The global business meltdown and the continuing uncertainty it's engendered may seem to some to have had an inordinate impact on design centers in India. While engineers are still being laid off at home, including by Texas Instruments Inc. and Silicon Graphics Inc. in recent weeks, all of the multinationals' design centers in India have grown in the past two years. What's more, as if to mock the anemic global business climate, they plan to expand further.
Intel Corp. plans to hire up to a thousand more engineers; Texas Instruments will hire hundreds more. Others, including ST Microelectronics and Motorola, plan to hire by the dozen. These companies already have design centers in India employing hundreds of engineers.
Smaller companies whose current Indian operations resemble research-and-development labs-Synopsys Inc., Analog Devices Inc. and Solectron Corp.'s Force Computers, for example-also plan to hire more staff. In percentage terms, their planned hiring rivals that of the bigger corporations.
So, is the Indian design industry-or rather, the design industry in India-benefiting from the global meltdown, thanks to its lower-cost skill base?
It would seem so, though political sensitivities in the home countries of the global corporations have put a lid on announcing expansions in countries like India. Still, the expansions are being carried out.
A number of factors dovetailed about a year ago to bring this about. First, the design centers of global firms operating in India have acquired the necessary critical mass and skills. Second, Indian engineers continue to cost much less than what engineers cost in the United States. A third factor is that some venture capitalists are now insisting that their investment targets carry out engineering in India.
Growing their engineering base in India while cutting back at headquarters seems to be the rule at many technology companies in the current business climate. Those trends have been helped to some extent by the fact that design centers in India no longer do merely low-value work; many now have proven product expertise. Many of India's design centers are making the transition to full-fledged product development centers. For instance, the Bangalore center of Analog Devices is known today as the "home of the Sharc" family of digital signal processors within the company.
"Expansion of the design centers of global firms is happening in a real way in India at the moment. Many of them are driving critical projects from these centers. The credibility of the centers has gone up hugely within the corporations," said a manager at a design tools company.
Most everyone shares that view, with companies adding staff virtually across the board, even in these times.
The downside of the global business meltdown on the design segment in India has been felt more among the half-dozen or so homegrown software companies that also offer design services. Sales of design tools have fallen in this segment in most cases. The best-case scenarios are those that do not show appreciable increases in purchases of these tool suites.
Those firms that offer end-to-end design services have managed to hang on by virtue of their providing complete solutions. They are helped in that regard because they also offer application software services; this helps balance the business.
Design activity in India is growing as a clutch of small firms now on the horizon has developed the appetite for the risk and higher investments that design entails. This is backed by the fact that most of them have been started by Indian engineers who have returned after stints with overseas companies, largely in the United States. They have the design skills and, crucially, the exposure to sales and marketing. The lack of such exposure thwarts the dreams of some homegrown startups.
The promising ones are typically two to three years old and have already assembled impressive product portfolios and customer rosters. Activity is humming at such firms, which largely disdain the more proven but less skillful application software for which India's software industry has become renowned.
More important, these firms have had little trouble attracting venture capital and have been hiring non-Indians in strategic positions to expand their businesses worldwide.
Analysts in India believe the crunch of the downturn will favor Indian design companies in their ability to attract talent in large numbers. More overseas chip design companies are expected to move more of their work into India to ride out the downturn in their markets. Typically, these overseas companies are better-funded, and their increasing presence in India could pose a threat to the staffing needs of local design firms.