According to a Nasscom-Booz Allen Hamilton study, the engineering services outsourcing (ESO) business in India has the potential of generating $40 billion by 2020, catapulting it to twice the size of the entire Indian ITes and BPO industry put together.

Engineering services is a huge market, with a global spending currently estimated at $750 billion per year, an amount nearly equal to India’s entire gross domestic product in 2005. This amount is likely to increase to $ 1.1 trillion by 2020, with the offshorable portion expected to touch $ 150-225 billion, according to the Nasscom report.

India can leverage this potential through its engineering prowess in the telecom, transportation, automotive, construction, infrastructure and defence space. Speaking at a Nasscom sponsored ESO summit, chairman Kiran Karnik said that India has the potential to capture 30 per cent of the global offshorable portion, up from the 12 per cent or $2 billion that it currently commands. “To do this however, the country needs to rapidly increase its investment in developing quality engineering talent and design and development capabilities,” said Karnik.

Which is exactly what Indian companies like Emerson Electric, Sandvik, Neilsoft and Vertek are now doing. While Emerson has already established its Design Engineering Center in the country, Sandvik is also going the extra mile by investing in a process modelling centre as well as a design and development centre in Pune. In fact, Nasscom will also be endorsing the establishment of over 40 to 50 Test Labs in the country, which could look at promoting engineering services and components exports business, along the lines of STPIs- that have played a crucial role in building the IT services business in India.

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