VIENNA, Va.—Two U.S. product development companies have agreed to merge to form GlobalLogic, a multinational software product development company based here.
The companies, Bonus Technology based in New Jersey, and Indus Logic, based here, both have substantial overseas operations.
The merger is the result of an equity swap, and no price was placed on the value of the transaction. The merger is effective Sept. 25.
“What GlobalLogic does is partner with product software companies to help build their products,” said GlobalLogic CEO Peter Harrison.
Harrison said that the merger will join operations in India and in Kiev, in the Ukraine, into a single operation. Overall, the company will employ nearly 1,500 people.
“Some would refer to it as outsourced R&D, or outsourced product development,” Harrison told eWEEK.
“Were a leader of global product development,” he said. “We believe we work with more product software companies than anyone on the planet today. We work with 100 companies, and we think the next nearest is about 60.”
Harrison said that one major difference between his companys focus and that of most outsourcing companies is that GlobalLogic helps create, design and deliver software thats intended to be sold as products.
He said that most other companies deliver products that are intended to be used by companies for internal use.
He also said that the multinational nature of the new company gives GlobalLogic some unique advantages.
“One of the things the Ukraine does is give us more time zones and allow us to follow the sun,” Harrison said. “We can build in India, test in Ukraine and deploy in the U.S. and do that around the clock. Or we can build some components in India and some in Ukraine and combine in U.S.”
“What were doing is helping design for companies,” Harrison said. “Companies will come to us with an idea and well help them design it. Many companies dont have engineering, so we interface directly with project management.”
Harrison also noted that a major focus on the new companys development efforts is with mobile and wireless products.
“About 300 of our people work exclusively on wireless and mobile products,” Harrison said. “Well develop a reference, and then we will transport that to the 1,500 different devices that the customer identifies as critical for that release. We will test it on all of those devices.”
Harrison said that another edge the company has is the fact that the aim of the company has been on products all along.
“Theres been an increasing appreciation that products are different,” he said. “Software thats going to get sold is different and needs to be built to a higher spec, and it needs to be more configurable.”
“Were seeing a whole lot of activity in this area of off shore product development,” said Berry Rubenstein, program manager – Application Outsourcing & Offshore Services for IDC.
“Its definitely a booming area,” he noted. “Youre seeing a larger portion of what companies used to consider their core competency being outsourced to companies like GlobalLogic.”
Rubenstein said that companies like GlobalLogic are getting deeply involved in the product development process.
“These companies are growing at a pretty rapid clip, which tells me that theyre meeting some success,” he said, adding, “Theyre putting some discipline, quality and process into areas where it might not have been previously.”
Companies such as GlobalLogic can be a real boon to smaller companies that might not be able to open overseas development operations on their own.
“It takes an enormous amount of resources in many areas for companies to set up a captive offshore center,” Rubenstein said.
“From our perspective, only the largest companies have the resources to make it worthwhile doing it themselves. It takes 350 to 400 people in an offshore center to make it worthwhile. That classes out a lot of companies,” he said.
“For smaller companies, this is just not feasible,” Rubenstein said. “The other option is to go to a traditional service company, but those companies typically develop applications for in-house use.”
“Theres a marked difference in developing products that are going to be mass marketed versus developing them for in-house use, and the requirements are very different,” he said.
Rubenstein said he thinks that the strength that GlobalLogic has in mobile and wireless will be very important.
“I wouldnt be surprised to see them grow at a pretty healthy clip,” he said, “youll probably see more and more players entering this space.”
Rubenstein said that this part of the market will grow rapidly. “A company like GlobalLogic that has a head start is in a very good position,” he said.
Harrison said that GlobalLogic is also announcing a product of its own called Velocity, which is a platform for supporting distributed development.
“Management here in the U.S. and engineers in India or Ukraine can collaborate,” he said. “It reduces the need to travel.”
Harrison said that Velocity will provide a highly granular and agile method for collaboration in product development.
“Velocity is the key to remaining agile while remaining in a distributed environment,” he said.