India, hailed as the outsourcing destination of the world, is all set to prove its mettle in the emerging vertical of offshoring -- product engineering services outsourcing.
Still in its infancy, PES has caught the fancy of Indian information technology majors such as Patni Computer Services, Tata Consultancy Services and Wipro Ltd, among others. The sector is poised to rake in revenues of over $11 billion in the next three years.
PES is defined as services, which are linked with the creation of a new product, and it helps in maximising output and lifespan of a product.
According to Nasscom estimates, PES outsourcing, which includes embedded software and offshore product development, is expected to be an around $8-11 billion business by 2008.
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 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 workforce of 1,600 dedicated engineers.
Ajay Chamania, vice-president and head-embedded technology solutions, PCS, said, "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."
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, he said.
Ravi Gopinath, vice-president and head-engineering and industrial services, TCS, said due to a rise in the digitisation levels in enterprises, the domain of engineering has become tightly linked to the territory of business information management.
Common 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.
Wipro lays a major thrust 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.
The country's advantage lies in its ability to deliver technology services to global customers at great value and speed. India also has a vast pool of engineering and scientific talents, which can be tapped for the growth of the sector.