Emerging,world,Engineering,ser business, insurance Emerging world of Engineering services outsourcing in India

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v\:* {behavior:url(#default#VML);}o\:* {behavior:url(#default#VML);}w\:* {behavior:url(#default#VML);}.shape {behavior:url(#default#VML);} Normal 0 false false false EN-US X-NONE X-NONE /* Style Definitions */ table.MsoNormalTable{mso-style-name:"Table Normal";mso-tstyle-rowband-size:0;mso-tstyle-colband-size:0;mso-style-noshow:yes;mso-style-priority:99;mso-style-qformat:yes;mso-style-parent:"";mso-padding-alt:0in 5.4pt 0in 5.4pt;mso-para-margin:0in;mso-para-margin-bottom:.0001pt;mso-pagination:widow-orphan;font-size:10.0pt;font-family:"Calibri","sans-serif";}Engineering; Destiny India -  ESO  Introduction  Takingcue from what Gates quoted, it is critical to note that sustaining leadershipposition is about constantly upgrading abilities to deliver smarter, faster andquicker. Equally important is scaling up the value chain by enhancing thecustomer experience thru innovation, process development and breath of serviceoffering.  The emergenceof engineering service outsourcing (more than just an engineering BPO) is one sucharea after ITO, BPO, KPO and LPO that is catching the attention of the worldtoday. India with its strength in outsourcing business and a relative strongerposition in Automobile, Hi-tech telecom and Aerospace industry is well saddled tobecome an indomitable force globally for Engineering services outsourcing work. VariousIndustry surveys suggest that the current value of design services, which isUS$700 billion, and the expected value of design services, by 2020 will be US1trillion with Design, R&D, Product development and Innovation as some areasof focus.  Forinstance with R&D focus industries like IT, health life sciences, defense systems, telecom, aerospace,automobile and industrial engineering the opportunities are growing amidstmajor corporations  setting  R&D centers (even terming them as ODCs sometimes)in various offshore locations.     Mushroomingof such offshore business models, growth in number of patents, royaltyagreements, transformation of global businesses with outcome based researchfocus etc., over the last decade is a strong signal of an underlyingopportunity in R&D outsourcing market which in India is approximately about$8B (2008).  ESOas an emerging industry demands a great mix of skill, tools and experience akinto manufacturing support services in manufacturing industry.  Harnessing such opportunities is only possiblein creating an ecosystem that fosters process development, innovation anddeployment of best-in-class technology to delivery complex products andservices quicker, faster and smarter to worldwide customers.   Growingwith times ESO – India  Engineeringservices outsourcing in India is in its fledgling state. Although with arelatively stronger position in industries like Aerospace, Automobile andhi-tech telecom, focus on industries like construction/industrial, utilitiesand others is equally required.  Sourcingengineering services for design and engineering requirements started gettingmomentum way back in 1980’s  and it  high time that an inclusive approach isfollowed  for developing capability in sourcingengineering services globally.     Service providers in India are expecting majoropportunities in drawing conversions and CAD migration assignments, 2&3Dmodeling and digital mock-ups, conceptual design, analysis and validation;complete design outsourcing, manufacturing co- ordination, CPC / PDM; overallprocess quality improvement, e-engineering solutions, remote monitoring andsystem architecture development. Engineering services at the plant automationand maintenance level (enterprise asset management) also appears promisingareas to focus for India.  Manymajor ES companies in India are not only expanding breadth of services but alsoreconstituting the scope of work while approaching customers.  With the advent of cloud computing technologyit is likely to gain traction and is expected to support many service providersto develop an integrated service offering across the value chain.   Onthe other hand, buyers of such services apparently are opting gradually to workwith integrated service providers in long term relationships.  Comfort with supplier, predictability ofservice, efficiency in planning, deployment and management of capital assetsand production appear to be some of the reasons of doing it.  Thisis leading to maturity of the vendor landscape and evolution of the market thatnecessitates installed capacities of R&D services for far efficientservices to the customers. Companies with strong technology play are likely totake leadership positions in gaining the market share.  Numerousindustry reports present competition landscape  of ESO comparing India with emerging destinationslike China, South Korea, Singapore, Taiwan etc., on industry structure, talent,segment dynamics, market players  and so on.  So far, India appears on an overall basis tohave specific and strategic advantages.   However, it is noteworthy to understand thatleadership in today’s time is about the “role” you play than mere ‘position’ onthe global scene.   Ifthat is the case so, gaining leadership position and sustaining it on a longterm basis is possible only when we understand the emerging industry landscape,align with the same globally and develop capability in gaining leadership role. Tothis effect, a road map at the industry level with a policy framework keepingcompetition and our strengths in consideration is necessary to gain momentum.   Drivers:  1.     Betterbusiness metrics 2.     Creatingtime and skill utility – by embracing global servicing model 3.     Verticalengineering companies embracing global sourcing model for strategic purpose ofcost and efficiency management4.     ITServices firms spot significant value besides the existing operators 5.     Investmentand allocation of funds with the need to develop R&D and IT capabilitieswill also have a spin off impact Risks 1.      Customer acquisition costs and retentionis high2.      Far greater risks in managing globalteams than in ITO or BPO outsourcing3.      Strategic leadership time and effortis pre-requisite for success of ESO4.      Highly iterative standards andcomplexity of delivery5.      High level of domain knowledge leadsto complexity in hiring talent 6.      Retaining talent comes with superspecialized work reducing opportunities of re-skilling7.      Knowledge transfer, application ofknow-how while at process transition stage or implementation stage leads costsover-run Basechallenges : Talentlevel a.     Engineeringeducation is about knowledge, know-how, and character.  Mushrooming of educational institutes inIndia couldn’t keep up the quality of education b.     Withan intake of more than 5 lac students in bachelor programs, over 30,000 inmasters and around 1200 in PhDs programs, the supply still seem to beinsufficient considering future opportunities since ESO, manufacturing, IT andBPO industries showing signs of strong growth storyc.      Researchfacilities mostly found to be either inadequate or misaligned with the industryneeds d.     Dearthof well-qualified faculty and the student faculty ratio at Master or researchlevel is at sub-optimal level e.     Amenitiesrequired providing quality education like laboratories, tools, machines etc., needa complete revamp across university and institution levels. f.       Faceliftthe status of various engineering related vocational courses by resurrectingthe course curricula, industry interface and employability  Marketplace:  a.     Creationof ecosystemb.     Engineeringwork may get outsourced to captive centers significantly c.      Smallercompanies and small work of outsourcing can continue for some more time d.     Enhancingskills to procure high end work in aerospace, automotive and hi-tech domain Process level:  a.      Engineering expertise is core formany companies outsourcing of it at large scale is only a long term bet b.     Ifengineering process at its core strength then its integration with other coreengineering processes/services is a real time challengec.      Althoughpiece meal outsourcing in design is happening for e.g. NPDI process, but it isstill sometime before an integrated service model is proposed for enhancing itbeyond design d.     Possibilityof outsourcing will gain momentum, once it prepares to leave the shores buttoday the outsourcing of process is preferred in shores and mostly piece meal. e.     Legal& Policy / Governmental, Trade and Regulatory affairs Toconclude we need to understand that dynamism is in true reflection of ESOIndustry globally. Today, it appears as one of the highly iterative, skilldemanding, technology intensive sunrise industry that needs sharper focus onvalue creation, time to market approach, value added services and high qualityservice delivery.  After all as wesee, India is at the inflection point to define its destiny to become a posterboy for the global engineering landscape. Focus ESO India: Somereferences 1.      PromotingEngineered in India concept - www.nasscom.com2.      Indiahas a market share of 20-25 per cent in global sourcing market of engineeringdesign and product research and development, which is worth around USD 150billion in 20083.      Indiacomprises 28% of the suitable global talent pool for off shoring services; 12%of the total engineering workforce is currently in India  - Booz Allen Hamilton study4.      Whilein FY05, only $10-15 billion of engineering services was off shored, the marketis expected to grow to $150 -225 billion by 2020  -  www.nasscom .com 5.      Aerospaceoffers the greatest potential for expansion – though it is also one of thetoughest opportunities to tap because of its close association with the defensesector – Booz Allen Hamilton6.      India's automotive engineeringservices outsourcing industry is expected to grow at a compounded annual growthrate (CAGR) of 32 per cent by 2012-13, with the potential to generate revenuesworth US$ 2.2 billion over the next two years – Frost & Sullivan 7.      The US$ 3.25 billion semiconductor design services market in India isexpected to reach US$ 14.4 billion by 2010, according to a report by ISA-Frostand Sullivan.8.      Close to 200 semiconductor companies operating in India, about 120 ofthese are into chip-designing - iSuppli Corp. 9.      India's chip design industry is on an accelerated growth curve, withmarket revenue expected to reach US$ 2.1 billion by 2010, rising at a CompoundAnnual Growth Rate of 29 percent, up from US$ 596 million in 2005 -  iSuppli Corp. 10.   Aerospace domain is a key componentof engineering outsourcing and India’s potential to become a significant globalcompetitor with presently around $1B of offshore outsourcing currentlyhappening out of India in aerospace in the areas of mechanical engineering anddesign, embedded systems/avionics and components manufacturing put together,this has the potential to double or even triple in the next few years.www.livemint.com