Despite a slowdown in the world economy, Indian engineering service providers will see growth due to availability of skilled talent pool coupled with a shortage of engineers in the developed markets.

According to a report released by Nasscom and Booz and Company, the growth is attributed to flexible business models, shorter product life cycles of engineering companies, decreasing time to market and flexibility in offering end products.

Indian engineering research and development (ER&D) market is expected to add to future growth with automotive, consumer electronics and telecom contributing by over 50 per cent to offshoring revenues by 2020, the report said.

Ravi Pandit, Chairman, Nasscom Engineering Forum, Pune and Group CEO, KPIT Cummins, told Business Line that the future growth will be driven by a need for IP and co-innovation, to meet the growing demand in emerging economies as well as fast evolving customer preferences.

“Global automotive or aerospace companies are increasingly asking Indian companies to co-develop a product instead of working on specifications set by them such as building infotainment systems inside a car or new wing technology for an aircraft,” said Suvojoy Sengupta, Managing Director, India, Booz and Co.

Indian engineering research and development outsourcing industry is set to reach $37- 45 billion by 2020, according to the report. This will be about 35 per cent of the overall ER&D market, which is estimated to reach $118 billion by 2020. Currently, this market is pegged at $10.2 billion.

This will be driven by companies in sectors such as chemical, medical and automotive. In addition, the Government is expected to provide a boost to engineering in India through investments in infrastructure development in 2012-17 in telecom and energy and construction sector, the report added.

venkatesh.ganesh@thehindu.co.in

(This article was published on October 10, 2012)
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