Wipro upbeat on engineering services

The next round of opportunities for Indian IT services firms will come not from any one "vertical" but from an across-the-market move by large customers to "innovate."

As more US firms embrace the idea that everything other than core design and branding can be given to someone else, Indian IT firms can look forward to a windfall in product engineering and R&D services.

To grasp this opportunity, they will have to aggressively position themselves to get this business. ranging from designing parts of aircraft engines to mp3 players.

Earlier this year, then with a staff strength of some 8,000, Wipro's product engineering team was featured as part of a cover story on "Outsourcing R&D" in America's BusinessWeek magazine. Wipro rubbed shoulders in that article with contenders in Taiwan.

With over a third of its last year's revenues coming from product engineering services, Wipro Technologies is seeking greater visibility for its capabilities in the field. It is getting technology analysts, from firms such as Forrester, to check out its capabilities.

Forrester has looked at both sides of the equation: It is urging US firms to re-invent the way they use Indian IT firms to benefit from a lot more than the labour cost arbitrage.

US firms, Forrester says, must build global "innovation networks" that among other things exploit the capabilities of the leading Indian IT firms. It is also seeking to highlight the ability of Indian firms, such as Wipro, to "plug into the innovation networks."

Wipro is now calling this business "Extended Engineering Services" that literally does what the name suggests for customers worldwide. The IT services firm's now 10,000 engineering services staff can build reference designs and limited series prototypes.

"Given specifications and target materials budgets that need to worked within, we can help customers find the right parts for a device at the right price."

"We can also put the parts together to make a working prototype of what will become a commercial product in less than a year down the line," a senior executive at Wipro Technologies said. The customer can concentrate on core design and branding, something that corporate America is increasingly going.

"Wipro's product engineering services (PES) now have 120 active clients and account for 36 per cent of its total revenues of $1.35 billion," Forrester said, after an interview with Ramesh Emani, president of Wipro's PES group.

In a paper on Wipro's capabilities, Forrester has indentified the IT services firm's strengths: "Well-honed industry domain knowledge, deep technology know-how, expertise in process methodologies, regional market insights, and investments in intellectual property (IP)."

PES teams are staffed with industry experts in electronics, especially in mechatronics, the combination of mechanics with electronics and software.

As software gets built into ("embedded") more products from cars to aircraft to medical devices, they are capable of using their knowledge to come up with specific product services for clients in the auto, computing, consumer electronics, medical devices, telecom, and semiconductor fields.

To do this, the team has experts in electronics and embedded software technologies such as wireless LAN, very large-scale integration (VLSI), home gateway, and multimedia.

Some 3,350 consultants, in quality assurance areas such as Six Sigma, and hundreds more trained in the capability maturity model (a way to find out the complexity of a task that a company can break down into standard steps), can help streamline even a clients' own product development processes.

Regional market insights "allow us to tell a client, if you want to build this device in say $70, you can get this motor from this vendor in Malaysia, this belt from this vendor in South Korea and so on," the Wipro Technologies executive said.

So, the PES team can help clients in Asia, the US and Europe with their global sourcing strategies "" identifying low-cost component suppliers "" as also their emerging market strategies -- developing go-to-market strategies for their new products in India, China, Russia, and Brazil, Forrester said.

Wipro has invested in building its own proprietary technologies in areas such as wireless local area networks, hands-free telephony solutions, video over wireless, Linux-based mobile phones, and digital TV. These reusable "building blocks," which emerged from Wipro's Innovation programme, help reduce time-to-market for clients.

In the past year, Wipro has filed 22 invention disclosures on behalf of its customers, as well as for its own inventions, Forrester said.

Leveraging strengths

• As US firms embrace the idea that everything other than core design and branding, can be given to someone else, Indian IT firms can look forward to a windfall in product engineering and R&D services.
• From designing parts of aircraft engines to mp3 players, the IT firms will have to aggressively position themselves to get this business.
• With over a third of its last year's revenues coming from product engineering services, Wipro Technologies, is seeking greater visibility for its capabilities in the field.
• "Given specifications and target materials budgets that need to worked within, we can help customers find the right parts for a device at the right price."
• "We can also put the parts together to make a working prototype of what will become a commercial product in less than a year down the line."
• "Wipro's product engineering services (PES) now has 120 active clients and accounts for 36 per cent of its total revenues of $1.35 billion."
• Strengths: "Well-honed industry domain knowledge, deep technology know-how, expertise in process methodologies, regional market insights, and investments in intellectual property (IP)."