India Poised For $40 Billion Growth In Engineering Services

Increase in offshoring of services could lead to 250,000 jobs for Indian engineers.

According to a report released Thursday, there exists a $40 billion opportunity for growth in the IT market India by 2020, from offshoring of engineering services, resulting in the creation of 250,000 jobs for Indian engineers.

The NASSCOM/Booz Allen Hamilton study, “Globalization of Engineering Services – the Next Frontier for India”  found that engineering services is a potential growth market for India. Current spending on engineering  services ($750 billion in 2004) is projected to increase to $1.1 trillion by 2020.

India’s current share of the offshored engineering services market is about 12% – relatively small as compared to its information technology and business process outsourcing sectors. The study also found that India is well-positioned to increase its market share of engineering offshoring from 12% to 30% by 2020.

Discussing the report, Kiran Karnik, President of India's NASSCOM (National Association of Software and Service Companies) said, “The Indian IT and software industry is continuously renewing itself and seeking to grow by addressing newer service lines; the latest one being engineering services. Companies in India have developed capabilities and skill sets, and invested in technology platforms to leverage this opportunity. The growth in engineering services signifies the need for global corporations to expand their R&D pool beyond their home countries. However, we must ensure that required steps are taken by stakeholders to address possible roadblocks - especially those concerning workforce.”

Total offshore engineering spending is expected to grow to $150 – $225 billion by the year 2020, and India with its large talent pool and experience in engineering services, is poised to realize 25% of this opportunity.

The reports statistics show that India enjoys a relatively strong position in the automotive and high-tech/telecom engineering services market with a $25 billion opportunity by 2020. Aerospace offers the greatest potential for expansion – though it is also one of the toughest opportunities to tap because of its close association with the defense sector. The report calls for greater support from the government to realize this opportunity.

Worldwide, spending on engineering services was $750 billion in 2004 and is projected to increase to $1.1 trillion by 2020.

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