Monday, November 07, 2005

Product Engineering Services Outsourcing: The Imminent Rumble in KPO

Not a long while back, many companies did not believe in outsourcing their engineering activities as conformist acumen deems engineering to be a core technology that should remain in-house. But today, product engineering is well on its way to becoming a mature industry, akin to civil engineering and architectural services. Biz wizards are naming engineering as “the last frontier of business-process outsourcing” and expect the market to accomplish $19.5 billion mark by 2008, up from $4 billion two years ago. From design to production and maintenance, most engineering functions can be outsourced successfully. It's the hottest trend in business-process outsourcing, and for excellent rationale.
As per a Nasscom study, PES (Product Engineering Services) outsourcing, which encompasses implanted software and offshore product development, is anticipated to be an approximately $8-11 billion industry by 2008. PES is defined as services, which are linked with the creation of a new product, and it helps in optimizing the productivity and duration of a product. PES outsourcing was earlier clubbed with IT services as research and development or with IT-enabled services-business process outsourcing as engineering BPO. However, increasing consumer demand for electronic products, shorter time-to-market cycles and competitive pressures propelled PES, to emerge a standalone segment. So much so that the segment posted $2.3 billion during the last year. The importance of PES can be gauged from the fact that to meet the requirements of this business, Wipro puts over 10,000 employees on its payroll, while PCS boasts of a staff of 1,600 dedicated engineers.
India, extolled as the optimum outsourcing destination of the world, is on the brink of proving its grit in the budding vertical of offshore outsourcing – PES (product engineering services outsourcing). Though in its infancy, PES has jammed the admiration of Indian information technology majors like Patni Computer Services, Tata Consultancy Services and Wipro Ltd, among others. The sector is hovering to scrape in returns of over $11 billion in the next three years.
General enterprise management applications and technology platforms have driven information integration to include engineering of products and production facilities, and efficient management of capital assets and production. "In addition to consumer electronics, which is traditionally known to be a high adopter of embedded technologies, there are significant opportunities in verticals like automotive, medical electronics and computing that are driving the growth of PES outsourcing", believed Ajay Chamania, vice-president and head-embedded technology solutions, PCS, , he further held that the semiconductor chip market, in which software design is playing an increasingly crucial role, is also a sector where PES is set to play an active part. Ravi Gopinath, vice-president and head-engineering and industrial services, TCS, said due to a rise in the digitization levels in enterprises, the domain of engineering has become tightly linked to the territory of business information management.
A major emphasis is laid by Wipro on its innovation programme that helps build intellectual property block and solutions for the above segments. According to a company spokesperson, Wipro owns intellectual properties in many applications and solutions areas, and is rather serious in its approach to PES outsourcing.
India’s advantage lies in its knack to deliver technology services to global customers at enormous value and speed. India also has a inestimable sea of engineering and scientific talents, which can be exploited for the intensification of the sector.

The article sponsored by A-1 Technology Inc, dealing in offshore outsourcing and offshore software development