efy report feb11 design houses

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EFY REPORT

5 4 • Feb r ua ry 2011 • e l ec t ron i c s fo r you w w w . e F y m a g . c o m

Desig s ade i I dia are a he hear of a y a successfu produc . I diadesig ce res a d i depe de desig houses are chur i g ou i ova ivedesig s a d i e ec ua proper y for heir pare co pa ies a d/or c ie s—a d fue i g success, wha ever be he odds

D sig i g i I di (P 2)

I depe de Desig Houses:

O e-S op Shops For G oba C ie s

JananI GOPalakrISHnan VIkramwItH InPutS FrOm JeSuS mIltOnrOuSSeau S.

in India, with more than half of the sur-veyed IDHs (60 per cent) designing forclients in these markets. These are fol-lowed by industrial electronics (45 percent), automotive, defence and health-care sectors (35 per cent each). Thirtyper cent designed for power electronicsand 20 per cent for aerospace.

Other ourishing areas of design areindustrial automation, railways, powersupplies, intelligent automation, smartgrid, networking, information technol-ogy (IT) products, radio frequency (RF),thin clients and digital signage.

Ca eri g o g oba a doca c ie s

Majority of IDHs designed for bothdomestic and foreign customers.

Only Mandate Chips had 100 per centexports. Systems Aids, Acceptable

S uccess is being de ned and de -signed in India by captive Indiadesign centres (IDCs) and inde-

pendent design houses (IDHs), eachworking at a different scale and fuellingeach other in the design ecosystem.

In Part 1 of this article publishedlast month, we saw how IDCs of globalcompanies were doing great work fortheir parent companies and clients, andgrowing at a steady pace.

In this concluding part, we look atIDHs—another category of designers.IDHs create designs and intellectualproperty (IP) for multiple clients, lev-

eraging on their core competencies.Sometimes, these make and sell IPcomponents independently. Some-times, they create the designs commis-sioned by a client. At times, they workhand-in-hand with captive IDCs of oneor more component-makers to, in turn,create end-products for their clients. Inthese and many other ways, they try toact as a one-stop shop for their clients’IP and design needs.

We studied a randomly chosensample of 20 Indian IDHs to nd outthe challenges and opportunities aheadof them. Here is what we found.

te eco a d co su ere ec ro ics: larges

arke s

Telecom and consumer electronicsdominate the electronics designing eld

Design Areas

Companies surveyed1. 4Semi Technology India2. Acceptable Electronics3. BPL Techno Vision4. Dexcel Electronics Designs5. Educe Micro Research, Systems Aids6. eInfochips7. Indrion8. Inforce Computing (India)9. Infotech Enterprises10. iWave Systems Technologies11. Mandate Chips and Circuits12. Mar tin’s Electronic Devices &

Instruments (MEDI)13. MindTree14. Saankhya Labs15. System Aids16. Tachyon Technologies17. Verismo Networks18. Whizchip Design Technologies19. Wipro Technologies20. Wysine Technologies



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Electronics, 4Semi Technology India

and Wysine Technologies catered todomestic customers only.

Over half had customers from USA,followed by European markets like Ger-many, Sweden, the UK and France (50per cent). The next signi cant consumerwas Japan with 30 per cent of the IDHshaving clients from that country. Othersigni cant consumers were Australia,Singapore and the Middle East (15 percent each), followed by Korea, Canadaand Africa (10 per cent each). Someof the IDHs also serviced Taiwan, SriLanka, Bangladesh and Nepal.

no affec ed uch by herecessioWhile some IDHs did not disclose theirgrowth gures, others’ growth ratesvaried from 15 per cent to a whopping400 per cent!

Unlike the captive IDCs, whichseemed to be affected notably by the

recession, perhaps because of theirdependence on the parent company

and the verticals served, IDHs werenot affected much by the recession.The recession’s impact was at for amajority of the IDHs (60 per cent) and30 per cent even experienced growth,while a mere 10 per cent witnessed adownward trend.

Cha e ges a y,s ra egies ap e yIDHs face a number of challenges en

route to achieving their growth targets.Nothing comes easy, be it acquiring theright customers or the right employees.However, IDHs are all set to face thesechallenges with strategies for success.

S. Janakiraman, president andgroup CEO-Product Engineering Ser-vices, MindTree, enumerated the manychallenges faced by them: “Gettingthe right talent pool; being selective inbusiness so that margins are protected;and competing with captive centres inproduct engineering to show the differ-ence in value proposition.”

However, they are successfully coun-tering the challenges through innovativestrategies. “We are overcoming the talentcrunch by recruiting a blend of freshtalents, whom we absorb and nurture,and lateral and better hires throughreference of our employees. Also, we aredoing brand building in India in the uni-versities and job market to attract better

talent,” informed Janakiraman.“We are focusing on business op-

portunities that will provide sustainablegrowth than sudden one-time windfall.We have nearly 250 customers and willfocus on repeat business by buildingstrong relationship and proactive valueaddition. We will be selective in addingnew customers with whom we see mu-tually bene cial and long-term relation -ships. Finally, for product engineering,we compete and collaborate with MNCcentres in India. We will focus on theirpain points and provide complemen-tary services that will be of value tothem. We will also intensely invest inresearch and licence technologies thatwill enable faster go-to-market for ourcustomers,” he added.

Vasudevan A., vice president-Sem-iconductor & System Solutions, WiproTechnologies, said, “Building the righttalent and competency in the VLSI areais a signi cant challenge. There needsto be a focus on understanding boththe system/product and sub-microntechnology issues. We invest a lot inbuilding this expertise and also use theinternal expertise to scale it up. Marketdemand is inconsistent. Customers aretrying to align to market demands.

Every customer’s requirement is differ-ent. So we are dynamically adjusting tothe needs of the customers to addresschanging market needs.”

S ra egies, i dep hLet us take a look at the main strategiesfollowed by IDHs to foster growth andcounter competition.

Exploring new opportunities. Oneof the key avenues for growth is toseek the new, whether in terms ofproducts or markets. “We have invest-ed a lot of time and money to developnew products. We are also workingon three more segments currently: de-fence, semiconductors and industrial.The revenues will come jointly from allthese segments,” informed Amit Sinha,managing director and CEO, DexcelElectronics Designs.

Ram Prakash H., founder and CEO,Tachyon Technologies, added, “We are

techies running the company, so theidea is to create more new products.”

Recession Impact

Major Clients



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Some IDHs, such as Acceptable Elec-tronics, preferred offering customisedproducts.

N. Ramakrishnan, president andCEO, Mandate Chips and Circuits,said that by changing the focus region,business growth could be achieved.“Hitherto we had focused on the Asia-Paci c region only. However, we arenow having engagements in USA andEurope also. With more customers andstrong and deep business relationshipswith them, we are con dent that wecan achieve our goals,” he explained.

Innovation. Innovation truly helpsin growth, and many IDHs seemed tobe doing just that. PA Martin Xavier,managing partner, Martin’s ElectronicDevices & Instruments (MEDI), said,“We have developed innovative de-signs for high-power IGBT-based staticvoltage stabilisers as a replacement forthe current servo stabiliser.”

Some, like BPL Techno Vision, arealso trying to improve upon existingproducts in addition to building newones. K. Gopi, chief operating of cer,BPL Techno Vision, remarked, “We areintroducing many new renewable en-

ergy products. Also, we are convertingall our existing rechargeable lightingproducts into solar-enabled ones. Weare also trying to create more LED-based products.”

Sinha said, “Today, with the availa-bility of a plethora of good componentshaving a lot of in-built features alongwith good software support, we arein a position to design products withfuturistic ideas. Of course, we don’tsee too much disruptiveness as the fre-quency of launch of new products withkilling applications has gone downreasonably. Although technologicaladvancements have been happening,most people are making the same setof products in a more advanced styleby integrating new ideas.”

Without innovation and technologyupgrades by manufacturers, compa-nies cannot survive in the competitivemarket. Xavier cited, “With day-to-

day advancement in electronics, andnew companies emerging in different

dimensions, there is less room for com-panies to progress using old designs.New designs with better features andlower cost ood the market, makingproducts with old designs hard to sur-vive. This forces the manufacturers to

upgrade their technology.”Single-window solutions. Most

IDHs try to become a one-stop shopfor their customers’ needs, as this savestime and money for the customers.Sinha informed, “We are a single-win-dow company for complete end-to-endproduct design solutions encompassingcircuit design, register-transfer level(RTL) development, software designand certi cation along with mechanicalcasing. Dexcel’s core capability lies indesigning systems on a programmablechip (FPGA) with in-chip expertise(RTL-level design) and out-of-the-chipdesign (board-level) capabilities.”

Other companies like Verismo Net-works and 4Semi Technology too wereproviding single-window solutions totheir clients.

Inforce Computing (India) went astep further and offered support evenafter production. “We give the end-

product and support from board de-sign, system integration, etc to support

after production. We are one ofthe few companies who providesupport after production of theend-product to end customers,”informed Premy Varghese,director-Hardware Platforms,Inforce Computing (India).

eInfochips too followed sin-gle-window strategy, in additionto having a regional advantage.Naik said, “We are a one-stopshop with complete lifecyclemanagement for ASICs. Also, wehave the advantage of being inwestern India (Gujarat) as thereare not many electronic designcompanies in this region.”

Value-addition. Going astep beyond single-windowsolutions, design houses try toprovide value-added engineer-ing. It includes gathering re-quirements, deriving speci ca -

tions from them, checking for patentsthat may affect the design, providingworkaround solutions, etc.

Janakiraman said, “Technology-wise, customers are looking for morevalue-addition (through design houses

bringing in their own IPs into the de-sign) and ready-to-use solutions thatcan be integrated easily into their prod-ucts. Customers are open to sourcecomplete products or sub-systems thatcan be taken to the market. Cost-effec-tiveness, exibility to scale, proactivevalue-addition and support in go-to-market are the key drivers for custom-ers to source from design houses.”

Fixed-cost and other newer models. Another potential growth strategy isthe xed-cost model. Ravi Shankar R.,CEO, Whizchip Design Technologies,said, “The customer has a xed budget,legal framework and business model.We tailor our solutions to customers’requirements on a xed-cost modeland service-level agreement, for whichthere are not many players in the in-dustry. We bring bene ts to our clientsby working under a xed-cost model.It provides our clients a predictable

environment in terms of both pricingand timelines.”

Key strategies for growth1. Get the right talent pool2. Partner with universities to catch them young

and train them in-house3. Be selective in business4. Focus on the customers’ needs5. Achieve long-term partnerships with clients6. Compete and collaborate with MNC centres in

India to provide complementary services thatwill be of value to them

7. Partner with leading companies to createfuturistic products based on their technologies

8. Invest in research and licence technologies thatwill enable faster go-to-market for customers

9. Develop new products10. Innovate to improve existing product lines too11. Identify and enter new markets12. Offer fixed-cost packages and service-level

agreements

13. Offer single-window solutions. In other words,be a one-stop shop for clients’ design needs

14. Try to achieve success for the customer 15. Go for value-added engineering16. Develop deep domain knowledge



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Customers are also beginning to

prefer risk-reward models. Janakira-man explained, “In risk-reward mod-els, a certain amount of the designcharges is being linked to success ofthe projects and products.”

Even frugal engineering is be-coming important. BhanuprakashCherukuri, senior vice president-strat-egy and head of the hi-tech vertical ofInfotech Enterprises, said, “Frugal en-gineering is becoming important withthe global delivery model, and we seemore future business demand.”

Partnerships. Partnering with lead-ing silicon companies helps designhouses to offer futuristic solutions totheir customers. Sinha informed, “Wehave tie-ups with premium siliconmanufacturing companies like TexasInstruments (TI), Analog Devices,Actel, Atmel, Altera, Microchip andIntel. This gives us leverage in termsof providing the right solutions to

customers. First, we get very goodtechnical support from our premium

partner companies. Second, we get

pre-launch product information, whichis very vital as we can start designingfuture products by the time their sili-con gets launched. Third, it adds to ourcredentials, as these companies give ustestimonies of our work.”

Varghese shared that they tooworked with partners like Intel.

M.A. Mohamed Saliya, managingdirector, iWave Systems Technologies,said, “We work with global leaders likeIntel, Freescale, TI, Microsoft, Xilinxand Google (partners) so that we haveearly access to future technology.”

Customer focus. Design houseswork on the speci c needs of theircustomers. Ramakrishnan said, “Weprovide customer-centric, collaborativesemiconductor engineering solutionsand services that lead to business ben-e ts for our customers. Our approachgoes beyond conventional factors suchas skill-sets and technical know-how

to cover work cultures, ethnic back-grounds, languages and geographies.

We also position ourselves appropriate-ly in the semiconductor value chain tomaintain its sanctity and be effective.”

Vasudevan said, “Customers lookfor predictability, exibility and theability to address their dynamic needs.Our differentiator lies in investmentin technology and increased productunderstanding; partnering with IPvendors and other ecosystem partnersand investment in the development ofreference solutions; and a lot of busi-ness-model innovation, beyond the tra-ditional time-and-material model, withmodels like the risk-reward model.”

Janakiraman added, “We are amid-sized company. Many customerschoose us as we will be able to pay bet-ter attention than very large companies,while at the same time being a safer betcompared to design houses that are toosmall. We invest much higher in R&Dthan similar-size companies. Also, webring in industry-domain knowledgeand understand the nuances of prod-ucts needed in the respective markets.”Start-ups offer a different bouquet ofbene ts too— exibility, for instance.

Gopi explained, “Earlier, companies

designed products and pushed themto the market. But now things havechanged. We need to design productsbased on consumers’ requirements andthen push the products to the market.”Hence understanding and catering tocustomers is very important.

Moreover, customers also want toparticipate in the design process now.Sinha commented, “Customers havebecome more application-savvy andknowledgeable as we see them partici-pate more in every aspect of productdesign. This bene ts the product de -sign as a whole as the quality of theproduct improves and is more close tocustomers’ needs.”

Retention of customers is as im-portant as acquiring new customers.Sinha said, “Our policy is to retainour customers by giving them gooddesign service and support. This helpsus in keeping the customers captive.

We would like to retain every singlecustomer that we have acquired as

Why not create own products?With all the expertise IDHs have, why don’t they create

their own products, under their own brand name?When asked about this, more than half of the IDHs

surveyed (60 per cent) said that they did not want tocreate their own brand as it would amount to competingwith their own clients. Just around 40 per cent thoughtit worth a try.

IDHs neither want to lose their customers, nor make them feel IDHs as a threat. They want to concentrateonly on designing. Janakiraman says, “We don’t haveany immediate plan to create our own brand of productsor solutions. Our current focus is to create a series of white-label products that will serve

the needs of the Indian and global markets.”Vasudevan added, “We are in the business of product design and engineering services

and will continue to focus on providing more and more comprehensive product realisationservices to our customers.”

Cherukuri said, “We want to take specific concepts of design from third-party customers,design for them and give fully-manufactured products to the brand owners. We want to bean original device manufacturing/white-label company.”

Focus on R&D is more important than manufacturing. Said Xavier, “MEDI has no planof entering manufacturing. For over 23 years, we have been dedicated to R&D and we willremain so in future. We don’t sell products (except for a few industrial products we havebeen manufacturing for a long time for special applications); we only sell technical know-how. We are not into manufacturing because then we can’t concentrate on R&D.”

Some IDHs preferred to create their own brands, though. Sinha said, “We are in theprocess of creating our own brands. Some products have already been launched. Oneexample is our IP encryption device, which is used for securing communication between

two networks or stations.”

Planning to CreateOwn Brands



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acquiring and building a new customertakes a lot of time and energy. We alsooffer excellent pre-sales and post-salessupport. In defence, even before we getthe orders, we start the design work asthe paperwork may take a long time.”

Long-term partnerships fostergrowth. Sudhir Naik, vice president-corporate affairs, eInfochips, said,“Post-recession, the thought process ofcustomers has changed. They focus nomore on cost arbitration but long-termpartnership.”

Domain expertise. Customers pre-fer design houses that have strong ex-pertise in speci c verticals. Vasudevansaid, “We have deep domain expertiseto do complex designs both at siliconlevel and product level. We have un-dertaken and delivered successfullymany high-complexity designs in tel-ecom, computing and other industries.With our deep expertise, we are ableto manage high-complexity productdesigns better. Also, customers wantus to take up complete ownership ofproduct design and engineering.”

Cherukuri informed, “Infotech’scutting edge is industry-speci c do -

main expertise, people and processes,technologies, tools and training. Wedraw on this strong foundation tocreate measurable business impact forcustomers around the world, resultingin long-term relationships with several

of the most recognised names in theirrespective industries.”

Marketing. For acquiring new cli-ents, 90 per cent of the surveyed IDHs

participated in events. Seventy- veper cent also believed in one-on-onemeetings, followed by word-of-mouthpublicity (70 per cent). Other majormarketing tools adopted were speak-ing at events (55 per cent), e-mailers

(40 per cent), Web advertising andpersonal contacts (25 per cent each),international silicon conferences (20per cent) and print ads, Google ads,

technical articles and own websites (10per cent each) . Some also looked uponSMS blasts, industry forums, customerevents, and tie-ups with industry con-sortiums and research institutes.

Visweswaran B., CEO, WysineTechnologies, said, “We rely on word-of-mouth and one-on-one meetings, anddo use e-mailers. We are also workingon creating a channel by partneringwith other companies in the energy eco-system—such as UPS or diesel genera-tor manufacturers and HVAC systemintegrators. Our participation in eventsorganised by CII-IGBC and TERI alsohelps in creating awareness about ourproducts. Lately, we have started usingsocial networking sites too.”

mee i g a power eedsThe surveyed IDHs employed designengineers with experience rangingbetween one and 15 years, with a ma-

jority of them preferring those withfour to ve years of experience.

Technology trends Low power and geometry. With the need for smaller chips, there is a push towardsdesigning in lower geometries. Hence understanding the challenges in designing small chipswith high density is crucial. Also, there is a trend towards use of multi-core and ultra-lowpower consumption.

Green technology. Green and clean technology is becoming important, and it ismanifested differently in different industries. From designing new engines with low noise andfuel consumption to designing lead-free products, there is a lot of scope.

Integration. Raveendran Nair, CEO, Educe Micro Research, revealed, “Multiple functions(power, analogue, intelligence and communication)—compared to any one previously—arebeing integrated.”

Software-based customisation. Shankar pointed out another trend: “We are seeing agreater consolidation of hardware platforms and customisation through software. Also, thereare more features in the same chip which can be enabled or disabled through software. Thesame chip can be used in different cellphones, whether the handset is priced at Rs 1500 or Rs 20,000, as software customisation helps to make the chip work differently with differentfunctions.”

Vasudevan added, “Feature variation, especially using software variants, is increasing.In the semiconductor industry, the trend is towards system LSI and complete system-on-chip. From full-system functionality, understanding the end-market and product needs isalso important.”

Device convergence. Ramakrishnan said, “Device convergence is a major trend that is influencing semiconductor chip design. Power management and high-speedcommunications are important for it. We are seeing an increased demand for high-efficiency,low-power chips for consumer electronics and mobile applications, niche automotiveapplications (for hybrid and electric vehicles), alternative energy applications, etc.”

Marketing Tools



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Eighty- ve per cent of the IDHsalso recruited freshers, paying thembetween Rs 100,000 and Rs 600,000 perannum.

The industry needs hardwareengineers from electrical or electron-ics stream. Knowledge of embeddedsystems is also preferable. Those whohave done projects in hardware designare naturally one up.

Sinha said, “We do look for theirprojects, and fundamentals have tobe strong.” Additionally, they shouldhave a good knowledge of semicon-ductors, digital signal processing,server languages like Java and Python,and Web development. They shouldhave good analytical skills and logicalthinking, and be fast learners.

S. Uma Mahesh, co-founder and

CEO, Indrion, added, “Original think-ers and energetic and good teamworkers are preferred.” Attitude anddiscipline are also essential.

Some companies have tied upwith institutes and universities forrecruitment. Shankar said, “We have

Key findings1. Telecom and consumer electronics are the major markets.2. Majority of customers are from USA or European countries like Germany, Sweden, the

UK and France.3. IDHs face a number of challenges, like acquiring the right talent pool and right

customers, to achieve their growth targets.

4. Their strategies for growth include developing new products and exploring newverticals, innovation, fixed-cost model, changing the focus region and long-termpartnership with customers.

5. The recession impact was flat for a majority of the IDHs. Thirty per cent recordedgrowth during the recession.

6. Eighty-five per cent recruit freshers, with salary ranging between Rs 100,000 and Rs600,000 per annum. They train the freshers for a period ranging between one week and six months.

7. The top three marketing tools are participation in events, one-on-one meetings andword-of-mouth.

8. Strategies to counter competition include offering a single-window or one-stop shop for all the customers’ needs, partnering with top silicon companies, working on specificcustomer needs, being flexible, investing highly in R&D, innovation and building domain

expertise.9. Technology trends include low power consumption, low geometry, integration ofmultiple functions (power, analogue, intelligence and communication) and green

technologies. Other trends include the need to innovate and improve quality, and find the right partners to enable effective and efficient product development; customers’preference for one-stop solutions for designs as well as production; customers lookingfor more value-addition; shift from time-and-material business model to fixed-price

turnkey projects; and more interest in risk-reward models.10. Lucrative verticals for the next five years are telecom, renewable energy and consumer

electronics, followed by automotive, healthcare and aerospace.

tied up with the Manipal Institute ofTechnology and created a two-year MS

programme. Twenty per cent studentsof that course are hired by us.”

Most companies also give the freshrecruits a training that might rangefrom one week to six months. Whilesome do this is as a separate exercise,others do it on-the-job. The training

might usually be split into a genericone followed by a detailed vertical-

oriented specialisation.Oppor u i ies abou dThe future seems quite bright forIDHs. Majority of the IDHs (75 percent) saw telecom as the most prospec-tive market, followed by renewableenergy and consumer electronics (40per cent each). Other prospective mar-kets include automotive (35 per cent),healthcare and aerospace (30 per centeach), power (20 per cent), securityand industrial electronics (15 per cent)and defence (10 per cent). Some othersigni cant areas are industrial automa -tion, light-emitting diodes, arti cialintelligence, IT, home automation andInternet protocol television.

In short, there is a lot to lookforward to, and the IDHs have theirstrategies charted right to mount everychallenge and tap every opportunity.

Janani is a technically-qualified freelance writer,editor and hands-on mom based in Bengaluru

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