Hardware Design Services is a Niche area

How many big services company have got it right when it comes to Hardware Design? IMHO, I can name only one Indian company who started off from scratch in mid-80s with board design and invested in a few labs and testing. May be another also-ran Indian one but more into resource augmentation.

Any big professional services company who gets 99% of the revenue from the software business cannot crack the hardware game – HW is not a volume business, it is a niche business. Really hardware electronics engineers are needed -just using a few tools to assist in some designs is not proper services. Huge investment is needed – unlike software. One needs to have sufficient labs and testing facilities. Lots of eco system involvement is essential – like manufacturing, stringent testing requirements facilitated by different labs, etc.. hence project management is key in putting these together as dependencies can hit timelines badly.

Smaller stand-alone fabless design services company can do SoCs. There are few credible ones. Remember only a few semiconductor companies are present who may like to outsource only older designs for support, or ask for proper resources to augment their team on need basis. Having a software mindset and trying to venture into hardware services is suicide. License cost for a single tool would be in lakhs of Rupees and the CFO faints upon hearing there would be no RoI for quite some time. Training the folks in the tools is the first step, showcasing some pilot design is the next and that is how you grow up the value chain. I was asked once by a senior corporate leader in a big services company if I can build a $1B business in 3 years if he can recruit 25000+ engineers – I politely had to explain a few things to him. Lots of acquisitions have happened in this hardware services space over the past 3-4 years, but not sure if they materialize enough.

Calling oneself an embedded design services company or a PCB layout company is not enough – yes, it gives the feeling of specialization, but getting to know what the customer wants and doing end to end system design is the need of the hour. Design a SoC, do the board, develop the system, do the firmware, do the testing and product engineering and giving it back will have lots of takers. For these, today, I personally believe 5-6 vendors have to work together to make to happen. The dying field (meaning lack of proper engineers) outside of Defense based projects, which is RF design, is critical to any wireless design and getting the right folks here and miniaturizing these circuits along with analog ones is critical.

So, as summary, stick to what you can deliver based on what you specialize in, get the right projects to execute and always be a value adder to the customer – no point showing glitzy images in Microsoft Powerpoint and throwing big jargons at free will to woo customer as they would see straight through with some really pointed queries. And for big services company, trying to acquire smaller companies does not necessarily lead to bigger wins. Sometimes, it is better to stick to your core and not venture out. Hardware design services is left to passionate engineers who want to build something for the future, few steps at a time, in the automotive, wireless, media, computing and in the defense sectors.

The author is a Principal consultant in Business Intellects and comes with 25+ years of experience in hardware and software space.

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