With some part of each vehicle of the world having some touch of India, the ?India as a brand in engineering? is making headway, thanks to global original equipment manufactures (OEMs), who in a catch 22 situation are looking at low cost destinations like India as outsourcing hubs.
The Indian automotive engineering services outsourcing industry is expected to grow at a compounded annual growth rate of 32% (CAGR) by 2012-13. ? ?The industry has generated revenues to the tune of $500-600 million last year and there is $2.2 billion potential outsourcing opportunity in the next two years,? said VG Ramakrishnan, director, automotive & transportation practice, Frost & Sullivan talking at the ?Opportunities in the Automotive Engineering Services Market? seminar here.
He, however, added that there was a need at the industry association level to spin off automobile engineering services from IT sector, furnishing an example of Satyam Ventures, which is totally into automotive engineering services.
The top 15 OEMs and system providers taken together spent close to $60 billion on engineering, and research and development (R&D) last year. Globally, the spent on research and development (R&D) in the automotive sector spent is about $130-140 billion.
While industry experts see that the country has upper hand over other low-cost destinations when it comes to engineering services, they feel the need of the hour is to innovate and move up the value chain.
?We need to grow from designing interiors to more serious and complex engineering involving powertrains and chassis,? said Anand Rangachary, managing director, Frost & Sullivan, South Asia and Middle East.
Corroborating on the same, Tarak Balaji, director, Delphi Technical Centre said, ?India is a melting point for all our 32 tech centres across globe. We can see the efficiencies and inefficiencies of Delphi.? He added that the country is good in absorbing technology and has a good talent pool.
Indicating that offshoring has evolved in India along three dimensions including cost, talent and process, Ravi Gopinath, managing director, and CEO, Geometric said, ?Innovation is the next dimension. It changes the frame of reference of the traditional offshoring model.? The tie-up between OEMs and vendors is seen as an answer to it since the former demands are changing depending upon the needs of the customers.