Embedded software is a software system that permanently resides in a device whose operations it controls. Typically, embedded systems are housed on flash memory or ROM chip and may be found in systems like cellular phones, household and office appliances having digital interfaces, medical equipment, automotive components, avionics etc. The fundamental problem facing the design of embedded systems is heterogeneity. Multiple styles of algorithms (e.g. signal processing, communications, and controls) are implemented using a variety of technologies (e.g., digital signal processors, microcontrollers, field-programmable gate arrays, application-specific integrated circuits, and real-time operating systems).Other challenges in automotive development are increasing requirements and therefore increasing size and complexity of the code, development and management of offshore / muti-site software development to reduce costs. Embedded software developers need embedded software development tools to develop embedded software. An embedded software development environment is an integrated collection of software development tools that manage the entire embedded software development process: analyzing, designing, documenting, writing, compiling, debugging, testing, optimizing, and verifying software. The choice of an embedded software development environment is the most important determinant of the productivity and effectiveness of developers. Requirement management systems can be used for capturing, linking, analyzing, and managing changes to requirements and their traceability and hence ensure conformance to requirements and compliance with regulations and standards. Using optimizing compilers with multi software development environment, developers can consistently generate smaller and faster code. A debugger helps developers find more bugs in their software more quickly. Getting the bugs out of the software is the most expensive, time consuming, and high-risk aspect of electronic product development. Testing of applications at unit level allows finding bugs early in the development process and increases the confidence level for system test, because the system is now based on well-tested units. The usage of appropriate test tools enables the automation of unit testing and is the base for regression testing, thus optimizing the development process and providing the base for future product feature enhancements.