comlajs2.gif (8951 bytes)

 

 

Contact Us

 

  

Onsite Research Report

India - Year 2000 Software Capabilities

by Christopher Bartlett and Ashok Dongre

 

You have heard about the benefits of offshore Year 2000 conversion in India, availability of programmers, and cost effectiveness…but really India ?? Can it be done ? What is really happening ? What are my risks ?

To find out the answers FreshMan Consulting had a team in India for 3 months (May to July 1997) doing in-depth onsite reviews of Indian companies providing offshore Year 2000 services.

We reviewed Indian software companies supplying Year 2000 services that were Indian independent Indian companies and not subsidiaries of US companies or joint ventures with US companies.

The following outlines what we found…

IS INDIA REALLY DOING OFFSHORE Y2K ?

Yes… the following are examples of COMPLETED projects.

<table missing>

The top Year 2000 Indian companies have been researching/working for over 2.5 years on Year 2000 projects.

INDIAN SOFTWARE INDUSTRY

The top custom software companies in India are equivalent to USA custom software companies. They have highly educated and talented programmers, excellent infrastructure often in a campus like environment. Compared to the USA there is a shortage of developers with 5+ years experience due to the young age of the Indian software industry combined with the "Brain Drain" to foreign countries.

  • English is preferred language of educated people.
  • 140,000 + English speaking software developers.
  • 1,670 + College Institutions.
  • Education system comparable to USA.
  • Over 41,000 computer graduates per year.
  • 300 million college educated and English speaking middle-class.
  • Population of 950 million people.

US Companies with long term offshore development projects include:

  • GE
  • Citicorp
  • Merrill Lynch
  • Amtrak
  • MetLife

US software companies with Indian subsidiaries include:

  • IBM
  • ComputerVision
  • Microsoft
  • Novell

Indian companies have 2 lines of business:

  • Onsite. Developers are onsite at the client’s office.
  • Offshore. Developers are in India.

Indian companies have been doing onsite placement of developers since 1988. Offshore development took off in 93/94 with the advent of affordable International Communications. The export companies have been growing at an average of 55% per year.

Offshore development is 90% Business Solutions and 10% product development. India is good at custom programming, but does not have in-depth experience of product development.

Companies are advancing from coding to delivery of complete solutions from design through coding and testing.

Technically India is about 6 months behind the USA on the introduction of new technologies, though this is changing because of the Internet.

The Indian software Industry is very young compared to USA.

YEAR DOMESTIC EXPORT
1987-1990 Small but growing with advent of PCs and lowering of import duties on hardware and software. 95% of revenue from placement of developers at client site.

5% of revenue from offshore services.
90-91 2250 Million Rupees 90% revenue from onsite development

10 % offshore development

US $128 Mn
91-92 3200 Million Rupees US $164 Mn
92-93 4900 Million Rupees US $225 Mn
93-94 6950 Million Rupees 38% offshore development

US $330 Mn
94-95 10,700 Million Rupees 39% offshore development

US $485 Mn
95-96 16,700 Million Rupees US $734 Mn
96-97 27,000 Million Rupees US $1000 Mn

 

INDIAN EXPORT SOFTWARE COMPANIES

An example of a top Indian export software company:

  • Campus with state of the art IT infrastructure.
  • 900 employees: All graduates, 20% with Masters and 5% PHDs.English speaking, Professional and dedicated
  • Large international firms as clients
  • Technologies: MVS/VAX/Unix/NT, Cobol/RPG/C++/Visual Basic,DB2/Sybase/Oracle
  • Wide Range of specialist business knowledge: Banking, Finance, Transportation, Manufacturing
  • International Subsidiaries: USA, Europe, Far East
  • Business Focus: Custom software, Product development, R&D

The primary business areas of Indian software companies are:

  • Custom Software (Turnkey or T&M)
  • Software maintenance
  • Platform Porting

It is important to understand that the top Indian software companies are equivalent to US custom software consulting firms, the only difference is a US firm will have more senior software people (with 10 to 20 years experience).

Indian software has very high quality and documentation, often higher than US standards because

  • Clients demand high quality and documentation since development is taking place where they cannot see/feel/touch it.
  • the time and physical distance require clearly defined projects and quality controls.
  • an Indian company can afford to hire additional staff required to ensure that a high standard is enfored

As in USA there is wide range of Indian software companies. Companies that deliver well designed and written software on time to those that deliver poor quality software late.

The other major difference between USA and Indian software companies is the much younger age of the Indian software Industry (about 8 years old), leading to a shortage of older experienced software engineers and project managers.

While the cultural and physical distances are an issue, they have been successfully overcome.

The key to a successful offshore software development is in selecting the right Indian software company.

YEAR 2000 PROJECTS IN INDIA

How much offshore Year 2000 conversion is actually being done in India ? Over 400 MLOC are currently being converted by the top 10 companies.

Indian Year 2000 companies provide a range of services from undertaking the complete project to just doing the conversion phase.

While it is called offshore development, it is only the programmers who are offshore. The physical location of the code and data will depend upon the offshore model chosen:

  • Programmers log into client’s computers using dedicated satellite link.
  • Code and data is transferred offshore.

The following outlines which phases of the project can be done offshore:

  • Scoping and Inventory Onsite Client + Indian Project Manager
  • Data and Code Analysis Offshore Indian Team
  • Conversion Offshore Indian Team
  • Unit Testing Offshore Indian Team
  • System testing Onsite Client + subset of Indian Team
  • Retrofitting Onsite Client + subset of Indian Team

The best Indian companies have the experience, expertise, staff and methodology to do this work and some have been doing for the last 2 years.

Projects range in size from Pilot Projects of 0.5MLOC to large 15 MLOC projects.

For an offshore conversion:

  • The scope of the work must be clearly defined
  • The programs must be clearly identified

TOOLS USED

The most experienced Indian companies have developed their own tools to increase automation of the process. A typical project will use a combination of in-house tools and 3rd party tools like:

  • Cobol Analyzer
  • Vantage2000
  • Microfocus Revolve 2000
  • Discovery 2000

PLATFORMS AND LANGUAGES

This lists the platforms and languages of existing Y2K projects being done in India:

PROGRAMMING LANGUAGES

  • COBOL
  • RPG
  • 3090 Assembler
  • PL/1
  • JCL

DATABASES

  • DB2
  • IMS
  • VSAM/IDMS

ENVIRONMENTS

  • IBM 3090
  • AS400
  • ES9000
  • VAX

CLIENT/SERVER

No Y2K projects of any significant size… due to the lack of Y2K client/server projects reaching the implementation stage in USA.

BENEFITS OF OFFSHORE Y2K

BENEFIT

NOTES
Resources Indian firms have been staffing up and increasing resources specifically for Year 2000…there is available capacity.

Companies are expecting between 30% to 50% of revenue for 98/99 to come from Y2K work.
Cost Effective Fixed price is $.40 to $.80 LOC for Data and Code Analysis, Conversion and Testing.

T&M is $16/hour to $26/hour.
Methodology Companies have developed own methodologies based on their experiences.
Tools Combination of 3rd party tools(eg. Cobol Analyst) and in-house tools.
Expertise Y2K projects completed have been up to 10 MLOC in size.

Experience various from 3 years to none.

WHAT IS THE REALITY ?

All software companies are trying to get on the Year 2000 bandwagon and claim that they have the experience and resources to deliver on offshore Year 2000 projects. In practice the experience and resources range from substantial to none. The difficulty is in finding out the reality…you have to be in India at the company’s development facilities.

The top tier consisting of 7 Y2K Indian companies have over 2 years Y2K experience and the expertise to take on the responsibility and deliver large(eg. 10 MLOC) Y2K projects. We were surprised by the depth experience and projects completed at these companies.

The second tier of 9 companies have over 1 year Y2K experience and expertise.

The third tier of 12 companies have a few months or no experience.

While there is a shortage of senior developers and project managers (5+ years experience), there are enough. Bodyshopping for Y2K project managers for USA positions is heating up. Any Y2K offshore project should include provisions for retaining the key offshore employees.

About 40% of offshore work is software maintenance and support, particularly of legacy systems (Mainframe and COBOL). This work really started in 93/94, so there has been a growing level of expertise.

There is not a capacity problem yet…there are probably no more than 3000 developers working on Year 2000 in India, while the top 15 software companies have over 20,000 developers. While everyone talks about how thousands are devoted to Y2K and there is a major shortage of people…this is not true. On the ground when you meet with the companies, the larger companies (1500+ people) have between 100 to 200 developers on Year 2000 projects. The numbers are often inflated as the companies relabel their offshore maintenance work as Y2K.

Companies are looking for long term relationships as opposed to one off projects, some companies will only undertake a project if it will lead to a relationship

Choosing the right Indian company is the key to success and the only way to do this is to review the company in India.

ISSUES IN AN OFFSHORE RELATIONSHIP

Relationship Mutual respect and understanding from management down the line to operational personnel is needed.

USA Client must be committed to handle differences, e.g. Holidays, socio-cultural, time zones
Project Risks Clearly defined scope.

Stable Scope(eg. No moving goalposts)

Clear Deliverables/Acceptance Criteria

Well defined project standards and quality criteria
Technical Indian development staff have the necessary skills.

IT WORKFORCE

The IT professional is a well educated graduate. Indians are hard working and quick learners. The average age of developers in a software company will be mid 20’s.

The Indian IT workforce has skilled programmers with experience in most languages and environments.

In the US there is a career path for technical experts and technical specialists, but this is new in India..

The biggest problem area is finding good experienced Project Managers(eg. 5+ years experience). The software firms have many good programmers…but there is a shortage project managers and technical experts due "newness" of IT industry and "Brain Drain" to USA.

Companies are top heavy with programmers with 1 to 3 years experience.

Average staff turnover rate is 24%, most of this is from developers with 2-3 years experience leaving to work abroad.

SKILL AVAILABILITY
SKILL PROGRAMMER

1 -3 Years

 TEAM LEADER

3-5 Years

 PROJECT MANAGER

5+ Years

NOTES
COBOL HIGH MEDIUM MEDIUM India has been using IBM mainframes since 1970s.

Firms are hiring all experienced Cobol programmers. High demand for experienced managers.
RPG Medium LOW ?? RPG/AS400 projects are being done.

Medium availability of AS400 boxes in India.
3090 Assembler MEDIUM LOW ??  
Visual Basic HIGH MEDIUM LOW Indian software export firms have concentrated on client/server development.
C/C++ HIGH HIGH MEDIUM Indian software export firms have concentrated on client/server development.
 

   

COMPUTER HARDWARE AVAILABILITY
HARDWARE AVAILABILITY
Mainframes:

ES9000 (12 in India)

Tandem

Older IBM Models.

  

Approx 6 ES9000 at Y2K software companies.

 

Few older IBM mainframes.
AS400 Most Top 10 companies
UNIX – SUN, RS6000 Medium
PCs – Servers and desktop High.

NETWORKING

Each office has a network linking the developer’s PCs to the servers and any International communication links. The networks range from Ten Base T Ethernet to 100MBs Ethernet.

The top 15 software companies all have multiple development centers in India. Dedicated 64kb lines usually link the development centers.

INTERNATIONAL COMMUNICATIONS

International Communications are provided by 64Kb Point to Point links. The satellite links are available in Bangalore, Bombay, Calcutta, Delhi, Hyderabad, Madras and Pune.

Dedicated communication links range from 64kb to 2Mb.

The uptime is 99.9%.

There is a choice between satellite and optical fiber.

PROJECT SIZES

People

Project Classification

NOTES
Less than 15 Small Most common.
15 to 30 Medium  
30-50 Large A company of 800 people probably has one or two projects this size.

Large scale teams of 50+ are rare.

KEY CRITERIA IN SELECTING INDIAN Y2K FIRM

There are over 360 companies doing software export in India. These include

  • Indian owned companies.
  • Subsidiaries of US/European IT firms.
  • Joint Ventures with foreign companies.

This report is targeted at USA companies looking for an Indian firm as opposed to a subsidiary/joint-venture firm. The Indian firm has to be capable of handling offshore Y2K projects ranging in size from 1 MLOC and up.

There are over 300 Indian software companies, but only the top 30 have any real size and experience in offshore development. Companies below the 30th listed by revenue have revenues of less than US$1 Million and less than 100 employees.

The top 30 companies all have

  • IT Infrastructure
  • International Communications
  • US Style Management
  • Offshore Development Experience
  • Quality Control
  • Proven track record.

To select a company for your Y2K projects, look at their Y2K experience:

  • Y2K Experience (Completed projects)
  • Y2K Expertise (Understanding of technical issues)
  • Y2K Project Managers and Senior Staff
  • Methodology (Detailed approach)
  • Experienced Staff (Programmers through Project Managers)

An offshore Y2K project will probably fail if the Indian company has:

  • No real experience
  • No methodology
  • No offshore experience

These criteria CAN ONLY be assessed ON-SITE in India.

SUMMARY

It has been proven by the size and complexity of Year 2000 projects completed that the right offshore Indian Year 2000 company can provide you the resources, cost-effectiveness and experience you need. The problem is finding the right Indian company from among those claiming to have the experience and resources.

There is available capacity at the leading Indian Y2K providers today.

While there are additional risks with an offshore project, these risks can be clearly identified and managed as part of the normal project risk management.

The benefits of lower cost and available experienced staff resources can you help you meet the immovable deadline.

AUTHORS

This report was produced by FreshMan Consulting, an International Consulting firm with offices in USA and India, that provides consulting services regarding Year 2000 conversion in India.

This report is a small summary of the information and insights gained based on 3 months of research in India reviewing Year 2000 software companies.

The research was carried out by:

Mr. Ashok Dongre, Director of India, with 32 years experience in the Indian IT industry from marketing to CEO. His extensive knowledge and contacts inside India allowed us complete access when reviewing companies.

Mr. Chris Bartlett, President, with extensive technical,development and project management experience at a broad range of Wall St firms prior to founding Freshman Consulting.

(c) 1997, FreshMan Consulting, All Rights Reserved