India is mooted as an answer to the Irish development skills shortages

Indigenous Irish companies wishing to become truly global, should follow the US example and outsource their product development activities in India.

That's according to Mr Anand Khandekar who brings an outsider's perspective to the Irish skills' shortage - one fashioned by his experiences in India which, in the last seven years, has become home to software and hardware development activities for more than 30 US multinationals.

While India, hampered by its physical location and language, has been slow to innovate new technologies, it is proving an almost unlimited resource for skilled technology graduates dedicated to rigorous production processes. Some 250,000 engineers are estimated to be working in India and each year 60,000 new IT graduates are produced.

Mr Khandekar has 30 years experience designing high-quality software development processes for international clients. A former managing director of Motorola India, he is now managing director of CirrusLogic, a $1 billion (€943 million) US company which produces embedded logic for Intel chips. It is based in Pune to which Mr Khandekar is seeking to attract multinational investment.

Pune is a university city and Mr Khandekar sees limitless opportunities for collaboration between colleges and industry. The US-based technology research campus, Carnegie Mellon, is in the process of establishing another campus in Pune. Mr Khandekar says: "Key politicians in the region are very keen on an Irish link-up. We want to provide a pathway for Irish resource-based companies to establish in India. Indian companies are very process-oriented and strong at back-end activities like software coding, testing and integration. Irish companies then have more time to focus on product innovation and marketing at the front end."

If the US example is anything to go by, the Indian option is proving a successful formula for speeding up and refining the development process. Oracle established a development centre in India three years ago. It now employs 150 people and is responsible for the company's network computer operating system. Due to abundant supply, engineers are available at a fraction of the global cost, and they bring heavily sought after digital signal processing (DSP) and object-oriented programming skills to the table.

During a visit to Ireland, Mr Khandekar met with a number of leading industry figures, including Mr Seamus Gallen of the National Software Directorate, part of Enterprise Ireland. He says Ireland could never begin to compete with the numbers of software graduates on offer in third world countries.

Mr Gallen adds: "Our strength is in spotting niches, and devising products to fill those niches. Now that we seem to have cracked the US market we should focus solely on designing and marketing products from here, and develop the products wherever it can be done cheapest."

According to Mr Khandekar, the Indian mindset is built around delivering a product. "While an Irish software developer might spend 16 hours ensuring a product works, wouldn't he or she prefer to be researching the next product?".

Many Indian development houses have refined their processes to allow complex hardware and software development to be reduced by carrying out development on virtual or simulated chips.

The benefit to India of tapping into the Irish market is the path it offers to learning about European and English speaking markets. India suffers from under-refined banking systems, and limited business reliance on computers. By getting involved with Ireland's high growth development, Indian industrialists hope they can play catch up and learn about new markets.

But what about the possible threat of losing Irish jobs or this State's competitive edge? Mr Khandekar rejects this notion by pointing to the example already being set by US companies. "Forget about pride, it's whatever makes sense for the next stage of success. This is about allowing the industry grow to the next intellectual level. If people get stuck in the development cycle, they can't add further value by designing and pushing new products."

Mr Gallen echoes this sentiment: "The IDA would always have seen the creation of jobs elsewhere as anathema to us. But now we're nearly at full employment, with a skills' problem, we'll have to use labour forces wherever we can get them. The US has been doing it for years, there's no reason why we shouldn't."

He says a statement of intent needs to be made at government level between India and Ireland to let Irish companies know it's alright to outsource some of their activities. The National Software Directorate is in the process of looking into some kind of endorsement by the Minister for Enterprise and Employment which may help overcome the feeling of "letting the side down" by hiring from outside.

One Irish company is currently dedicated to sourcing skilled Indian technicians, but owing to its clients' sensitivities it will not reveal which companies it is hiring for. Pace Institute was established last year by Mr Neil Salvi to help Irish companies set up and manage software development centres in India.

On top of this Kindle is an example of an Irish software development operation that quite dramatically relocated all its activities to India last summer. However, Mr Salvi says this was a negatively handled transition, and Pace believes in operating a partnership approach for its clients.

It will examine an Irish company with a well-defined software process and assess its engineering and development personnel requirements over five years, matching that company's needs with a team in India. Initially one person will come to Ireland to build a relationship in the short term, and eventually the development process can be synchronised between Ireland and India.

"If Irish companies want to become multinationals the skills' resource is clearly a limiting factor. This is where the back-end strength of Indian technology graduates can really kick in in a cost effective way," Mr Salvi says.