November 10, 2003
Peace & Prosperity
Please note that contributed articles, blog entries, and comments posted on are the views and opinion of the author and do not necessarily represent the views and opinions of the management and staff of Internet Business Systems and its subsidiary web-sites.
Peggy Aycinena - Contributing Editor

by Peggy Aycinena - Contributing Editor
Posted anew every four weeks or so, the EDA WEEKLY delivers to its readers information concerning the latest happenings in the EDA industry, covering vendors, products, finances and new developments. Frequently, feature articles on selected public or private EDA companies are presented. Brought to you by If we miss a story or subject that you feel deserves to be included, or you just want to suggest a future topic, please contact us! Questions? Feedback? Click here. Thank you!

“We do use off-shore [facilities]. In the past, it's been in India, but presently we're seeing more [R&D] in Egypt. Those are the places we're outsourcing to. The process is one where we would put together contracts - as you know, in India there are many companies - then we would interview many and select the best. However, I originally come from Egypt, so I have many contacts there and am able to find the proper resources there now to meet our needs.”

“We really see off-shore development as complementary to our work here. We continue to expand and invest here, but off-shore development has a price point which is a lot lower than here - library development, library migration, the broad mapping of IP and memory, regression testing, and so on - things that are very engineering-labor intensive are well suited to contract off-shore because it's a lot more efficient. We focus here on the planning, the extraction, the creative architectural work.”

“We see this as a healthy trend that eventually will provide more productivity and efficiency for our industry. Historically, many industries have come to a point in time where it has made more sense to be off-shore for efficiency and productivity [reasons]. Then the work force here has to adjust to the more relevant jobs that are needed.”

“The U.S. has always been very forthcoming in taking the lead through history in opening up its industries and opening up change in other countries. For example, setting up NAFTA resulted in some jobs going to Mexico - it was very controversial at the time. But NAFTA has turned out to be very positive for North America and the U.S. You have to look out at a broader horizon. There may be some pain now in some classes of jobs as they are shifted to different areas. But in the long term, it's a positive development for everyone.”

Aptix Corp. - Charles Miller, Senior Vice President of Marketing and Business Development

“Setting up training facilities overseas does not mean that national security is compromised. The things that they're covering in those facilities are part of the standard curriculum for university engineering programs everywhere. It's only because of the job situation today, that this is a sensitive issue. Off-shore development means you've got people working in every time zone, the compute bandwidth is 24x7, and the sun never sets on development. When this happens and companies can offer stable and rewarding employment, the world is a safer place.”

Magma Design Automation, Inc. - Rajeev Madhavan, Chairman and CEO

“We have operations outside of Eindhoven in the Netherlands, in Beijing, China, in Bangalore, India, and are in the process of setting up an organization in Seoul in South Korea. Each of those centers has a local country manager. Magma is unique because, from early on, we've had off-shore operations in Eindhoven. From day one [as a company], we could not attract enough people [here in] Silicon Valley - the situation was forced on us, because we couldn't get people here fast enough. Now our procedures are so well set-in that we can actually start an R&D lab and have Internet and infrastructure up and running within [a short period of time].”

“I think that, typically, none of the additions that we have done have been at the cost of taking jobs here in the U.S. We're different from every other EDA company - we're not just sending this job or that job to India. Our guys in India are a very high-end team who can work on any core piece of our technology. That's [the key consideration] in setting up our labs. When we come across a [talent pool] and can say, 'Hey, this is a bunch of great people,' [then we know it's time to start something there].”

“In India, we came across several good people from Interra, so we built a team around them. Also, we had a bunch of professors on sabbatical here at Magma from a university in Eindhoven. I was joking with them and told them I'd fund a lab around them if they were ever interested. Two months later, one of the professors called me and said that if I was willing to fund them, they were ready. [All of this] is about growing an organization organically - it's not about taking jobs away.”

“There are some negatives. The biggest negative means that our senior vice presidents and I have to be up a lot longer to communicate across time zones. It puts a lot of additional work on management, there's no doubt about that. But for a company like Magma, we really have no choice. We have to go with the cutting edge technology. If that happens to be in Timbuktu, we'll do it in Timbuktu.”

“The economic downturn has not been a driver for Magma. From the very beginning - since I'm originally from India - people have asked me why I didn't set up a team in India. But labor costs are not a sufficient reason to do that. Yes, right now it's an interesting reason that we're adding more people in India, but in the case of the center at Eindhoven, for instance - now with the Euro being higher - cost savings are not a [motivation].”

“[Foreign-national] engineers returning home has [provided a talent pool] with proven capability. In India, for instance, as people went back with the type of expertise they received here in working in high-tech, they were able to provide a minimum layer of experience there for the teams. Our manager in India right now, Anand Anandkumar, was with Cadence before he was with us. Now he's a very big driver for what we need to do there. He's very energetic and that comes from his experience working here and knowing [what we're trying to accomplish]. The 40-person team that [we have in place now in India] is a reflection of his skills.”

“The emerging EDA user market in Asia absolutely affects our decision to pursue off-shore development. When places like China and India did not have user communities, all of the relationships with regards to users were [directed] from here and things were different. Having a Magma center in China now allows us to ask our people there to go [visit the customer directly] and to communicate back to R&D for any [needed help]. The de-centralization of software development is happening and, if our customers are doing chips elsewhere, [we need to be there].”

“[In addressing national security concerns], I'll quote an old saying - A wise mind left untapped is more evil than a wise mind [challenged]. If we think that controlling education and limiting education for a group of people who are eager to learn is beneficial to national security, we should realize they'll only become more of a problem [that way].”

“Where there are people working on chip design or working on EDA technology - we need to think in terms of training people, so that they can contribute more effectively. I commend Cadence and Synopsys for their efforts in this area. Magma [would like to be part of that], but we don't have the bandwidth yet. [Nonetheless], I think it's an essential part of focussing intelligent people in those countries on something that is positive.”

“I heard this quote from a customer recently and now I repeat it to my own children. I tell them that when I needed a job, I came to North America. Now you should be learning the languages of India, because when you need a job you may have to go to India.”

“Today our task is to come up with newer and newer applications in the U.S. Here in Silicon Valley, if we continue to need higher pay and higher wages [than in other economies], then we need to pursue applications that continue to be on the high-end of the scale.”

Giga Scale IC, Inc.- George Janac, Chairman and CEO

“I think the main thing that drives R&D overseas is really cost - it's a matter of development costs and it's really a hybrid of costs and expertise. As you move into data generation and quality assurance, these are easier to outsource overseas, also the maintenance and evolution of the software. It's true, you can get a lot of engineers in India, but it comes with management overhead. [For instance], if you outsource to Russia, you need management there that understands the culture. You need to avoid having management there that doesn't understand the culture or the business practices of your overseas team - working across ethnic barriers doesn't always go
so well. And, it's always been true that initial development continues to be very difficult to send overseas.”

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-- Peggy Aycinena, Contributing Editor.

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