In the software business, one can make money in two ways: write codes as required by your clients - call it software services - or develop a product and try to sell in the market. A majority of Indian techies opted for the first, and therefore you have the Wipros and Infosys' of today. Some dared to try the second - and you have an iFlex.

Praveen Kankariya chose a third option when he set up Impetus Technologies: product development services. And the decision to tread a middle path not only has paid off for Kankariya, but has also puts his company in a unique position vis-à-vis' the numerous other Indian software companies. Today impetus has grown to a 170-people organization that is steadily expanding.

On the face of it, what Impetus does is not really unique: it too gets software outsourcing work from its clients what makes the difference is its strategy to only undertake product development on behalf of its clients, who are hardcore software product companies. True that companies such as Wipro and HCL Technologies partake in product development by working for companies like Cisco, but Impetus focuses and only focuses on product development. It does not do software service as such.

"We actually set up an extension of the client's research and development team within our company," Praveen says. "We remain a core part of our clients. We have developed full - fledged product or modules for our clients, who focus on marketing and sales by outsourcing technology development to us." The company today has 14 clients and some of them are: 3M, ComerceOne, Info-One, NightFire Software and PeopleSoft.

The dynamics of software business is quite different from others. For instance, Impetus charges its clients on a man -year basis at about $40,000 to$50,000 per year, unlike the per billing rates of services companies. Also, once a team is established for a particular client members are not usually pulled out to work for others "It usually takes about four months to win the confidence of a client since most of them are not used to outsourcing such core development work, but once we get in, we stay with them," Praveen says, claiming that Impetus has not lost many clients in the past.

The business model of Impetus evolved actually after Praveen had his own share of success and failure in the software product business. In 1991, he had developed software products- one of them, a new acquisition system that filtered reports by wire agencies, was for the media- and marketed them in India. "But selling in India and providing after-sales support was a problem in India then. We had to take a call whether to continue here or go to the US,'' Praveen recalls.

During the boom times when money was plenty for technology firms thanks to the largesse of venture capitalists, it was difficult to get work since companies preferred to do everything in house. But today, post 9/11, VCs are asking companies to go and outsource everything they can to cut costs. " Many of our clients are start-ups or midsize companies who cannot afford to set up offshore centres in India," Praveen points out.

While such a clients also makes Impetus vulnerable to some extent Praveen says he has identified over 2,000 software products companies in the US alone who can be potential clients. "Today our revenues stand at $4.5 million from about 14 clients. So you can extrapolate the market size of our kind of business', he says. "It is estimated that a company can save 60 per cent of product development costs by outsourcing such work and enjoy a productivity enhancement of about 30 per cent," he claims.

Impetus hopes to achieve about $6 million in revenues by end of 2003 and to ramp up the offshore facility at Indore to 300 people from the present 150 techies. "Start-ups are getting funded these days and 2004 looks promising." Praveen is optimistic as it's always start -ups who have driven technology. Impetus is also planning to hit the market with its own product in the future. "Ultimately we want to be a licensor of our own technologies," Praveen says. Then, you can say Impetus has come a full circle.