Tech Mahindra, ASUS in outsourcing pact

Tech Mahindra, a global end-to-end IT solutions and services provider to the telecom industry and Taiwanese major ASUStek Computer Inc have signed an outsourcing agreement for developing software for its nextGen products in the communication segment.

Presently, Tech Mahindra is working on the pilot which will incorporate the framework and process structure for future workflow between the two companies.

"This is a multi-year agreement for developing an embedded system and features for its ASUS nextGen handsets that will be mass manufactured in the next 2-3 years," said Manan Panchal, director, Embedded Systems Practice, Tech Mahindra.

ASUS offers complete range of products across computers, consumer electronics and communications. It has in the past offshored to local Taiwanese companies and this is the first time it is outsourcing to India.

"With this partnership we are looking beyond vanilla development and hope to create disruptive innovations like the iPod or iPhone," said Taiming Parng, chief technology officer "" Core Technology Centre, ASUS told Business Standard.

Parng also expressed his intention to extend the partnership beyond the communications space to cover its consumer electronics and computers space.

"Depending on the success of the pilot we could outsource up to 80 per cent of our software development from Taiwan to India, leaving just 20 per cent of the core development in Taiwan," said Parng. However, he did raise concerns for increasing costs. "We understand that India offers value addition, but pricing is important," he said.

With expected revenues of $23 billion in 2007, the $16.5 billion company has 4,000 employees in R&D and development in Taiwan, 1500 people in R&D and a workforce of 70,000 people for manufacturing in China.

"We have chosen Tech Mahindra after an entire year of deliberation which involved visiting all the top software services companies in India," said Parng while sharing that Tech Mahindra's strong offshore presence in Taiwan was what won in the company's favour.