Engineered in India, almost

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: Spurred by the recent developments in the global financial markets, Indian IT service providers are actively scouting for business opportunities beyond the banking, financial services and insurance (BFSI) vertical. Engineering services outsourcing (ESO) is one such segment that is fast catching their attention. Though this segment caught the fancy of Indian IT service providers a few years ago, good news is that it is seeing an increased focus now.

According to a Nasscom-Booz Allen Hamilton study, the current market for ESO in India is around $2 billion. It is expected to touch $38-50 billion by 2020. This could be 25-30% of the global offshored engineering services market. (Though the top players in the IT industry like Satyam, Wipro, Infosys, TCS and HCL have a significant presence in ESO, most are upping their focus as new players pull up their socks to foray into the market.)

Consider this. India’s fourth largest software exporter, Satyam Computer Services, generates around 9% of its revenues from engineering services. Buoyed by the prospects, the company is now aiming at cornering a 10% share of the market by 2012. Ruias-promoted Aegis has also stepped up its focus on the significant sector. The group has moved around 1,000 people to Aegis Engineering Services, which will cater to engineering design in infrastructure, power plants and petrochemicals sectors.

Another strong player in the arena is Hyderabad-based Infotech Enterprises, which is drawing up plans to acquire three companies this fiscal in the engineering services domain. The company has earmarked Rs 300 crore for this purpose. At present, Infotech Enterprises gets over 90% of its revenues from engineering design and IT services. Interestingly, Tata Consultancy Services (TCS) and Tech Mahindra are believed to be closely eying the design services unit of Flextronics, which is on the block. “TCS has recognised Engineering and Industrial Services (EIS) as one of the growth engines as the engineering services is the next emerging market after IT and BPO,” says Regu Ayyaswamy, vice-president and global head, EIS, TCS.