Indian cos eye a piece of engg pie

BANGALORE: Indian IT companies have a $40 bn opportunity in engineering services by ’20. The country’s share of offshored engineering services, which is currently 12%, can be increased to 30% during the period.

Nasscom chairman B Ramalinga Raju said, “The amount of exports from engineering services from India today is the size of the Indian IT industry (export-oriented) in 1998-99. The sector has now attained a size where it deserves special attention.” According to him, global customers are now even planning to move such activities from China to India.

The sector, however, faces the challenge of finding industry-ready people even though nearly 3m pass out of engineering colleges every year, Mr Raju added. Nasscom president Kiran Karnik said there was a special role for the government in facilitating the growth of this sector, which has the potential to create 1.5-2 lakh additional jobs.

Globally, the spending on engineering services amounted to $750 bn in ’04 and is projected to grow to $1.1 trillion by ’20, according to the Nasscom and Booz Allen Hamilton study ‘Globalisation of engineering services — the next frontier for India’.

While in FY05, $10-15bn of engineering services were offshored, the market is expected to grow to $150-225 bn by ’20. The market is highly fragmented with the automotive sector accounting for 19%, aerospace 8% and utilities making up 3% in ’04. The study says hi-tech/telecom is the dominant and fastest-growing sector with 30% of the market.

While India is on a strong footing in the automotive and hi-tech/telecom segments — with a $25 bn market opportunity — aerospace offers the biggest potential for expansion, it said.