software products dealing with Real time
operating systems, embedded, and robotics technologies. "These technologies
are used in Novellus equipment and processes to make the interconnect structures
that link transistors within a chip," explains Ashok Belle, Managing
Director, Novellus Systems (India).

Synopsys’ India Development center started with test and validation
activity followed by internal application engineering. "As the site grew in
experience and maturity, more and more core software development activity
started to originate from here. Today, major portions of key releases are taking
place from our engineering teams in Bangalore and Hyderabad," says Pradip
Dutta, managing director Synopsys India.

The IBM Software Labs(ISL) portfolio includes worldwide support for diverse
IBM products in areas such as Operating Systems (OS/2 & AIX ) , Web
Application Servers ( WebSphere), Distributed File Systems, Compilers (Visual
Age), Office Automation products (Lotus SmartSuite) and Middle—ware
technologies like MQSeries and Java.

Today ISL owns product components across key IBM product offerings like
Websphere Commerce Suite, Websphere Business Integration, Lotus SmartSuite on
OS2 & Windows, DCE/DFS/AFS, TX Series (CICS and Encina among others.

	“We are catching up in the areas of requirements management and system engineering. We are away from the main markets”
Dr Chandan Haldar Lucent Tech

"Canon is currently working on the development of the Software
Development Kit (SDK) in the area of printing technology and mmbedded software
print server. (An SDK is a set of commonly used functions that provide an
abstraction for high level programming," explains Hemant Kumar, director
and GM, Indian Software Development Center (ISDC), Canon India.

The Lucent arm has been a full-lifecycle product development center right
from the beginning. "We transferred the product development, validation,
and release management of several core revenue generating products in various
areas of Network Operations Software (NOS) and Multiservice Switching (MSS) to
the IIDC progressively over the last two years. We also started the development
of our next generation network element management system products based on our
new Navis iEngineer platform at the IIDC," says Dr Chandan Haldar,
Director, INS India Development Center, Lucent Technologies.

The Invensys India Development Center has been working on software products
in the areas of Human-Machine interface (HMI), Process Automation, Simulation
and Optimization.

Analog Devices started with DSP IC (chip) design and then moved into DSP
software. "We are now designing next generation high performance DSP
processors from IPDC. Even in DSP software we started with libraries, now we are
developing algorithms and software modules for video, audio and wireless
applications. We have also started a analog and mixed signal IC (chip) design
group," explains Dr S Karthik, Managing Director, India Product Development
Center (IPDC), Analog Devices Inc (ADI).

Even at SAS, work on building industry-specific intelligence data models
began under strong project direction and control from its US and Europe
organizations. "But an international award we won last year for one of the
products built in India and the growing confidence of the parent company has
seen a transformation. SGS now has a role in strategy and direction, and greater
autonomy in execution," explains MD Vivek Gokarn.

	“Being a virtual extension of the HQ at San Jose, there is no question of ‘allotment’ of work”
S Devarajan V-P and head,Cisco India Global Development Center

The Indian arm of Divine offered software consulting services in e-commerce
and Client/server technologies. "It is now involved in the development,
maintenance, testing, and global technical support of the cutting-edge products
in the areas of customer interaction management, content management, and
collaboration," says Dr Gobind Baghasingh, director (operations) at Divine
India

But then, the abilities of Indian software professionals have been known for
a while. Why is it that MNCs have upped investment in India over the last few
years? While "cost-effective quality" has been cited as the prime
reason, the Indian contribution to products released by these companies as well
as the patents filed by the Indian arms indicate that the quality aspect has a
greater role to play in this transformation.

"Patent potential"

Techies they say, have one track minds. When engineers work on technology for
products, they may not be aware of or interested in the patent potential of
their work. It is up to the company to tap this potential. ST Noida has now
identified about 10 ‘patent mentors’ (one per team of 80 people) in the
company who closely watch and capture potential patents. "These patent
inventors also get financial compensation. The patent belongs to the company,
but the person is acknowledged as inventor," informs ST Micro country
director Pradeep Kumar. "We hope to surpass ST, USA with our plans to scale
operations," says ST Micro Director Vivek Sharma, explaining that ST Noida’s
"Patent potential" initiative is a step in this direction.

	“Companies are redefining what is core activity and what is non-core, and what processes & R&D are critical”
Ravindra Datar senior analyst, IT Services, Gartner India

IBM India has a group, which guides and encourages employees to file patents.
Canon organizes an annual "patent filing" training program in Japan
for its engineers.

Intel India president Ketan Sampat says that at Intel, employees are told
that whenever they think something is innovative, they are asked to write it
down. "There are Intellectual Property Parties held–festive events where
invention disclosures invariably come up. After that, patent lawyers examine
these and shortlist the ones that are really unique," explains Sampat.
Intel has a uniform incentive scheme for employees. An invention disclosure
fetches you $100. If it gets selected for a patent, you get $1,000.

Adobe too has a bonus scheme where an inventor gets up to $5000 for filing a
patent. Novellus and Analog Devices too have launched "patent
awareness" initiatives.

Caveat: Software exports

Does this success of MNC development centers threaten to poach into the
talent pool of Indian IT’s original success story–software service exports?
Are Indian software companies losing out?

"Captive development centers being set up by potential clients could
result in a potentially huge market lost to Indian software companies,"
admits Ravindra Datar, senior analyst, Gartner.

"Indian companies should highlight the fact that R&D could cost
significantly less without any adverse effect on quality by outsourcing to
Indian vendors" says Datar.

Swerving past roadblocks

Even as Indian employees make waves in boardrooms across the globe, there
are hurdles, which could slow down the joyride of the MNC juggernaut…

Infrastructure issues like power, communications, better roads,
transportation facilities and international airports, remain a problem.

So are customs’ restrictions on sending and receiving hardware and
prototypes, which result in delays and long drawn procedures. SAS Global
solutions MD Vivek Gokarn points out, "The more the nature of high tech
work that global companies want to outsource, the more they are zealous of
guarding it. Indian IPR laws and their implementation do not provide adequate
protection to MNCs. High-end work is mainly restricted to fully owned
subsidiaries, and pure R&D services companies beyond this holding pattern is
not very common," says Gokarn.

The right people?

Experienced engineers with deep domain skills in niche areas such as EDA
software development, are still in short supply. Dutta of Synopsys India points
out that the absence of a proper VLSI curriculum in Indian engineering colleges
is one of the main hurdles.

Dr Karthik explains that getting experienced (high quality) engineers was a
problem, especially in niche areas (high-speed analog design etc).
"However, we see an improvement on these fronts as more Indian engineers
are relocating from the US to India. We still need to cultivate more specialists
who have in-depth knowledge and experience in their areas," he says.

And often, the problem is not the expertise, but the attitude.

	“Filing a patent fetches an inventor a $5,000 bonus and an invitation to an exclusive gathering in San Jose with the top management”
Naresh Chand Gupta managing director, Adobe

"The Indian mind set is trained more to follow than to lead. While
Indian engineers are exceptional when it comes to delivering a well defined
piece of work, we need to improve our ability to deliver leading edge technology
where there is no one to follow," points out Srivibhavan Balaram, R&D
Lab Director, Hewlett Packard — India.

Ramam of Invensys points out that with more and more high-end work moving to
India, the expectations are also growing. "India has to prove its
capabilities in delivering high quality products and services at the right time.
Companies have to invest in bringing in more professionalism."

Says Oracle’s Murali Subramanian, "As we reach a critical mass, it
becomes absolutely important for the India center to outperform its counterparts
elsewhere." The greenhorn is no novice anymore. But only if he evolves to
be the best, can one say that our man has truly…arrived.

Manjiri Kalghatgi in New Delhi

The Indian Face of Global Products

Globally launched products and solutions with significant contribution from
their India research and development centers:

Adobe

Almost all Adobe products–InDesign, PageMaker, Illustrator, Acrobat,
Photoshop, Premiere, After Effects, Photoshop Elements.

Analogue Devices

The SHARC family of high performance floating point DSP was designed in
India.

Baan

Close to 50% of Baan products launched globally are developed in India
including recent releases like ibaan Procurement, ibaan sourcing and ibaan
service. The India center contributes in a major way to the Customization of
Baan ERP

Canon

Among others, Canon India has jointly helped develop ImageWARE Publishing
Manager, Document Composer, Document Manager, FormCraft Pro along with other
Canon development centers.

Cisco

SNMS or Cisco’s Small Network Management Solution as well as Cisco Emergency
Responder has been conceived, designed and totally developed in India.

Divine

Customer Interaction Management products like Divine NetAgent Suite, Content
Server and Collaboration products like MindAlign.

Hewlett Packard

Some of the HP enterprise products where HP-ISO has contributed
significantly include HP-UX, HP OpenView, Virtual Vault, Domain Guard, HP
Telecom Product Line of Opencall (OC Portfolio)

i2

i2 Supplier Relationship Management (SRM), Demand Chain Management (DCM),
Supply Chain Management (SCM).

IBM

India Software Labs is key to developing, enhancing and supporting versions
of software products like WebSphere Application Server, WebSphere Commerce
Suite, WebSphere MQ, Tivoli, Lotus Smart Suite among others. IBM Software labs
in India plays a key role in IBM’s Linux initiative, working with other IBM
labs located in the US and around the world.

Intel

eBiz applications, Media Switch

Network Programs

Net Pacer, Net Relations, Net Beeper in the VoIP market.

Novellus

The suite of deposition products like, Inova, Sabre, Speed, Vector have
features that make them highly productive in the dielectric and metal deposition
technologies. The India center has been involved in developing many of these
features.

Oracle

The India development center has contributed to the development of various
components of the end to end e-business suite Oracle 11 i. There has been
significant contribution to Warehouse Management, HRMS (Payroll and iRecruitment),
Students System, Oracle Healthcare, Sales and Marketing and Advanced Planning.

Lucent

The flagship ATM network management system of Lucent, namely Navis Core and
Xtend products are engineered and released by the IIDC with complete
responsibility and ownership. The engineering of several other product lines
such as the Navis Voice Activation Manager, and the Operations Maintenance
Center for the wireless customers, happens at the IIDC.

SAS

The India center has contributed to the development of SAS®
Telecommunications Intelligence Solution, Banking Intelligence Solution,
Insurance Intelligence Solution

ST Microelectronics

ST, Noida is the central R&D group for latest technology like the 90
nanometers– Embedded memories/ Memory generator, I/O cell libraries, Core cell
libraries, mixed analog Libraries including PLL, ADC/DAC

Sun

SunONE Application Server v6 and v7, Sun ONE Webserver v6.0, Sun ONE Identity
Server, Sun ONE Portal Server SRA, Sun ONE Meta Directory, Solstice Enterprise
Manager (SEM), Sun Management Console (SunMC)

Synopsis

Apart from significant contribution to latest releases in the company’s
flagship simulation program, VCS and testbench software Vera as well as key
modules of the Physical Compiler product are being developed in Bangalore.