Indian IT firms see big bucks in OPD

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Chennai, April 12 Indian software Companies can capture up to 60% of the global offshore product development (OPD) market if they move in early, say industry experts.

OPD, a term coined recently to describe the outsourcing of product development is a market which has not yet seen its full potential. India has an enviable position among global offshore players and if Indian software Companies make the right moves, they can capture a bulk of the OPD market.

Gowri Subramaniam, founder and chief executive officer, Aspire Systems, an OPD company believes that outsourcing of product development is a concept that is slowly gaining popularity. “The global software product revenue is around $180 billion at present and approximately 20% of this revenue which amounts to $36 billion is invested in research and development (R&D).

Assuming that even 25% of the R&D gets outsourced, it will create an OPD market opportunity of around $10 billion,” said Mr Subramaniam.

This is just the tip of the iceberg. Mr Subramaniam added that it is a matter of time before product Companies start outsourcing a substantial portion of their R&D. India can cash in on this opportunity by taking the early lead.

As of now, product development work is being outsourced primarily to India but industry experts believe that it won’t take long for other countries to catch up. “Indian firms can grow the OPD market by coaxing product Companies to outsource product development. Product Companies still feel that product development is their core activity, which is not the case. We have to grow the OPD market by convincing product Companies that product development is best done by an expert. The core activity of product Companies is to identify the mission of the product and take it to the market in finite amount of time. R&D is not their core activity,” he said.

Research has shown that outsourcing product development reduces the product roadmap by 50-60% and the cost of product development by around 30%. In case of start up product firms, outsourcing product development could dramatically transfer business.

“For a start up firm, it is important to keep the time to market at a minimal. This is possible only if the Companies outsource the development work,” Mr Subramaniam added.

Outsourcing, according to Mr Subramaniam, can be done at any stage of the product cycle; be it the growth stage, maturity stage or the declining stage. Opportunity for outsourcing is, however, more in the growth and maturity