global services - June 27, 2007 - Imrana Khan
Software development is becoming increasingly critical to even those companies that are not in the business of building and selling software
For Independent Software Vendors (ISVs) getting their products developed offshore is nothing new. Modules of Windows Vista, and Adobe PageMaker and FrameMaker regularly get coded in workshops in Bangalore.
But, now companies that are not ISVs, yet who ride heavily on the back of technology, are looking at getting their "products" coded overseas. More importantly, they are taking their software development very seriously, and are increasingly turning to product-development companies to manage their software development just as ISVs do.
There are companies such as search engines and Web 2.0 sites, whose primary business is not software, though their business depends extensively on it. These "software-enabled" companies could be in industries as diverse as publishing and travel. The London Stock Exchange, for instance, worked with Accenture to launch its trading "product" TradeElect — a product integral to its trading business. This was released in June this year.
"Non-ISVs or software-enabled firms are turning to product-development companies to help them manage software development more like a pure technology company would," says David Carpini, VP, Commercial Software Solutions, Symphony Services, a U.S.-based product-development company. "Moreover, they need an offshore model that benefits them by ramping up productivity and ability to innovate."
No less demanding than ISVs
Another such non-ISV is Mitchell International, a solutions provider for the insurance industry. It is working with India-based Infogain to develop a system to evaluate the value of loss of a vehicle after an accident. As with ISVs, the driver for non-ISVs to opt for third-party product development is the need to get to market fast. In the case of Web 2.0-enabled websites, for instance, going live before their competitors is critical.
"Software-enabled" companies are beginning to find it difficult to balance market and competition, and since any product has a limited time window to capitalize on the market and make profits, time is a critical factor. Moreover, working with third parties often helps in reducing this timeframe.
"There is a peak time when we need to tap into a resource pool and go [to market] quickly," says Erez Nir, SVP, Technology, Mitchell Medical. "In the market where we are operating, time-to-market is really important, and therefore having a partner that can keep up with our pace is critical."
Non-ISV customers demand customized applications, which they can use in-house. The level of customization and personalization of solutions cannot be determined when they get the products from ISVs.
Non-ISVs are no less demanding than ISV counterparts. "Very often they have thousands of users and [the application is] deployed multiple times in different locations," says Arkadiy Dobkin, CEO, EPAM. "Often it could be built on top of a standard ISV offering, but brings more than 50% new functionality." Colgate, for instance, worked with EPAM to develop a sales-support system to be deployed in more than 20 countries in a multilanguage and multicurrency environment.
Tupolev PSC worked with IBA Group to develop an electronic document interchange system. Hence, in the case of non-ISVs, product-development companies find themselves getting extensively involved in the planning phase in terms of design and architecture of the solutions.
"Non-ISVs are very demanding with respect to solution development," says Shankar Krishnamoorty, CTO, Aspire Systems. "The team [of an OPD company] has to be very nimble and active in managing non-ISV customers."
While most major ISVs, such as Microsoft, Oracle, SAP and IBM, have their own captive centers in places like India and China, non-ISVs too are looking offshore, though at third-party models. Product development is not core enough for them to set up captives for development work.
Considering this, most third parties have been quick to tap into this growing opportunity. Along with their offshore delivery teams, onshore teams too work closely with clients to understand their requirements and help draft the solutions.
"EPAM’s offshore team works along with a small onshore team in SBLI's U.S. office. This helps everyone to understand the business needs and requirements better and translate them into the final product," says Eric Bullis, SVP, IT of SBLI U.S.A. Mutual Life Insurance Company, a client of EPAM Systems.
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