Flextronics has massive plans in India

NEXT BIG THING/ Capability leap for domestic telecom service providers likely

The $ 14-billion Flextronics is about to do in India something quite out of the box for itself. The global major in electronics manufacturing services looks set to acquire a large software footprint which will significantly take forward Indian capabilities in selected areas.

Such rapid uplift in a company's profile is inevitably accompanied by extensive inorganic growth. The corporation which recently acquired a majority stake in Hughes Software, operating in the telecommunication space, is reportedly looking at three more acquisitions in this space.

According to information in the market, the company is in discussions with Sasken Communication, Deccanet and FutureSoft in Chennai for possible partnership, including acquisitions. It is also learnt that Flextronics is likely to buy out FutureSoft for around $15 million.

What is most breathtaking is that Flextronics has also reportedly bagged a multi-billion dollar global telecom deal and is looking at Indian niche software companies working in the telecom space to ramp up its delivery.

Expectedly, the company has declined comment but according to analysts tracking it, the move to widen its software operations is logical as it is adopting a vertical integration model which affords growth opportunity and establishes high barriers to entry.

The decision to go after telecom software companies makes sense for Flextronics as this combination of its own hardware capabilities and Indian telecom software companies' expertise will provide a complete outsourcing solution to telecom original equipment manufacturers (OEMs).

This convergence of hardware and software expertise will also open up significant opportunities to cross-sell respective products and services to a complimentary telecom customer base. When the company had acquired a majority stake in Hughes Software it had stated that it was committed to expanding its design services into every product area where it has a manufacturing presence.

This decision by Flextronics to actively look at telecom software companies in India is also expected to significantly enhance the capabilities of Indian telecom software companies.

The Indian companies in the Flextronics fold will be exposed to the breadth of software development experience that is required to bring new products and solutions to the market. Areas ranging from low-level device drivers and DSP algorithms to high-level communication software and business applications are the capabilities which they will be working on.

Flextronics is expected to inculcate a system of developing a large range of reusable software building blocks, allowing service providers to quickly deliver high quality and low cost products and solutions to customers.

In addition, Flextronics will upgrade its Indian entities so as to offer engineering services to enhance, maintain, and support customer software throughout the life of the products and solutions.

Besides these specialisations, the company is expanding its portfolio in internet working, broadband, wireless, network management, embedded systems domains and an array of products in areas like IP, ATM, telecom and network management.