The word ''embedded'' was recently been in vogue with
most journalists on the war front in Iraq accompanying
British or American military units giving the latest
updates of the battle. However, the word in the Indian
IT jargon holds one of the hottest options for software
entrepreneurs who believe in doing good business in
Indian Commerce Minister Arun Jaitley announced concessions
for the information technology and software segment
in the Export Import Policy announced on 31 March 2003,
he seemed to have read the writing on the wall
give a push to embedded software products on a war-footing.
said: "To promote the growth of software exports
in the area of embedded programmes, procedure for the
import and re-export of the hardware including automobiles
in which such programmes are embedded for testing and
development will be greatly simplified in consultation
with the ministry of finance. Henceforth, such hardware
for embedding up to the value of $10,000 will be allowed
to be imported duty-free and permitted to be disposed
of after testing subject to certification by Software
Technology Parks India (STPI)."
late, a lot of interest has been generated in the embedded
software market, and industry experts are pointing out
to the fact that despite being a world leader in IT
services, India lags behind in software products, having
captured only a meagre 0.2 per cent of this $180-billion
world market. Within this there is a worldwide market
of $21 billion in embedded software, and holds a world
of opportunities to do business.
is embedded software?
embedded software system is a combination of hardware,
microcode, drivers, an operating system and an application
that delivers functionality within traditional non-computing
devices such as personal digital assistants, mobile
phones, industrial automation, automobiles, office automation
and consumer electronics. The embedded system and software
markets are expected to grow at a healthy 16 per cent
compounded annual growth rate (CAGR) in the next three
number of multinational firms are setting up huge development
centres in the country like Intel, Texas Instruments,
ST Microelectronics, Motorola and Cadence. Coupled with
this Indian IT majors such as Wipro, TCS and HCL Technologies
are focusing on this sector. According to Nasscom, over
60 per cent of the top global independent software vendors
are already leveraging India for maintenance services
and new product development.
enabling factors in India arise out of leveraging the
existing design and programming capabilities while outsourcing
the actual development of chips to external silicon
wafer manufacturers. A significant percentage was contributed
by embedded software development out of the total contribution
of $1.2 billion in 2001-02 from the research and development
and technology sector.
feels that the embedded system space can be exciting
for Indian companies. There are four factors that have
been taken into consideration. Out of these three will
contribute to the growth of services in the industry.
1. Rising software content. Software content
in many traditional non-computing firms is rising.
2. Rapidly evolving hardware. Each time there
is an upgrading of hardware, it calls for a significant
3. Lack of protocols. Most industries lack one
standard protocol/platform (like MS DOS in the PC industry).
As a result, original equipment manufacturers (OEMs)
need to ensure all devices are compliant with all major
4. Lack of software skills in OEMs. OEMs face
a huge challenge in attracting and retaining high-quality
software talent. This coupled with increasing need for
services is likely to result in a large number of OEMs
and suppliers looking for third party services providers
to augment their software development capabilities.
the IT industry is delighted with the commerce minister''s
policies outlined in the Exim Policy. Says Nasscom president
Kiran Karnik: "The new policy has taken a major
positive step by introducing a scheme for the promotion
of exports of services and also does away with procedural
deterrents which were hampering Indian software companies
conducting work in cutting-edge areas such as embedded
software. The removal of procedures for the import and
re-export of hardware with regard to embedded software
for testing and development is a positive step that
will promote software exports in this area."
embedded software, which seems to be the most buoyant
of the emerging software segments, software products
do hold a lot of promise but yet remain a weak area
in the Indian IT set-up. This is primarily because the
core skills in a product play are fundamentally different
from the IT and IT-enabled services (ITES) sectors,
and Indian companies have not paid focused attention
to the unique aspects of the product market.
core strengths lie in lower costs of development, a
large pool of entry and mid-level talent and quality
management processes. However, success in the products
business requires sizeable investment in sales, marketing,
and branding, a sizeable pool of high-end architectural,
design and testing skills and flexible and dynamic development
environments. Also, the dual shore models have really
not developed in the same level of strength as the IT
services global delivery model.
the face of it, it may seem okay for India to forget
the product opportunity. But, strategically, for the
future it may seem to be a good idea to explore the
opportunities in offshore product development, development
and delivery of specialised components, products acquisition
and enhancement and shrink-wrapped product development
all emerging areas in products besides embedded
software. The fortunes made out of IT services and ITES
must be re-invested in these vital areas for better
companies need to leverage skills in these spheres when
the global competition gets too hot in the IT and ITES
segments, owing to further development of Chinese, Filipino
and South Asian talents in the IT services and ITES.
Talat Hasan, chairman and CEO of the Silicon Valley-based
Sensys Instruments: "Good times may run out in
the near future for India IT services and ITES segments.
Indian IT today is very vulnerable, as it is not developing
unique software products on its own. There is not much
intellectual property development in India.
Indian IT companies are doing is routine service and
customised software development for US companies. Once
the US companies pull out these contracts, there will
be no IT left in India. There is a huge threat from
China and other Southeast Asian countries. Once these
countries start offering the same services at lesser
costs, what will happen to India? India should start
developing new products and not merely provide cheap
trend is, therefore, clear. Software product development
is no longer an option for Indian IT entrepreneurs.
It is fast becoming a necessity.
2002 Asia Times Online Ltd. This article first appeared
and is republished with permission.)