i2 looks to India to cut costs

i2 looks to India to cut costs

i2 Technologies, a provider of supply chain management software, is moving a significant part of its product development from the US to Bangalore, India, as part of a cost-cutting program following the recession in the US, according to a senior company executive.

"At present the Indian development center accounts for 17 per cent of i2's product development," said Pallab Chatterjee, executive vice president of worldwide development at i2 Technologies. "The goal is to increase this share to 50 per cent."

The remaining 50 per cent of product development will continue to be done in the US The staff at i2's India development center has grown from about 50 employees in 1996 to more than 1,000 currently. Some of those additions were made by acquiring companies in the US that already had development centers in India, such as the acquisition in June last year of Mountain View, California-based Aspect Development Inc.

"We will be approximately 1,200 employees in India by the end of this year and about 2,000 by 2002," Chatterjee said.i2's revenue in the third quarter of this year slipped to US$194 million, from $241 million in the previous quarter, and from $320 million in the third quarter of 2000, which the company said was on account of the economic slowdown and disruption of sales cycles. It reported a pro forma net loss of $0.13 per share in the third quarter, compared to pro forma net earnings of $0.07 per share for the third quarter of 2000.

Announcing these results in October, the company said it would increase its development efforts in India to take advantage of cost efficiencies there, and of its infrastructure in the region.

To shore up its India development center, i2 introduced a program a few months back that will result in about 150 employees being moved to India from the US "These people are core developers who have led teams and who will now transfer their knowledge and build those products in India," Chatterjee said. " By doing so we not only establish product knowledge in India at a much faster pace, but it will also give us round-the-clock development opportunity for each product line."

All i2 product lines will have an India development component. "We are convinced that we will derive significant cost savings from continued product development in India," Chatterjee said.i2's development centers in the US and India will also share customer-related engineering functions. "For customer-related engineering functions, Bangalore has been the APAC (Asia Pacific) and EMEA (Europe, Middle East and Africa) hub for global customer solution management, as well as consulting functions, since 1997," Chatterjee said. "In order for i2 to provide 24/7 service to all our customers around the world, we would need the customer-related functions to be based in regions that can support customers regardless of the time zone they are in."

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