The Hindu Business Line : Big scope seen for offshoring engg services

Multi-pronged strategy
Build engineering in India brand
Build domain expertise through symbiotic relationships
Focus on infrastructure creation
Take up initiatives to improve workforce

Pune , Sept. 4

A Booz Allen Hamilton study has estimated an additional $40 billion opportunity for the Indian IT industry by 2020 from offshoring of engineering services alone.

To realise this opportunity, India needs to develop a multi-pronged strategy which includes build the `engineering in India' brand, build domain expertise through symbiotic relationships, focus on infrastructure creation, undertake initiatives to improve workforce, leverage local industry `offsets' and align Government policy and incentives.

Mr Sunil Mehta, Vice-President, Nasscom, said to build the engineering services brand, it would need different hubs in the country. Quoting an example, he said Bangalore, which housed Texas Instruments and Intel, could be developed as a tech or telecom hub, while Pune, Chennai and Gurgaon as auto sector hubs and Mumbai as financial services and aerospace hub.

He said that this would mean developing end-to-end IT solutions from designing the product to its manufacture.

Pune, which contributes about $500 million in engineering services revenue, is occupying the third position in the country. The total revenues from this segment in the country is close to $3 billion. He pointed out that CEOs were also viewing offshoring as a way to counter market forces that were exerting pressure on engineering services. While cost control remained a concern, companies were also seeing access to talent pool that could grow engineering capacity.

Locating engineering services in emerging markets also provided access to growing market of customers and could decrease time to market. While in fiscal 05, only $15 billion of engineering services were offshored, the market is expected to grow to $150-$225 billion by 2020.

As part of building up the engineering services, he noted that the Government should take a structured approach to leveraging industry for e.g., large imports in aerospace, defence and utilities should be leveraged through offset programmes. Mr Mehta said the forum members of the engineering services of Nasscom is also placing its recommendation to the Ministry of Defence and Civil Aviation for this.

Nasscom, which had received these recommendations from the forum a couple of months ago, would be submitting it within the next quarter, he said.

Mr Mehta said as part of the brand building exercise, it would be reaching out to the stakeholders by conducting awareness programmes within the country and would be taking the same to the US, Germany and Japan. This would be followed by working with the Government and members to extend this to building up talent. For this, it is looking at setting up centres of excellence, numbering around 10 across the country, which would be supplied with the latest equipment, software at reduced prices and also a talent pool which was conversant with the latest technologies. Talks with hardware manufacturers and colleges have begun, he added.

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