BENGALURU, India Embedded software development, which netted exports worth $4.9 billion last year and employs 106,000 engineers in India, remains fragmented and stuck at the lower end of the value chain. But larger Indian companies are now moving toward higher-end development and are increasing their expertise in specific domains, a study has found.
Embedded software developers here also are moving toward product ownership and away from modular tasks, according to the study commissioned by the India Semiconductor Association (ISA).
"Embedded software development companies in [India] will have to create a strategic advantage for themselves in order to succeed in the industry," the report concluded.
The success stories of large Indian software services companies like Wipro Technologies, Tata Consultancy Services, HCL Technologies and Mindtree also underscore embedded software trends here. These companies are at a stage where they can both conceive and develop products for the Indian market.
The study found that captive embedded software companies follow the IDM or fabless model to develop software used in chips and reference boards. OEMs also develop software for their own products. Non-captive companies, which include most Indian companies, are third-party embedded software developers, hardware and board designers or third-party VLSI design companies that also provide embedded software.
"With the consumer electronics and telecom companies recognizing the importance of localization of their products, and India emerging as a big market for these products, the India embedded software industry is in a unique position where it can add value not only in the development process, but also in the conceptualization of new and unique products," the ISA report said.
According to the study, the growing Indian consumer market will spur more India-specific products, leading to an increased focus here on design service companies. Growing spending that was forecast in certain sectors, including telecommunication defense, automotives and consumer electronics, will also contribute to growth in the next few years.
Reforms in India's power distribution sector also will help the embedded systems business through infrastructure upgrades and the introduction of sophisticated electronic equipment.
Still, the study found that India's embedded software industry faces a shortage of skilled workers. While embedded software companies are leveraging the growing availability of fresh engineering graduates here, they must also spend considerable time and money on training and boosting productivity.