Indian software vendors, led by firms such as Infosys Technologies Ltd, HCL Technologies Ltd and Wipro Ltd, are increasingly reusing for new customers software code or parts of it written for existing clients in an attempt to reduce development costs and time. Such reuse, industry insiders and analysts estimate, helps reduce software development costs up to a quarter and time to write it by up to a half, and helps improve profit margins under pressure in an operating environment overshadowed by a rupee that has appreciated around 13% against the US dollar since the beginning of the year.
To help them reuse software code or modules, tech service providers are increasingly retaining the intellectual property (IP) on the software they develop for different clients and, in return for such rights, offer discounted pricing—sometimes up to 20%. The mid-sized Headstrong Corp. is one company that offers a 20% discount.
At Bangalore-based Wipro, India’s third largest software firm, reused software today saves efforts by between 20% and 30%, and allows additional margins of 10-15%, but those benefits have come over time.
The effort that goes into designing and writing software code and modules that can be reused is up to 40% more than software written without reuse in mind.
“Retaining IP and making sure it is in good, reusable form is important,” said Sudip Nandy, Wipro’s chief strategy officer. But, “it does not have an impact quickly as you have to give discounts to your customers. As the open source technology picks up in India, resued software will also be big in another two-three years,” Nandy added.
Experts say a well-executed reuse programme can provide several benefits such as reduced effort in project execution, consistent quality and reduction in defects across projects, improved time to market and enhanced predictability of future projects. But companies have to keep certain things in mind to ensure the success of this model.
“It is important to maintain and keep the correct and up-to-date versions of the assets in the repository or data base with details of the necessary infrastructure and adherence to standards, on which you develop the software. An ecosystem supporting reused software in an organization is important,” said an Infosys spokesperson.
Infosys research indicates effort and cost savings are between 10% and 15% and in some cases even up to 25% of the total project life cycle for, say, a typical Java-language application development project, according to the spokesperson.
An October survey by research firm Forrester Research Inc. said t he partial reuse of the code and domain expertise in architecting the solution, coupled with most of the development happening in low-cost locations such as India, make the concept highly economic.
“When clients accept the concept and are ready to pay for the value, (such) ‘solution accelerators’ will yield savings of 12%-15% in the overall project cost,” Sudin Apte, senior analyst and country head, for the research firm in India, wrote in the report.
HCL Technologies, which does significant work for telecom and high-end technology customers, favours the use of components or building blocks based on certain standards such as Wimax, WiFi and Bluetooth, to deliver complex product designs.
“As the standard for the component is already defined by the industry body, having pre-built reusable software ensures up to 30-50% time saving in the overall project, because of which even customers encourage the practice of reusable software,” said Gunaseelan Narayanan, senior corporate vice-president for the Noida-headed firm.
HCL has been using reusable software in the area of test engineering services, across multiple domains such as automotive, aerospace, telecom and networking.
“Time to market and quick design turnaround cycle are the major characteristics that drive the reuse market,” Narayanan said.
In Chennai, software services provider Cognizant Technology Solutions Corp., a New Jersey, US-headquartered firm, has given a formal structure to its software reuse efforts: Cognizant Application Framework for Enterprises, or Cafe.
“There is a shelf life for any software asset and it is inherently bounded. We believe that in the future, most of the reus able software will be a part of either the development environment or the runtime software platforms,” said G.V.N. Apparao, vice-president, technology, at Cognizant.
Citing an example of the benefits of reused software, Cognizant said one of its life sciences customers required a Web-based system focusing on clinical data management, which the firm developed with the help of reusable software—resulting in a 15% productivity increase.
In another instance, Cognizant was able to reduce the effort by 23% and the duration by about 10% for a client in the information, media and entertainment business.
The company sees opportunities for reused software largely in financial services, health-care and insurance sectors due to its ability to invest in such solutions for large clients, and in retail and manufacturing due to the need for reducing costs.
For several software service vendors, such reuse helps in ratcheting up productivity while executing the so-called fixed-price projects, where there is an incentive to complete the project at lower costs and less amount of time.
“The vendors benefit in terms of productivity gains and margins,” said Krishnakumar Natarajan, president and chief executive of MindTree Consulting Ltd. “Apart from improving productivity, the quality of deliverables would be much better and the client stands to benefit from the proven solution.”
As the concept of reuse gathers momentum, it could even lead to new features being added to the tech vendors’ offering in a product-like environment, some insiders predict.
“Over the next five years, customer cost and effort benefit through software reuse can be as high as 20-40% of overall outsourcing cost with the savings being used for new product design or feature addition,” said HCL’s Narayanan.