Bangalore, September 22, 2013: Indian engineering service providers have clearly emerged as global leaders and soon India will have a $1 Billion Product Engineering Services player in the market , finds leading Globalization and Market Expansion Advisory firm Zinnov Management Consulting.
Its annual study titled “Global R&D Service Providers (GSPR) Rating 2013 says India and China are garnering a major share of the engineering services revenues; Over 225 new R&D centers were set up in India in the last 5 years. Indian service providers continue to retain the lion’s share of the overall Engineering and R&D outsourcing pie – accounting for about 23% of the overall market. The total exports in the Engineering R&D outsourcing segment from India stood at $16.3 Billion. However, the growth in the Engineering R&D and outsourcing segment lagged the overall Indian industry growth rate and stood at 10.9%. Engineering analytics is a significant opportunity area, with overall spending in this segment set to increase to about $27 Billion by 2017 at the rate of 16.5%
The service providers can be broadly classified into three groups. First group is Wipro, HCL, TCS, Tech Mahindra and Infosys, which has a significantly large product engineering practice and amongst them they cover most of the outsourced R&D activity. The second set of leaders include companies like iGATE, L&T TS, Infotech, Mindtree and Symphony Teleca that continue to expand their coverage across verticals and are transforming to take on a larger play across all the verticals. The third category is a set of niche leaders like Aricent, KPIT Cummins, Persistent, Sasken, eInfochips, Quest Global, Tata Elxsi and Tata Technologies. This makes the Indian supplier landscape a diverse and mature market place for companies that are looking to source product engineering services.
TCS has the most expansive service offering across all the verticals. Wipro and HCL being heritage engineering and R&D service providers, they have deep and strong capabilities in this space. Tech Mahindra has emerged as a strong player in this segment with strong eco-system support from the engineering capabilities of the Mahindra group and erstwhile Mahindra Satyam. Infosys is strengthening and growing its presence in areas like Semiconductor and Electronics and notably its strong training engine for Engineering R&D gives it a definite edge. The niche leaders continue to enjoy a dominant position in their respective verticals of operation and have considerably increased the non-linear revenue as a percentage of overall revenue.
In terms of verticals, niche service providers continue to retain their dominant position. Niche service providers have a better focus on the non-linear strategy and are beginning to see good traction in terms of the revenue from non-linear strategies. More than 30% of the overall deals signed in the engineering services segment have had a solution component incorporated in it and clearly there is a clear shift from the traditional professional services model to a solution augmented model. The European service providers in the product engineering space like Capgemini, Altran, Safran, Alten, AS System are now starting to leverage the Global Delivery Model and this trend will soon put tremendous pressure on the
Sundararaman Viswanathan, Manager-Consulting, Zinnov, said, “Today there are several new opportunities for service providers to take advantage of, such as engineering analytics, which presents significant potential for growth. We are seeing a trend of solution strategy increasingly becoming a major component in majority of the deals, as service providers are building solutions to demonstrate competency, enhance product quality and reduce time to market across sectors.”