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9 August 2004
Taiwan and China EDA,499482.HTM.1b03b405
Indian software prowess fails to translate to EDA
Posted : 22 Jun 2004

India's software services firms may be high-profile in the world of IT, but they barely register on the EDA radar.

Although most of the big suppliers of electronic design automation tools have development centers here, they have no homegrown competition and don't expect to see any for at least another decade because, as one senior executive said, India's software industry seems to have a one-track mind.

"EDA software development is a complex and expensive research process," said Pradip K. Dutta, managing director for Synopsys India Pvt. Ltd. "An EDA tool is essentially a product offering, and we all know that product companies require multiple years of investment before breaking even. Most Indian companies prefer to operate on the 'service' model where the payback is much faster."

Dutta also cited "the relative dearth of key technologists/architects in this domain" as another reason why India's thriving software industry has yet to scale the heights of EDA.

Interra Systems Inc. comes closest to being an Indian EDA company, because all of its development work is done out of centers in Noida and Kolkata. Headquartered at Santa Clara, California, Interra was founded by two expatriate Indian engineers, Sunil Jain and Ajoy Bose. Bose went on to found another U.S.-based EDA company, Atrenta Inc.

All the big suppliers - Cadence, Magma, Mentor, Sequence Design and Synopsys - have their own captive development centers in India and are selling an increasing volume of tools here. However, "These Indian subsidiaries are involved mostly in implementation work, while the real cutting-edge technologies are still concentrated in the U.S.," said Sanjay Mittal, managing director at Interra Systems India Pvt. Ltd.

And they expect no local competition any time soon. "Product development, while lucrative in the midterm, does have certain entry barriers, including relatively larger investment and resource needs, a gestation period, technological complexity and end-market and marketing knowledge," said Jaswinder Ahuja, corporate vice president at Cadence Design Systems Inc. "India not only has no EDA company, but that phenomenon is true of the entire IT industry in India."

Still, Ahuja said, "It is interesting to note that in the U.S., many small EDA startups have been started by executives of Indian origin."

Given that they possess large cash reserves, the larger software companies in India could afford to invest in building an EDA tool if they so chose. Yet they are unlikely to do so, observers said. They are extremely profitable providing software development services around the world and would likely see building an EDA tool as a risky and unnecessary business venture, said industry watchers here. Nor would they have the necessary experience to go after the EDA business.

"EDA tools are specialized software tools, used by only a handful of expert electronic design engineers. These tools are complex and require significant presales and post-sales support and training," said Jyotirmoy Daw, managing director of Mentor Graphics (Noida) Pvt. Ltd. "The users and buyers of EDA tools are mostly in the United States, followed by Europe and Japan. The history of EDA shows that market share of any EDA tool is dominated by two or three large companies. Having said that, there is always an opportunity for EDA startups in India if the startup can solve a new problem not solved by others."

"Since you need the architects, the funding, the experience and well-known names at the top levels, you need to be near the U.S. Here, there is a lack of domain knowledge in 'emerging' areas," said Anand Anandkumar, managing director at Magma Design Automation India Pvt. Ltd. It is possible that the scenario may change and that an EDA industry could emerge here, Anandkumar said. But "If you ask whether I would start an EDA firm in India, my answer will be no."

D. Krishna Kumar, general manager of Sequence Design (India) Pvt. Ltd., pointed out that India has never had any big customer requirements for EDA tools, nor any base of manufacturing from which innovation might spring. "Since multinational companies in the EDA domain set up their research and development centers in India, it was easy for them to provide the technology, training and facilities," he said. "Compared to this, without any background, Indian companies face a lot of problems in training, finding suitable people and availability of tools, as they are very costly."

Also, the Indian market for design tools is tiny compared with other world markets such as North America, Europe, Asia-Pacific and Japan. To survive and sustain itself, an Indian companies are service companies."

- K.C. Krishnadas
EE Times