The Hindu Business Line : Midsized firms eye engg service outsourcing pie

A recent study by Nasscom and Booz Allen Hamilton has said that India has the potential to garner around 25 per cent of the global ESO pie, worth around $50 billion by 2020.

For instance, the Luminous Group, which is primarily known for its appliances business constituting inverters and UPS, is scaling up its engineering solutions arm to meet growing demand by midsized American and European firms.

The company plans to spruce up operations of its engineering services arm from around 250 engineers at present to about 1000 engineers in the next two years.

The company has already carried out projects in the domain of architectural engineering, land information system services and design support for civil works projects, among others.

According to Mr Rakesh Malhotra, Managing Director, the company is mainly targeting midsized companies in the West.

"The advantage offered is not only lower costs but also higher turnaround capability."

The company expects its engineering services arm to grow from Rs 16 crore currently to Rs 80 crore by 2009.

The competitive edge is also because of the availability of skilled engineers in India.

The country saw nearly four lakh engineers graduate in 2005 against just 70,000 in the US.

Analysts have said that smaller and midsized companies in the West outsourcing even functions such as electrical, plumbing and piping designs signifies opportunities for independent businesses in this domain.

At the top of the value chain, of course, are ESO pioneers such as L&T, Thermax, Mahindra and Hero Global Design.

Many larger Indian companies are also diversifying or expanding the engineering services business.

Eicher Motors, for instance, has forayed into ESO with the acquisition of the US-based company Design Intent Engineering (DIE).

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