India has been portrayed as a beehive of innovation, where engineers at Indian subsidiaries of global technology companies design sophisticated new products for global markets.

The reality is quite different, as most companies do mainly product maintenance and testing, and development of small components of products in India, according to Sudin Apte, an analyst at Forrester Research, and Vinay Deshpande, a developer of the Simputer, a handheld computer designed in India. Their sentiments are shared by a range of others in IT in India.

"The situation is a lot better than it was some years ago, but most Indian operations of multinational companies are still far away from defining and architecting products," Deshpande said.

A lot of the product innovation in the country is coming from small and medium-size Indian companies, he added.

Multinational technology companies typically claim in their advertisements and press announcements that they are doing innovative product development in India. That image helps companies attract employees, said an executive of the Indian subsidiary of a technology company, under condition of anonymity.

Most technology product firms, however, still see India only as a "limitless source of bulk staffing," Forrester said in a report.

Multinational technology companies are setting up offshore development operations in India, mainly to take advantage of the lower cost of staff in India, and the availability of talent, Apte said. But innovation, which he describes as thinking out a product or having ownership of a product, does not happen at the Indian subsidiaries, he added.

Respondents to a Forrester survey of development centers in India of multinational technology firms cited availability of talent, and low cost of staff as the main considerations for having their centers in India.

"We do not think out new products or architect products in India," said a software engineer at a multinational vendor of banking software in Bangalore, who requested anonymity. "We get to do the coding for new products, and are mainly involved in maintenance or making improvements to legacy products," he added.

When technology companies have outsourced to Indian companies, they have usually contracted for staff on a " time and materials" basis, which reflects the kind of work that is getting done in India, Apte said.

The IDG News Service is a Network World affiliate.