IP Development at the Forefront of Engineering Services Go-to-Market

Embedded and Semiconductor Engineering Services is a growing market as there is a renewed interest from the applications of connected systems, i.e., Internet of Things (IoT). Embedded and semiconductor engineering services are traditionally standalone solutions to address hardware challenges, connectivity solutions, and specific product functionalities. But now with the advent of IoT and connected systems, clients are increasingly looking for a single-product engineering service provider for an end-to-end solutions portfolio. The scope includes silicon and system design, software development (including communication stack and middleware, testing, sustenance, and optimization), and enabling more digital technology integration with embedded engineering. Therefore, service providers are expanding their capability from innovation to transformation.

We released our HfS Embedded and Semiconductor Engineering Services Blueprint Report recently, where we evaluated 20[1] leading service providers. In this PoV, we discuss the top go-to-market strategies adopted by the embedded and semiconductor engineering service providers, key differentiators and  investments to boost their services capabilities.

Strategies Adopted by Service Providers to Grow Embedded and Semiconductor Engineering Business

Exhibit 1: Strategies Adopted by Service Providers to Grow Embedded and Semiconductor Engineering Business

Source: HfS Research, Embedded and Semiconductor Engineering Blueprint 2017, n=17 Service Providers

New solutions and IP development is the highest focus area for the service providers for growth in specific domains such as embedded platform design, security, silicon design among others (See Exhibit 1). In semiconductor engineering, the new focus is to build advanced chip design smaller than 14 nm, and in the future, the focus will be on smaller than 10 nm chip design. Since rapid deployment is one of the trends in embedded and semiconductor engineering, service providers are building industry-specific solutions for industries such as automotive, telecom, aerospace, and medical devices. At present enterprises are seeking guidance for the technical changes required for any change in regulatory compliance. As a result,  industry-specific consulting is also a sweet spot for the service providers. Service providers are also increasingly looking for engagements in niche areas such as infotainment and air traffic control.

Key Differentiators as a Provider of Embedded and Semiconductor Engineering Services

Exhibit 2: Key Differentiators as a Provider of Embedded and Semiconductor Engineering Services

Source: HfS Research, Embedded and Semiconductor Engineering Blueprint 2017, n=17 Service Providers

Service providers want to differentiate by enabling the customers in their digital transformation journey with capabilities in emerging technologies (See Exhibit 2) such as IoT and Industry 4.0.  Another differentiator is end-to-end embedded and semiconductor engineering capabilities including proprietary tools and platform, IP, accelerators providing value across the chain of design, development, testing, and support.

The innovation capabilities of embedded and semiconductor engineering services are the next priority for service providers. Some of the key focus areas in embedded and semiconductor engineering innovation are partnership ecosystem, technical infrastructure and product certification, workforce capability, and outcome-based engagement model among others.

We have seen robust investments in IP development (automated testing frameworks, applications for rapid deployment) and emerging technologies such as security solutions, machine learning, connectivity, imaging and lower geometry chip design. The partner ecosystem development, talent management, and resource capability augmentation are the emerging focus areas.

Other investments include technical infrastructure development (domain/industry specific), partnerships with academic institutions (research programs, recruitment), industry-specific capability development (automation, regulatory compliance), and thought leadership initiatives.

Bottom-line: IoT will Drive Technology-led Differentiation in Embedded and Semiconductor Engineering Services

The embedded and semiconductor engineering sector is an interesting space due to an emphasis on IoT and service providers are developing their strategies and making investments in developing their embedded and semiconductor engineering capabilities. The focus is on the entire technology stack starting from lower geometry chip design, managing complexity in the system on chip (SoC) and at the software level, focusing on gateways, edge analytics, cloud-based platform, analytics and insights, user interfaces, application integration, and other factors. Also in some cases, the focus is on developing plug-and-play solutions to address specific challenges, such as telematics and patient monitoring. Service providers need to rethink their embedded and semiconductor engineering services offerings for additional functionalities and more integration with other enterprise applications.

This PoV is a reality check for both embedded and semiconductor engineering service providers and enterprises to assess whether they are investing in the right areas for developing their embedded and semiconductor engineering capabilities and identify action points for future-proofing their embedded and semiconductor engineering operations.

HfS Premium Subscribers can access the 2017 HfS Blueprint Report on Embedded and Semiconductor Engineering Services here.

[1] Alten, Altran, Aricent, Capgemini, Cognizant, eInfochips, Happiest Minds, HARMAN, HCL, Infosys, KPIT, L&T Technology Services, Luxoft, Mindtree, QuEST Global, Sasken, Tata Elxsi, TCS, Tech Mahindra, Wipro