In what could be a new opportunity for Indian software companies to play in global product business, American software product companies are warming up to outsourcing development. Global product companies - that were so far wary of outsourcing product development and at most offshoring it to their own captive units in India and other countries - are testing waters with peripheral product development outsourcing. The aim is to bring down the total cost ownership (TCO) of product to remain competitive in the market.

As an early indicator, US based Impetus Technologies Inc, which claim to offer software development services exclusively to product companies is doubling its people count in India in next 18 months The company currently has 150 people software product team based in Indore to service its US-based product customers such as 3M, PeopleSoft and Commerce One.

Moreover impetus is also developing its own product portfolio in the process and selling them in the market on its own.

"We are engaged in joint development of product with our customers. Besides developing product as part of out sourced service, we also invest in products by co-developing them with the vendors. Under the arrangement, we own the intellectual property and sell it as our own product while the vendors gets a lifelong license to bundle the product with its own offering," Impetus Technologies president and chief executive officer Praveen Kankariya said, adding that the company currently owns 16 such products.

"I see an increasing out sourcing trend from product companies in the last one year. These companies have been conservative in outsourcing product development work so far," he said.

Talking about the type of product development being outsourced by companies Mr. Kankariya said, "the development of core products cannot be outsourced to a third party. It is the infrastructure pieces- either being developed by product companies themselves or sourced from other product vendors to bundle with the core product - that are being outsourced," he said.

Claiming that Impetus is engaged only in product development services Mr. Kankariya said that the company was able to charge 15 - 20 per cent premium over the billing rates charged for enterprise software development outsourced jobs.