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09/04/03 09:43 AM
Commentary: EDA Industry View - What did the ... Report this article as Inappropriate to us !!!Login to Reply

Sent as a letter from Seth Goodman to Russ Henke


In the August 22, 2003 issue of EDA Cafe News, your article "Commentary: EDA
Industry View -- What did the Last Quarter Bring?" was very enlightening. (URL: http://www.edacafe.com/eda_commentary.php)
You cite many sources familiar to me that suggest, as opposed to previous
recessionary outsourcing binges, this round of outsourcing affects some of
our core capabilities in which lie much of the economic advantage that we
currently possess. The further implication is that these jobs are not too
likely to return in the foreseeable future. Sadly, I could not agree more.

Despite the admirable performance numbers turned in by the big nine in EDA,
I can't help but wonder how much of these EDA sales went to the operations
set up outside the U.S. to do the design work previously done here. If it
were possible to estimate this number, that would give us a better handle on
how bad the problem really is. Complicating the task of data collection is
the possibility that EDA seats could be purchased by corporate parent
entities in the U.S. for use by their foreign subsidiaries or
sub-contractors. Is it possible to make such an estimate or do you
presently have a feel for the numbers, even without hard data?

If EDA sales are currently being propped up by sales to the off-shore design
facilities that have supplanted our own, it will probably not be long before
the EDA industry is in the same position as the rest of the U.S.
high-technology design community. I must admit that as merely an EE who has
managed several engineering departments, I have no expertise in the inside
workings of the EDA industry and I am somewhat out of my realm in making
this prediction. However, it does seem logical from where I sit and I
wanted to bounce the idea off of someone who does have expertise in the EDA

Some EDA companies have gone heavily into outsourced software development,
with key technology know-how going with it, leaving only top management
(technical and non-technical), marketing, sales and support in the U.S. I
have dealt directly with some EDA software development groups in India (as
an EDA tool alpha tester) and I can attest to their high level of expertise,
productivity and English language skills. Do the EDA companies really think
that their management teams are so irreplaceable that off-shore EDA
companies cannot supplant them entirely? An off-shore EDA enterprise that
was not burdened by the currently bloated salaries and benefits of top U.S.
executives could possibly offer a lot more product for a lot less money.
The savings in the management area are potentially as large as in the
technical ranks. Is this not the next logical step?

I would be most interested in your opinions on these matters.


Seth Goodman

Goodman Associates, LLC
tel 608.833.9933
fax 608.833.9966

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