Waiting for ex-pats

OUTLOOK 2005

In 2005 India's technology sector is still overwhelmingly dominated by its software companies, which generate billions of dollars in revenue and claim a community of about 650,000 software engineers. Truly high-tech services account for a minor part of the sector, either in revenues earned or as a proportion of the number of engineers — not programmers — in the country's talent pool.

So even while some continue to gloat over India's prospects for fulfilling the worldwide demand for software, more than a few technologists here are unhappy about the failure of the country's electronics and engineering community to come up with a successful new product. Admittedly, some have been introduced, but the products have not been the kind to either garner huge revenues or be mentioned as breakthroughs in electronic design.

The number of Indian IC designers is estimated at 6,000 to 10,000 — a fraction of the country's total software community. So while most of those who work in export services charge anywhere from $15 to $30 per man-hour, the ones who offer design services and can easily earn $40 per hour and above are few.

One sign of change involves this year's fresh crop of talented Indian engineers. With the painful lessons of the tech meltdown still fresh in their minds, they might hesitate to move to the United States once their studies are over. More may remain in India, lured by the country's improved infrastructure and the concomitant chance for a better personal life. They might also be attracted by the promise of a career with the Intels and the Infineons in India and a clutch of emerging local high-tech companies; the availability of venture capital; and mentoring from the experienced expatriate engineers who have returned.

Scores of expatriate engineers are still on their way back home, according to heads of companies here, and while they are welcome, there are not nearly enough of them. The VLSI Society of India has a low-key presence in the industry, and is not known for much more than the annual meeting it holds each January.

The IEEE India chapter is more known for its citywide gatherings, while the Manufacturers' Association for Information Technology and the Electronic Industries Association of India really do not have anywhere near the clout of the National Association of Software and Service Companies (Nasscom). But Nasscom represents both IT services and business process outsourcing companies, and cannot really do much about high-tech services or the design and development of electronics.

There is also hope in the recently formed India Semiconductor Association (ISA), which may serve to guide India into the world of engineering in the same way that Nasscom did for IT services here. The ISA is already engaged in finding ways to foster high-tech skills in design — efforts that are needed if the country is to have more design engineers rather than programmers.

While India's returning expatriates and home-grown associations offer some hope for the country's advance into a high-tech design future, software programming remains a heavy favorite for the present. Programming companies are the main attraction for the 250,000 engineers now graduating from the country's colleges. Simply put, it takes much less time, effort and money to train those graduates to do programming, while it takes companies like Synopsys Inc. six months to a year to train a newly recruited engineer in India. If training institutes existed on a large scale in this country, high-tech companies could spend more time generating business rather than long months training engineers, then worrying about having them picked off by competing companies.

Another look from a business perspective shows that it makes more sense to start or expand a company that offers programming skills to the world — which also explains why India has had a negligible presence in design engineering to date. Also, the Indian stock market is unlikely to fall in love with Indian high-tech design companies anytime soon — another discouraging factor for anyone with lots of ideas and resolve but little money.

In addition, engineering students in the country are not normally exposed to people with high-tech industry experience or to high-quality labs with the latest tools and equipment. It is true that some overseas technology companies have set up labs in India for students. But those labs are only at a few, better-known institutes, so there is no trickle-down effect that would aid the thousands of other engineering students. And the interaction between industry and academia is limited.

For reasons that vary from lower salaries to "it's just not done," few senior engineers are willing to return for teaching stints at institutes.

Indian high-tech companies as well as the centers that global organizations have set up also need people with all the high-level skills they can possibly get. But they will have to learn to live with the status quo, at least for the next few years.

Studies have mapped out how to produce 4,000 chip designers in the country each year, and there is pressure in this direction — but when it will happen is anyone's guess. The hope is that if the ISA or the VLSI Society of India and India's ministry of human resources development work together, this will happen soon. If they work in isolation, however, it will happen much later.

In any case, the continuing demand for programming skills ensures that India's road to a high-technology future won't be an easy one.

PERSON TO WATCH
The background of Srini Rajam, the co-founder and chairman of Ittiam Systems, looks much like that of many others on India's high-tech frontier. But beneath an easygoing demeanor lies a steely determination to make his startup one of the world's top three DSP systems companies.

That goal, so boldly stated, sets Rajam apart from his Indian colleagues, none of whom has publicly declared any intention of trying to place a company among the technology world's elite. Indeed, no one is known to even quietly harbor such ambitions.

But Rajam, in four years, appears already to have moved beyond words. A study by Forward Concepts late last year named Ittiam Systems the world's preferred DSP intellectual-property supplier, in both hardware and software.

Few companies in India take the technology route, most preferring to take the dollar-per-man-hour rate and having it multiplied by the number of engineers employed. In other words, the more people, the more revenue. Ittiam marches to a different drummer, and the fact that almost all of its founders once worked at Texas Instruments gives it both direction and the guts to hang on for the long haul.

COMPANY TO WATCH
India is well-known for its software prowess but hardly for anything novel, in either software or hardware. As is often said, India is good at following standards but not at setting them.

One company that could help change that perception is DSP startup Ittiam Systems Pvt. Ltd. A recipient of Forward Concepts' Most Preferred DSP Intellectual Property Supplier award for both hardware and software IP, Ittiam has set its sights on being one of the top three or four DSP systems companies in the world.

Started by half a dozen engineers previously with Texas Instruments (India), Ittiam has developed such products as a complete solution for a portable media player and recorder, with a form factor reference design that is said to let ODMs and OEMs enter the market in as little as three months.

AT A GLANCE
Population (2003): 1.1 billion
GDP: $603 billion
GDP growth (2003-2004): 8.3 percent
Major exports: Manufactured goods (74 percent), agricultural products (12 percent)
Forecast share of world semiconductor market: not applicable
Leading technology: not applicable
Top companies: Wipro, Infosys, TCS
Favorite pastime: watching cricket on TV
Best local dish: rice and lentils
Sources: World Bank, variety of Indian government reports