Satyam BPO Media Report

A showcase of Satyam BPO in media.

India poised to become hub of engineering process outsourcing

Date: Jun 2008
Publication: Business Standard.com

Monday, June 09, 2008 : The Engineering Export Promotion Council (EEPC) had estimated that the Engineering Process Outsourcing (EPO) business would grow 10 times over the next seven years and touch $30 billion from the current size of a little over US $ 2 billion. The global Engineering Process Outsourcing (EPO) market will grow in the range of $110-$140 billion and India will get a share of 20-27 percent. From the period 2004-06 demand for engineering process outsourcing to India has grown at 30% to 35%. Engineering exports from India had touched the US $ 26 billion mark in 2006-07.

We spoke to Shaun Mitra, Assistant Vice President -Business Development, Satyam BPO, on this emerging trend. “The EPO industry conventionally started with design and design related outsourcing. Manufacturing services outsourcing is still nascent and started with work such as documentation for various engineering and manufacturing processes, moved into Engineering Change Management, Industrial Engineering related work and virtual validation, visual aids for assembly lines, etc.”

Though most of the initial players in the segment have emerged from legacy IT services businesses, today the segment has matured with several of these firms having established an independent engineering services practice.

Commenting on the growth he added “We believe that in future, Global EPO suppliers will play two key roles

• Be a significant link between the Engineering and Manufacturing departments of the customers, and
• Use Virtual Manufacturing Technology for New Product Introduction, more efficient capacity planning and better use of investments in assembly lines.

We would definitely see more and more global auto and manufacturing industries moving into outsourcing of production planning, industrial engineering and quality engineering kind of work. The key decider would be the IT enablement of these functions, which generally is not as strong as it should be.”

The potential for process engineering, plant automation and enterprise asset management services lies relatively unexamined. Industry estimates peg the market potential for process engineering, asset management and industrial embedded systems at over $5 billion taking the total outsourced/offshore market potential to approximately $12 billion. This estimate takes into account the outsourcing opportunity that would arise from mechanical engineering design, construction engineering design, electrical engineering design, embedded systems and chip design, instrumentation and controls design, manufacturing and tool design, industrial design, product lifecycle management (PLM) and software product engineering.

Of the $750 billion global engineering-services market today, only about $10-$15 billion is offshored. India accounts for about 12% of the total offshore market, that is somewhere between $1.2 billion-$1.8 billion. This could go up to $40 billion by 2020.

This implies an increase in India's share to approximately 20%-25% of the total offshored market, which is likely to grow to $150-$250 billion by that time. The key link in this area is the availability of quality talent. “The people needed for this growing industry would typically come from OEMs and respective manufacturing industries, interspersed with fresh graduate engineers. It is vital to have domain experts in EPO as this is what adds value to the client’s business. Another important factor for having experienced people in the industry stems from the fact that EPO service providers are in a virtual environment most of the time and hence people coming with practical experience would be able to relate better to the processes they are into and add value over a period of time. Obviously, the numbers and skills depends on the kind of services the client wants.” Said Mitra

Click here to view article in BPO Watch India.com

Back