'India is a good place to acquire talent'

Synopsys, a global provider of electronic design automation (EDA) software for semiconductor manufacturing, is gung-ho about the engineering talent available in India. The $1.3-billion group has acquired 48 companies globally — including half-a-dozen that have a significant presence in India — over the last 20 years. The company says it has the wherewithal to acquire more companies as it has zero debt and cash reserves of nearly $1 billion on its books. In an interview with K Rajani Kanth, Synopsys Global President and Chief Operating Officer CHI-FOON CHAN says the company sees India as an emerging market for intellectual property (IP) and systems business. Edited excerpts:

Synopsys has always adopted the inorganic growth route. Are you lining up more buyouts?
We are a conglomerate of 97 companies (including the subsidiaries that came along with the acquisitions). I think we have lined up some acquisitions as we are very excited about this market. India is a good place to acquire talent. Though we don’t specifically say it, we are consciously looking at acquisitions. However, I cannot name the companies. Actually, it is good news for India. If we want to recruit another 100 people in India, we know how to do it organically. However, whenever we merge, it is for technologies. India has a very strong engineering base and we are quite optimistic that something (an acquisition) will happen here.

Synopsys has acquired US-based companies that have a significant presence in India. How do you plan to leverage these acquisitions? 
With the Noida (Coware) deal being much closer, we want to cater to Indian consumers. We are currently going through the legal process and, I think, we will be closing the Coware deal in the next two months. We have a strong eco-competence for acquisitions. They (the targets) should have the right culture and know how to merge.

What are your focus areas in India? 
We have been very strong in implementation and verification domains with a market share of close to 60 per cent in the verification sector. Now we want to focus on systems and IP in India, which we were not strong at. At present, IP contributes $150 million to our global revenues, while systems, according to estimates, will be a $400-billion market by 2020. Though we aren't involved directly, I think we will be able to enable a faster growth rate in the systems industry in India. IP and systems are clearly growth areas for us and now, with the critical mass (Coware), we can better support the customers here. 

Where does India stand in terms of the semiconductor industry? 
Worldwide, the EDA market is $4 billion and is growing at three-four per cent. Firstly, India clearly has very high-end and sophisticated design engineers with multi-national companies (MNCs) and among our clients. And, the Indian Semiconductor Association says more small systems companies, each of which have a revenue of less than $10 million, are growing here. We see an emerging market here and will continue to support this market.

Experts say India and China will be the next biggest markets for the semiconductor industry...
We have 400-odd engineers in China. However, the industry there is very different from India. India has more MNCs, and domestic companies too are growing fast, while China has more domestic companies. In many aspects, design engineers are much stronger and this is always reflected in our survey of complexity of chip design.

How much have you invested in your Indian operations so far? Any plans for further expansion?
Over the last 15 years, we have invested close to $100 million in our Indian operations. Of our 6,000 workforce, close to 500 work in Bangalore, 300-odd in Hyderabad and 30 at Noida. We are investing in a new facility in Hyderabad (at Hitech City). The 60,000-sq-ft campus will have a 450-seat capacity initially with more options to grow, and we expect to move into it in the next three-four months. 

What is the contribution of Indian operations to Synopsys’ global revenues? 
Though we don’t give a break up, at present, North America accounts for 50 per cent, with the rest contributed by Japan, Europe and the Asia-Pacific. Clearly, we see Asia-Pacific growing in the next couple of years.