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Infotech Enterprises has two areas of core competence. One is EMI or Engineering, Manufacturing and Industrial products vertical. The other is UTG - Utility, Transportation and government vertical (from which it provides geospatial services, now called Geospatial Solutions Design).

If you look at the market at this time, a good starting point would be the Booz Allen Hamilton-Nasscom report on `Globalisation of Engineering Services'. It so happened that I was chairing the particular forum on behalf of Nasscom and have a good sense of how the numbers will stack up. The key findings were:

Engineering industry

Product design, R&D, engineering and manufacturing worldwide, whether internally done or outsourced, is about $1 trillion now. It actually gives you a flavour. But I have to add that the engineering industry and the IT industry have different parameters and are not similar. So we looked at the trillion dollars systematically and decided how much of that can really be outsourced. We considered several parameters such as outsourcing propensity, target country labour pool availability, infrastructure and stability of the government before outsourcing.

Why outsource

It is not that infrastructure is bad in India and thus work will not flow. As the infrastructure improves, workflow will improve. It is not a static scene that we pulled but a dynamic scene. There is an opportunity to export about $35-40 million worth engineering services in several areas. It starts off with high technology industry, which includes VLSI and computer design, moves on to instrumentation design and then covers things such as electronic, avionics and consumer products.

Electronics

I was pleasantly surprised with the large growth in the electronics market. Understandably so, because more and more chips are being used in the automobile industry. You have to do more and more of embedded electronics. For that matter with the new hybrid car coming in where you have both CNG power as well as electric power. Here, I believe that the complete shift from one type of energy to another is electronically done. They shut off one part and bring in another so they usually use various electronic controls. It might sound routine, but the intensity of the power change will be dramatic. The dashboard control is the next market space we intend moving in the next course for the auto industry.

Good growth rates have been projected and the market could grow anywhere from 30 per cent to 35 per cent at this point of time. There are several engineering companies such as BHEL, BML and BEL that created necessary infrastructure for companies to start working after attaining independence. So the addressable market in terms of engineering services is very large. We should, however, admit with due modesty that we are in a pre-eminent position. At this point, we are running about six verticals — aero, auto, rail equipment, offshore and process engineering, energy utility and consumer electronics.

Aerospace

We choose some verticals initially and after establishing our strengths we decide to add up a few more. For example, we chose our first vertical, aerospace, more by accident than any other reason.

From being a low-end value player, our aerospace sector has systematically grown up the value chain. Earlier, our clients asked us, "Can you take up the previous project model and convert it into 2D drawings?" or "Can you do the final shaping of the machine into a 3D component?" But today we are in a position to ask them, "Can you design this and send it back to us?" Our Integrated Products Teams consist of three personnel working on product definition, analysis, manufacturability, value engineering, and several other parameters. So I think the engineering business is good for us.

Geospatial Solutions

However, GSD (Geospatial Solutions Design) business has been an older business (15 years old) compared to our engineering, which is just six years old. But there has been certain amount of slow growth. This addressable market is fairly large and we have definitely developed enormous amount of competence. It has become difficult for competitors to challenge us in this particular market.

We did research a year ago to find out how to grow the business better. I don't think we have been successful so far. But we have some new ideas that we will try in the next financial year to speed up the growth of our GIS business. Growth is good so far this year.

As told to Krishnan Thiagarajan and K Bharat Kumar

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