Betting high on embedded software

he future world will be driven by three key technologies: mobile communications, broadband, and 'always-on' appliances. This, in turn, would fuel the growth of embedded systems a combination of computer hardware and software, either fixed in capability or programmable, that is specifically designed for a particular kind of application device. According to a report in The Economic Times, "The global embedded and telecom market is worth one trillion dollars and will continue to grow at an exponential pace. Industry analysts estimate that over 54 per cent of future software development will be in the embedded technology space. Nasscom states that the worldwide market for embedded software is pegged at US $21 billion (2001) and is expected to grow at a healthy 16 per cent CAGR in the next three years with software becoming an important source of functionality enhancement and differentiation in many traditionally non-computing devices such as PDAs, cell phones and consumer electronics.

Datacom 34% Consumer Electronics 20% Industrial Automation 19% Automotives 10% Office Automation 8% * Percentage share of various verticals in Embedded Software market

The key sectors that are driving the growth of the overall embedded space (both software development and hardware design) are automotive and industrial electronics, digital consumer electronics, enterprise and carrier class communications, wireless, broadband, aerospace and even defence. Of these application sectors, telecom at 34 per cent enjoys the largest chunk of market share, followed by consumer electronics at 20 per cent and automation and instrumentation at 19 per cent. Automotive electronics and telematics are the hottest areas in the embedded space. In the automotive sector, for example, major new product advances such as Automatic Braking Systems, Telematics, Engine control are all powered by embedded software systems The amount of electronics deployed in a car has risen steadily over the years. Now, about 15 per cent of a car's value lies in the electronics, and this figure is expected to grow up to 20 per cent soon. The offerings include complete design and development services from concept to product design through development, and testing on a wide variety of processors encompassing all the major architectures, ranging from 4-bit micro-controllers to 64-bit microprocessors, as well as many popular Dips.

Rapidly evolving hardware is also fuelling the need for embedded devices. Every time a manufacturer chooses to upgrade to a more superior/newer hardware, all applications and tools need to be ported onto the new hardware. This calls for significant software input. In addition, as hardware becomes more powerful and inexpensive, with 64 bit processing power available now at US$120 - 200, the development as well as value needs of the future will lie in the software.

India is set to capture a significant pie of this emerging opportunity. MNC majors such as Texas Instruments, ST Microelectronics, Motorola, Intel, and Cadence are aggressively expanding operations in India. Honeywell Industrial Controls has a 400-person captive ODC in India, focusing on avionics and industrial controls. Delphi, the leading global automotive supplier develops embedded software for automotive controllers in India. It plans to invest $35 million in India over 3 years. Samsung has set up a development centre in India with 200 engineers to work on software applications around network management, computer telephony and network printing solutions.

Leading Indian IT companies such as TCS, Wipro and HCL Technologies are also focusing on this sector. Many OEMs in industries such as automotive face a huge challenge in attracting and retaining high quality software talent. This, coupled with the increasing need for services in this market is likely to result in a large number of OEMs and suppliers looking for third party service providers or talent hubs to augment their software development capabilities, according to Nasscom. Says Kiran Karnik, President, Nasscom, "Over 60 per cent of the top global Independent Software Vendors are already leveraging India for maintenance services and new product development. Many companies have already started providing complete solutions in this area by leveraging the existing design and programming capabilities within the industry while outsourcing the actual development of chips to external silicon wafer manufacturers. A testament to this fact is that of the total revenue contribution of US $1.2 billion in 2001 - 02, from the R&D and technology sector, embedded software development constituted a significant percentage."

Nasscom has identified four primary markets that can be carried out by third party providers or offshore hubs in India. These include:

• Product development partnerships: Companies can work with customer's in-house team to share product development workload, reducing costs and time-to-market
• Validation Services: Companies can use extensive tools to objectively validate code written by in-house engineers or other vendors
• Maintenance Services: Companies could maintain customer code, making and documenting any changes required during the life cycle
• Professional services: Companies could help their customer's customers (i.e., end users) modify and use their products

Expansion plans of various MNCs and recent efforts by Nasscom to play up India's product development skills point to the fact embedded software would be India's next sunrise sector. Companies are frantically looking for professionals with a good knowledge of the industry domain and product roadmap, along with knowledge of technologies.

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