News Analysis

Embedded technology—the next wave in outsourcing

The increase in consumer demand for innovative electronic products at lower cost has given rise to embedded technology, which is also known as product engineering outsourcing. The growth of Internet technologies and recent advances in embedded systems such as reliable and low-cost flash memory are driving the penetration of smart devices and hence bolster the embedded technology market in India.

India can leverage its strengths in the services market as most of the global bigwigs are looking for effective partners to outsource work on embedded technologies.

In India, software companies such as Wipro, CMC, HCL and Patni have been engaged in the development of embedded software for specialised hardware of their global clients.

According to Nasscom estimates, in the year 2004, Indian IT companies earned around $2.3 billion from product engineering services (including embedded software and offshore product development) and the industry is expected to touch $8-11 billion by 2008.

Patni’s role in embedded technologies

The Product Engineering Services (PES) SBU at Patni provides product realisation services such as conceptualisation, prototyping/R&D, design and development, verification and validation testing, migration and reengineering, maintenance, and technical helpdesk support. With a team of 1,600 engineers, the company focuses on verticals such as storage, consumer electronics, automotive electronics, industrial automation, medical electronics and telecom.

The company has stressed upon training their engineers, providing their customers the best quality services and protecting intellectual property.

Ajay Chamania, Vice- president of embedded technology and solutions (ETS), Patni is of the view that embedded technology is an area where India has a problem. The issue is India’s manufacturing capability. This is a major roadblock for Indian IT companies.

Technology costs are going down and hence many technologies can be used in one product. For example, a pacemaker is generally used for regulation of your heartbeat. Just imagine the impact if the same device starts performing other functions such as regulating blood pressure, breathing and blood circulation.

Talking on various trends in verticals, Ajay Chamania says that innovation is taking place in every vertical. Three key areas are:

Medical electronics

Ajay Chamania Vice-president Embedded Technology & Solutions Patni

The medical vertical utilises embedded technologies at varying levels for monitoring, therapeutic and diagnostic devices. There is an increasing trend towards creating smaller, high quality, less invasive and more affordable machines.

Medical devices range from offline lab measurement and automation equipment to life critical devices. This is led by major imaging machines; the MRI machines, PET and CAT scanners and E-Bean tomography equipment, blood analysers and body function monitors to radiation equipment, portable diagnostic imaging and home monitoring devices such as cholesterol monitors and blood glucose meters.

The role of semiconductors is increasing substantially. Some of the fastest growing application markets are home monitoring and diagnostic devices, telemetry, diagnostic imaging applications and provides ample opportunity for suppliers targeting these designs. For example, semiconductors make up nearly 34 percent of the total medical device market, which is estimated at $174 billion. It is estimated that revenues from these electronic applications is growing at an average annual growth rate of 18 percent over the next five years, resulting in a market worth $179 billion by 2009.

Another area showing good growth and driving new product changes comes from medical information management. Medical diagnostics, therapy planning and implementation and patient monitoring involve collecting, trending and management of data. Industry initiatives such as ‘computerised physician order entry’, ‘clinical decision support system’ and PACS are aimed towards reducing errors and taking informed decisions.

Automotive electronics

The automotive electronics segment is another driver of embedded technologies. Growth is forecast across all product segments with the strongest demand coming from emerging markets in Asia, East & Central Europe. With respect to software, industry estimates suggest that the costs associated with developing automotive software accounted for around 4 percent of the total vehicle cost in 2002. This is expected to rise to nearly 13 percent by 2010.

Ajay Chamania is of the view that embedded applications will find a tremendous play in collision avoidance systems, tyre pressure monitoring systems, infotainment and telematics, navigation, vehicle safety, vehicle multiplexing and x-by-wire. The market for navigation will continue to converge with audio and entertainment and together will be one of the fastest growing segments of the automotive electronics market.

Consumer electronics

The worldwide consumer electronics market achieved impressive growth in 2004 due to strong shipments of products including digital televisions (DTVs) MP3 players, DVD recorders and digital still cameras. Shipment revenue for consumer electronics products increased from $229.7 billion in 2003 to $248.3 billion in 2004, and will represent the strongest growth year for the consumer electronics market at least through 2008. It is expected that this year will bring a moderate slowing in market growth, with shipment revenue expanding to $265.1 billion, up 6.8 percent from 2004. Consumer shipments will continue to grow over the next four years to reach $297.7 billion in 2008 (Source: Market firm iSuppli Corp).

Embedded technologies will have to provide compelling software that provides value-added information, interactive entertainment services with an interweaving of audio, video and data services. Such trends increase the time-to-market pressures on vendors, who are now eyeing ready-to-use solutions from the market, which offered with their core components, will deliver innovative products to the consumer.

Globally, the total automation business is projected to grow at a CAGR of 4.7 percent over the next five years (Source: ARC Advisory Group). The market is forecasted to be over $60 billion in 2008.

Embedded technologies will find use in process automation industries and discrete industries.

With most process industries such as chemical, drug & pharmaceuticals, pulp & paper, power having ageing plants and legacy automation systems that are obsolete by current standards, process companies are looking forward to improve their ROI and utilise plant equipment effectively with modern controls for automation.

The future of automation in discrete industries is bright with an expected CAGR of 6.1 percent over the next five years. As per an ARC Advisory Group study, the market is forecasted to over $32 billion in 2008. Automation in discrete industries would be driven by increased advancements in semiconductors, global competition and subsequent cost reduction.

—Megha Banduni

megha@expresscomputeronline.com