Friday, June 10, 2005

Outsourced product development expanded in India

From: financialexpress

The Indian outsourcing industry has matured substantially and is seeing some interesting trends. With the rupee appreciating and costs rising, India loses the edge of a cost advantage that can affect our profits and the clients’ decision to outsource.
To combat this, India is moving away from offering just a cost advantage to redefining business plans that bring in value-adds and enhanced delivery capabilities. There is a continuous effort to move up the value chain towards high end product development, innovation and design.
Outsourced Product Development (OPD) is the rapidly emerging niche with many product companies looking towards India to outsource their product engineering work. Software product outsourcing seems to be gaining significant traction not just in established companies but also in startups with many venture capitalists (VCs) specifically asking for an ‘India plan’.
In fact, the last two years has seen a sizable movement from VCs towards an interesting business model. VCs are increasingly funding entrepreneurs with hard-core business domain knowledge who partner with an Indian technology major specializing in end to end product engineering.
Product start-ups are now coming to India with just a vision document based on market needs. There has been an increase in business from the European countries, where product talent is still not widely found. The European markets have opened up towards outsourcing product work to India.
According to Frost & Sullivan, R&D outsourcing market for information technology in India is estimated to grow to $9.1 billion by 2010 from $1.3 billion in 2003, at a compounded annual growth rate of 32.05%.
India’s talent pool is its other competitive edge. Over the past decade this has received sufficient international exposure. A combination of high-end product services and abundant IT talent makes us the ‘leader’ to deliver world-class expectation. Along with being scale players, Indian companies also need to show focus and depth of knowledge in the vertical they identify for themselves and go to market with success stories.
So OPD is an evident trend that is likely to gain momentum in 2005 - While Product companies are already looking at entering India with an OPD partner, small and medium level captives might go the third-party way, as they might find it easier to ‘rent’ already existing high talent teams instead of creating one themselves.

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