Offshore product development grows tenfold in five years

Bangalore, July 26 (UNI) From a mere 300 million Dollar business in 2001, the offshore product development market in India has registered a phenomenal ten fold growth in India to touch three billion US dollar mark last year, with the spending on product development services outpacing traditional IT services.

According to the latest market overview unveiled here today, Forrester Research said that while the spending on traditional IT services was merely 28 per cent, the growth in spending on product development services last year was 36 per cent.

Forrester Country head and Senior Analyst Sudin Apte told newspersons here that in addition to the continuous expansion by pioneers such as Cisco, Intel, Motorola and Texas Instruments, several factors would drive continued growth in the offshore product development space, which had three different segments - Research and Development, embedded classic engineering and software.

These factors have applicability across a range of products and verticals, a higher percentage of products' value now come from software/intelligence, competitive product development pressures, large engineering talent pools and access to emerging markets.

Mr Apte said ''more than 200 product companies have jumped on the offshore bandwagon and established their presence in India over the last three years, through their own captive operations or outsourcers.'' Though a number of companies had opened captive units across various technologies, such a R and D centre was not seen as an universal answer due to lack of scale, unproven global project culture, rising attrition because of dead-end career path and limited savings. Firms would go in for an hybrid captive and third party strategy with Venture Capital firms pushing for a suitable choice. While large firms would build hybrid ecosystem, tier-II and small product companies would opt for outsourcing, he added.

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