The Hindu Business Line : Auto engg design services — HeroITES may tap group resources

CLOSE on the heels of being hived off into an independent company, business process outsourcing (BPO) firm HeroITES is finalising a business plan to tap the high-potential automotive engineering design services market.

For this, it may look at channelising related resources and capabilities — currently residing with various group companies — towards the BPO venture, to get a headstart in the domain.

"We are looking at tapping opportunities in engineering design services arena as part of the newly spun-off BPO company. Engineering design services is a high potential area and Hero Group already has the strength and expertise in manufacturing and engineering. We are finalising a business plan to evaluate the opportunity that exists," Mr Nilesh Kothari, Senior Vice-President — Business Development and Finance, HeroITES, said.

Engineering services augment or manage processes that are associated with the creation of a product or service, as well as those associated with maximising the life span and optimising the yield associated with a product or asset. This not only includes design elements of the product or service itself, but also infrastructure, equipment and processes engaged in manufacturing or delivering them. The market potential for outsourced engineering services is estimated to lie somewhere between $7-12 billion.

Indian vendors have barely scratched the surface of this opportunity with the estimated value of work currently undertaken by players at a mere $400-500 million, according to a recent Nasscom report.

"One of the options for us is to leverage all resources of the group through one engineering design services company. The outfit could look at serving the internal needs of the Hero Group, other clients in the domestic market and also international clientele. This could be one of the ways of launching on a larger scale," he said.

Currently under the group, Hero Global Design offers engineering design services to international clients albeit on a small scale. Besides this, engineering service capabilities reside with other Group companies.

Another alternative before HeroITES could be building engineering design services capabilities from scratch, leaving the existing engineering design functions under other group companies, untouched. Yet another route could be to tie up with an international design house to provide these services in automotive and other domains, he said.

"We are evaluating all options. The idea is to see what are the existing capabilities available in the Hero Group and whether there are any synergies and how these could be leveraged," he added.

Hero Group had recently announced the hiving-off of its IT-enabled services unit, HeroITES, into an independent company, and had outlined a comprehensive business strategy aimed at being amongst the top five BPOs in the country by 2007.

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