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Engineering Design Services: Advantage, IT Players

Continued from page: 3

Shyamanuja Das

Friday, August 03, 2007

The top five players account for 56.8% of the total market and all the firms profiled in the table of Top Players account for as high as 84.3%. The rest of the market is divided among certain specialized firms such as Plexion, Ashley Design, and Harita, Hero Global Design Services, besides smaller players. For the purposes of our study, export revenues of firms such as Bechtel, Flour, and Lurgi have been counted along with the captive players.

The Bakers Dozen
Company	Positioning	Revenue (Rs crore)*
TCS	The top Indian IT services players tops in engineering services too, with a well-balanced portfolio in automotive, aerospace, and industrial machinery. Getting serious about construction too	725.3
Tata Technologies	The Tata Motors subsidiary made it big through acquisition of INCAT, a Detroit-based engineering firm	675.8
Satyam	The unsung hero of engineering services. Satyam follows a TCS-type model and has a fairly well-balanced vertical break-up with automotive, aerospace, consumer products and plant, and industrial automation contributing significant parts to its revenue	450.5
HCL	Though HCLs engineering capability as an engineering service provider is more well-known, it draws most of its revenue from aerospace, where it is an undisputed leader	314.4
Infosys	Its engineering services is fairly low-profile, very much unlike Infosys. It draws most of its revenue from the manufacturing segment	222.5
Patni	Patni is fairly serious on engineering services as its growth engine. In addition to its well-balanced industries portfolio (with most revenue coming from medical devices), it is the only player that has penetrated the Japanese market, a large engineering services market, fairly well	216.2
Geometric Software	Geometrics strength lies in automotive and consumer products	210.7
Infotech Enterprises	Focused on aerospace with high-end design work, with Airbus and Boeing as major clients	205.9
Rolta	It is one of the few players well-entrenched in construction. It also has a thriving ship-design services practice	195.1
Quest	A new generation engineering services firm, Quest is modelled along the large IT services firms except that it is completely focused on engineering services, with aerospace being a major focus. It also draws its revenue from automotive and industrial products	153.2
Wipro	Wipro, a global leader in telecom and semiconductor design services features so low in this list, primarily because we have excluded these segment from this research	141.9
L&T Infotech	The only successful company among the spin-offs of engineering companies in India, L&T Infotech, is strong in construction and manufacturing segments	128.4
Neilsoft	Neilsoft draws most of its revenue from construction, industrial automation and transportation (including automotive and marine)	65.3
*From engineering services only�� 1$=Rs 45.05

In Search of Domain Expertise
According to the Nasscom-Booz Allen Hamilton report on engineering services offshoring, though the potential for India in engineering services is in the range of $12 bn to $16 bn by 2010, the most likely scenario would be in the region of $3-5 bn.

While the report identifies many reasons including lack of infrastructure, the biggest challenge happens to be manpower. Today, most of the engineering services companies hire a mix of fresher and experienced workforce. The composition of workforce is far more inclined towards experienced professionals than fresh talent. Domain experience is quite critical in this area.

In the traditional IT services space, learning and unlearning of skills are fairly rapid. Also, it is possible to rotate large number of employees across verticals. In engineering services, that is not so. It is unrealistic to expect an automotive engineer to do construction design. Also, the number of people in a project team having in-depth domain knowledge is just about 10%-15% in IT; whereas it could be as high as 45% in engineering services.

Recruitment poses a challenge, especially in fields where Indian engineering is not that developed. Most companies hire locally, though acquisitions have helped in getting the right skills, to some extent.

Internal training is something that even the smallest of players spend heavily on. Unless there is a mechanism to address this challenge, acquiring and nurturing talent could be a bottleneck.

Shyamanuja Das
shyamanujad@cybermedia.co.in

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