Infosys Technologies says it is expanding its engineering services base, part of its non-linear portfolio, to include new verticals. Large IT firms have been constantly focusing on non-linear portfolios to reduce dependence on linear projects that involve hiring in large numbers. Increased focus on non-linear portfolio allows them to foray into new technologies and gain better margins.
S Valmeeka Nathan, vice-president and global head, product life cycle and engineering solutions, Infosys Technologies, said, “Engineering services is a high-margin business as compared to other services and we are banking big time on it. Unlike other services that are volume driven, engineering services are value driven.” The engineering services horizontal has 6,500 employees and contributes 8.5% of the current revenues of Infosys. Nasscom predicts the engineering services market in India to touch $50 billion by 2012. “Engineering services is a premium play and Infosys will be cautious in terms of how we look at opportunities,” said Nathan, adding, “Currently, we have over 100 clients in this space and are looking at expanding base in areas of aerospace, telecom, energy, healthcare, automobiles and defence. At the same time, the focus is on expanding the scope of work done with existing clients and exploring deeper work shares.?
?There are limitations to what a captive unit can do and, therefore, work does come to third party vendors. Infosys is also increasingly looking at expanding the base of the high-end work. However, we need to focus on the bottom of the pyramid where a larger chunk of the work is coming from,? he added.
About 40% of Infosys’ work is low-end. High-end work involves reducing cycle time to market, weight reduction in aircraft and energy conversion in turbines that contributes about 15% of the firm’s total engineering services work.