From left: Vikas Saigal ( Booz), Som Mittal (NASSCOM President), Krishna Mikkilineni ( Honeywell), Ketan Bakshi ( NASSCOM, Engg Services Chair) and BVR Mohan Reddy ( Infotech) at the release of the report on Indian Engineering services, Bangalore, May 20 ( IndiaTechOnline photo)
||Indian Engineering services: a $ 8 billion biz, poised for 5-fold growth: NASSCOM
The National Association of Software and Service Companies (NASSCOM) in association with the management consulting firm Booz & Co, has released the key findings of the study ‘Global ER&D: Accelerating Innovation with Indian Engineering’ The study aims at understanding the changes in customer perspectives about ER&D services sourcing, the growth trends in the Indian service provider landscape and the opportunity by 2020. It also identifies and prioritizes key verticals, so that the industry can invest systematically in creating a sustainable ecosystem.
The report, says the engineering services landscape in India has evolved significantly over the last four years, reflecting maturity, diversification and enhanced verticalization to partner with global corporations. The Indian ER&D market in 2009 is estimated at $ 8.3 billion with employee strength of 150,000, reflecting almost a threefold growth in revenues, employees and number of offshore development centers.
This is expected to grow further with the global ER&D spend surpassing $1 trillion in 2009 and expected to touch $1.4 trillion by 2020. The report estimates that India has the potential to capture $ 40-45 billion in ER&D Services by 2020.
The study reviews eleven major verticals in detail - Telecom, Semiconductors, Consumer Electronics, Medical Devices, Industrial Automation, Computing Systems, Automotive, Aerospace, Construction and Heavy Machinery, Energy and Infrastructure. It also reviews India’s performance across the broad range of services including embedded software and hardware design services, testing, prototyping building, engineering analysis and modeling, core product development and design services. At the product development level, strong capabilities exist in India in areas of Automotive interiors and exteriors, aero-structures and propulsion in Aerospace, access networks, core networks, devices in Telecom and development of small-medium size products in the Construction/Heavy Machinery vertical.
Major growth triggers have been identified as:
• Continued ER&D investment critical for innovation and penetrating new markets.
• Increasing use of electronics, Fuel efficiency/ Alternate Fuels and convergence of technologies driving future ER&D spend
• Greater focus on emerging markets resulting from rise of a new consumer segment with varied requirements.
• Increasing sophistication and maturity of the ER&D services industry
• Changing customer perceptions wherein India is being viewed as a strategic partner, focused on innovation rather than just sustenance engineering.
• Global ER&D spend surpassed USD 1 trillion in 2009 and is expected to touch ~ USD 1.4 trillion by 2020. Automotive, Consumer Electronics and Telecom are the top spenders on ER&D
• Indian ER&D services market reflected revenue growth of over 40% in the last three years with 2009 revenues amounting to USD 8.3 billion and an increase in employee base from 54000 in 2006 to 150,000 in 2009
• Indian ER&D services market expected to reach USD 40-45 billion by 2020 with exports revenues at about USD 35-40 billion and domestic revenues at USD 4-6 billion
• Infrastructure, Aerospace and Energy expected to contribute ~80 per cent of the domestic revenue
• Potential to emerge as a “Frugal engineering” hub
March 22 2010