Engineering Design Outsourcing: The Next Wave After BPO/IT

Despite the sizeable opportunity, the future potential of the offshore outsourcing industry in India is likely to be severely restrained by manpower availability. A NASSCOM report recently predicted that India would face acute labor shortages in the next two to three years, especially in knowledge driven industries.

These and other issues were taken up for discussion at an event organized by NASSCOM in Pune last week, on "Engineering Design Outsourcing: The Next Wave After BPO/IT". Participants consisted of NASSCOM committee members, senior managers from companies actively involved in 'global engineering' (Infotech, Neilsoft, Emerson, Onward, Geometric, KPIT Cummins, Praj, Sandvik) and representatives from engineering colleges all over the city.

Engineering outsourcing: the next wave?

The speakers unanimously agreed that India has a great opportunity in delivering engineering services to the world. Certain drivers (see box) coupled with increasing cost pressures are making global sourcing a strategic imperative for engineering companies. Besides, on the supply side, India is well positioned to deliver value to global players. An important contributing factor is an engineering legacy in India, led by success in sectors such as defense, rail, civil engineering and aerospace.

Thanks to early efforts like creating IITs, and privatizing engineering colleges, engineering education has grown to be highly respected and has a status value attached to it in society. Further, education is relatively affordable (compared to that abroad), which makes an engineering degree one of the preferred areas of education. India produces more than 200,000 engineering graduates every year.

"Swarm" vs. "Specialized"

Despite the numbers, the 'quality' of talent available has been the main cause of concern for recruiters. With the IT and BPO industry flourishing in India, young engineering graduates have plenty of career alternatives that offer higher salaries, perks and a fast growth ladder.

Moreover, fresh engineers are often totally unequipped with industry specific skills with no 'plant' experience, and have to undergo another two to three years, increasing their 'time to market'. Mr. Hakan Kingstedt, President and MD of Sandvik pointed out that while engineers are available in plenty, India must address the question of how to create 'specialized engineers'. This is unlike in the IT industry, where a JAVA programmer can be fairly flexible and requires relatively lower 'domain expertise'.

Industry - academia collaboration

While industry representatives felt that the availability of quality talent is an issue, academicians felt that good talent would not come by on its own unless the industry was ready to co-operate. For this, they will have to provide greater exposure to prospective recruits on live projects. However, companies are wary of sending work to academic institutions on account of IPR and data security issues.

Academicians felt that the industry needs to provide a greater participatory role for students. This would not only help create an experienced labor pool, but also attract students who would otherwise get drawn to IT/ITES. They also urged engineering companies to consider revising their compensation norms and provide faster growth to new recruits to stop them from considering alternative professions.

It was felt that a collaborative environment would go towards tackling these issues. Some companies have already started to work with colleges to provide live projects as well as recruit students.

Where will the industry go from here?

The industry is increasingly feeling the need to build up end-to-end capabilities in testing, prototyping, production, design and research. According to Mr. Ravi Gopinathan, CEO of Geometric Solutions, the industry needs to 'globalize' India as a brand and significantly expand the delivery footprint. Although the industry understands that the opportunity is significant, they are well aware of the challenges. However, there seems to be considerable enthusiasm among participants, who expect that "Engineered in India" will soon be a reality for the Indian engineering industry.