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Our Bureau

Nasscom sees potential for $40-b business by 2020

New Delhi , Aug. 3

After making it big in the global IT enabled services and business process outsourcing market, the offshore engineering services segment is set to be the next big thing for Indian IT firms. According to a study done by the Nasscom and management consulting firm Booz Allen Hamilton, the Indian IT firms can account for nearly $40 billion from offshoring of engineering services by 2020.

This would give India a 30 per cent market share in this segment, up from 12 per cent at present. The report said that offshore engineering services could create up to two-lakh additional jobs in the country.

Mr Kiran Karnik, President, Nasscom, said: "The Indian IT and software industry is continuously renewing itself and seeking to grow by addressing newer service lines; the latest one being engineering services. Companies in India have developed capabilities and skill sets, and invested in technology platforms to leverage this opportunity. The growth in engineering services signifies the need for global corporations to expand their R&D pool beyond their home countries. However, we must ensure that required steps are taken by stakeholders to address possible roadblocks, especially those concerning workforce."

Innovation potential

Mr Vikas Sehgal, Executive Director, Booz Allen Hamilton, said: "For India, engineering services offshoring presents a tremendous opportunity, it is not only a significant revenue generator, but will also place India on the global innovation map. Attaining, training and retaining talent will be a critical next step for India to maintain its current advantage."

Global spending on engineering services was $750 billion in 2004 and is projected to increase to $1.1 trillion by 2020. The report also indicates that the market is highly fragmented by industry with automotive at 19 per cent, aerospace at 8 per cent and utilities at 3 per cent in 2004. High-Tech and telecom is the dominant and fastest growing sector, with 30 per cent of the market, and the traditional engineering powerhouses — the USA, Germany and Japan have a lead in engineering spend.

"India enjoys a relatively strong position in the automotive and high-tech/telecom engineering services market with a $25-billion opportunity by 2020. Aerospace offers the greatest potential for expansion, though it is also one of the toughest opportunities to tap because of its close association with the defence sector," the report said.

Mr B. Ramalinga Raju, Founder and Chairman of Satyam Computer Services & Chairman of Nasscom, said: "All important stakeholders including the Government of India, academic institutions, service providers and trade bodies such as Nasscom will need to undertake a series of important measures. A carefully thought out strategy that combines strong marketing efforts — such as the development of an `Engineered in India' brand, with investments in infrastructure, workforce and expertise is required."

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