Compiler Development in Bangalore

Compilers are large pieces of software that translate programming languages into executable instructions, allowing the software written in high level programming languages like C++ and Java to run on microprocessors like those from Intel. Compilers are examples of some of the most complex software that humans have built. The source code for a modern optimizing compiler is usually in excess of 200,000 lines. Compiler design has historically be a topic for PhD theses.

This marketing letter, from a Bangalore software company, is just another example of the fact that both routine and advanced software engineering jobs can move overseas. The claims, made by some people defending unrestriced offshoring, that the US will "move up the food chain" is highly questionable when it comes to sophisticated software like compilers. There is no where "up the food chain" to move.

There are some interesting, and, from a US perspective hopeful issues raised by this marketing letter.

Compiler development is an research and development (R&D) activity. Actual development or customization of a compiler is a one time cost. For any successful product, such a cost is a fraction of the total cost of the product (which includes sales, marketing and company overhead). Moving R&D offshore is questionable, since offshoring only produces a savings in 10 or 15 percent of the product cost.

There are significant risks in doing development in a foreign country. These include problems with legal recourse if a contract is not honored and problems with intellectual property enforcement. Face to face meetings are difficult, time zones do not match and it can be more difficult to determine if the offshore developer has the reliability and technical competence for the project. Given the risk of development in a foreign country, a 50% savings is not that high. At this price level an experienced US contractor can compete, once risk is factored in.

From: Chethan Somashekaraiah
Sent: Tuesday, February 17, 2004 2:38 PM
Subject: From Chethan S, Chipwerks Pvt. Ltd, Bangalore, India


This is Chethan from Chipwerks Private Limited, Bangalore. I recently saw your posting on

It gives me great pleasure to intorduce ourselves.

Chipwerks is a organization specialized in providing custom complier services. Many organizations leverage our strenths in compiler design and develoment to put their development efforts on fast track. As we are based out of India, we bring significant cost reductions in the development efforts of our customers(say up to 50%).

I get to understand from your job posting that you are on the look out for some senior complier engineers. As we have all the relevant skills inhouse, we are keen to take up compiler development work with US customers. We do not engage in placing our consultants onsite. I request you to help us make inroads into companies that require compilers and allied tool servies. We can work out a model where we will pay you for every contract that you get us in our area of expertise. I can tell you for sure from my past experiences that customers who have engaged the offshore route have benefited greatly both in terms of cost and quality.

I have attached a profile of our services with this mail. Please go thru and let us know if you have any questions. We will be more than happy to answer them.

We hope to hear from you soon and look forward to work with you.

  Sincerely yours,
  Chipwerks Private Limited,
  Bangalore - 560 079 India
  Tel : +91-80-5110 3251-55 & +91-80-3061-1540
  Fax: +91-80-5110 3256
  Mobile: +91-98860-26097

Ian Kaplan, February 2004

back to An Economics Question