Engineering Outsourcing - The Next Growth Frontier
Globalization of engineering support services will be the next growth frontier for India and this is expected to create 250,000 jobs in India, according to a recent report prepared by Nasscom and Booz Allen Hamilton. After IT and ITES making an impact in the outsourcing market, engineering services is following steps at a fast pace catering to engineering outsourcing, aerospace design, construction, pharmaceuticals, automotive design and industrial machinery products. Engineering outsourcing is becoming a necessity as customers get more demanding, competition gets more intense and product life-cycles shrink creating pressure on operating margins.
Outsourcing is a fast-growing business and India is a hotspot. India has a large pool of professional highly qualified engineers with exposure in various industries across the world who are recognized by the engineering industry world over. According to the Nasscom report, the total offshore engineering spend is expected to grow to $150-$225 billion by 2020, and India, with its talent pool and existing experience in engineering services, is well-suited to realize 25 per cent of the opportunity.
Today more industries are where IT was in the 1990s - knowledge based. Knowledge Process Outsourcing (KPO) will soon be the biggest revenue generator as Business Process Outsourcing companies move up the value chain in their service offerings. India with its advantages of highly qualified professionals can provide high-quality engineering services in the fields of Structural, Mechanical & Electronic Engineering - analysis and design, embedded software, Plant Design, Process Engineering, Plant Automation Services and Enterprise Asset Management and OEM solutions. Engineering outsourcing is gaining momentum as it involves labor-intensive engineering processes (structural drafting and detailing, conversion services, cost estimations and a lot more) that can be outsourced. It ensures quick turnaround time, competitive pricing, capabilities to develop customized software to the engineering project management needs and provides certified engineers proficient in state-of-the-art engineering tools and technologies for enhanced productivity at low cost.
The future of outsourcing in general and engineering in particular is promising as more and more countries are finding it attractive, creating a multi-polar world. One of the latest reports from GlobalSourcingNow says, the Global Knowledge Process Outsourcing industry (KPO) is expected to reach USD 17 billion by 2010, of which USD 12 billion would be outsourced to India . In addition, the Indian KPO sector is also expected to employ more than 250,000 KPO professionals by 2010, compared with the current figure of 25,000 employees. Evalueserve also predicts that India will capture more than 70 percent of the KPO sector by 2010. Apart from India, countries such as Russia, China, the Czech Republic, Ireland, and Israel are also expected to join the KPO industry. Low-end outsourcing services have an expected Cumulative Annual Growth Rate (CAGR) of 26% by 2010. In contrast, the global KPO market is poised for an expected CAGR of 46% by 2010.
Technological power will shift from the West to the East as India and China emerge as big players in the global outsourcing market. The two countries have the size and weight to transform the 21st global economy. B Ramalinga Raju, chairman, Nasscom and also chairman, Satyam Computer Services say that \"Engineering services will give India the edge as it aggressively gains momentum in the manufacturing space.
This presents a great opportunity as a lot of companies are looking at an alternative to China and engineering services expertise is of strategic importance in that angle.\"
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