IT'S a sector that has the potential to displace the booming 11ES and BPO industry from its golden pedestal. According to a NASSCOM-Booz Allen Hamilton study, the Engineering Services Outsourcing (ESO) business in India has the promise of generating $40 billion by 2020, catapulting it to double the size of the entire Indian lTES 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. According to Kiran Karnik, Chairman of NASSCOM, "We have 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."
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 Center as well as a design and development center 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 STPls- that have played a crucial role in building the IT services business in India. recently. Besides, it could also help enhance "What makes India an attractive destinations for EOS is a unique set of attributes, foremost among which is a large domestic market and the right kind of talent. The country has over 1400 engineering colleges, 3500 engineering professi-onals, government research and development centers as well as government research and deve-lopment centers as well as government test-centers like ARAI. Add to that the cost arbitrage factor and stringent IPR norms, and India's attractiveness as an engineering services offshoring destination becomes evident," said B S Kautuvabhan, Vice President of the Onward Technologies Group.
Telecommunications (30 percent), automotive (19 percent) and aerospace (8 percent) are the primary verticals that have benefited from the EOS boom currently. "If investments are ploughed into the sector on a sustained basis, ES offshoring could help create almost 2 lakh jobs, directly. Besides, it could also help enhance India's strategic position in key sectors like aerospace defence and automotives," said BVR Mohan Reddy, chairman of Infotech, which has a tie-up with ARAI to conduct testing for automobiles.