i2 expands India staff for SCM customization

BANGALORE, INDIA – As its customers increasingly demand customization of packaged software to tune it to their own particular processes, i2 Technologies Inc., a Dallas-based vendor of supply chain management (SCM) software, is increasing the number of staff at its operations in India.

“What we are telling customers is that we have standard products, but we can mass-customize them and do a lot of implementation offsite in India,” said Sanjiv Sidhu, chairman and chief executive officer of i2.

i2 already employs over 1,000 staff in Bangalore, which is roughly about one-third of the company’s staff worldwide. Currently about 60 percent of i2’s work in product development, customization, implementation and tech support is done from India, and it is likely that it will go up to over 70 percent, according to Sankalp Saxena, managing director of i2’s operations in India.

“In the last five years, customers wanted to use packaged software exactly as delivered, and there was this concept that packaged software brings to you best-in-class processes, and you should use it as it is,” said Sidhu. “That learning holds good in some applications like financials where the process is very regulated. But this does not hold good for supply chain management. Even two grocery retailers can be very different (in their supply chain management requirements).”

In some instances, the customization would involve source code modifications, and some of these modifications would be included in future release, according to Saxena. “Working with a large customer in a vertical sometimes enables us to offer a new feature set to that vertical,” added Saxena. ” Before we go in and tweak source code, we of course look at issues such as the industry re-applicability of the solution.”

i2 is currently doing customization of its packaged software in India for a number of large clients including Cypress Semiconductor Corp in San Jose, California, Royal Dutch/Shell Group of Companies in Europe, Payless ShoeSource Inc in Topeka, Kansas, and Woolworths Limited in Sydney. The Indian operation is also working on the development of SCM software for the downstream oil business in tandem with Shell Global Solutions International BV in the Netherlands.

i2’s strategy to move a larger proportion of its product development, customization work and related services to India makes good business sense, according to Larry Lapide, vice president for SCM at AMR Research Inc, a Boston-based research firm. “i2 generally has always had a brain trust of highly educated thought leaders inside, many of them Indian nationals, leveraged by an aggressive sales force,” said Lapide. “Many of the thought leaders have moved back to India to support this effort. So there is a good chance of success in this regard, at a much reduced cost structure.” In 2001, i2 moved about 200 people from its U.S. operations to India.

i2 aims to shift implementation of its software from customer sites to its center in India, Sidhu said.

The plan to move implementation offshore to India is feasible only for certain aspects of implementation, like data conversions and clean up, business process coding and making sure system modules interoperate, according to Lapide. “For business process definition, as well as for change management, you need someone on site,” said Lapide.