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The US-based
QuEST, which employs over 700 engineers in Bangalore and
supports a host of Fortune 500 clients with high-end
solutions for improved product development, clocked revenues
of $20 million in 2004-05. "We are projecting revenues of
$27 million for 2005-06," Raman Subramanian, Vice-President
(Automotive and Industrial Products), says.
Sizing up the market
A Nasscom research report recently quoted IDC estimates that
the worldwide market for outsourced engineering was worth
$69.8 billion in 2001, with a forecast to grow at a
five-year compounded annual growth rate (CAGR) of 12.2 per
cent, to $123.9 billion in 2006.
Areport by Avendus — focused largely on the engineering
design space — released in 2003 had valued the worldwide
opportunity in engineering services at $7 billion. The study
further noted that there was a growing interest in
offshoring these services and estimated that 20 per cent of
the value was being outsourced to third-party vendors in
countries such as India, Taiwan and China.
However, since these estimates were primarily focused on
design engineering, they addressed only a part of the market
potential for engineering services.
Industry estimates peg the market potential for process
engineering, asset management and industrial embedded
systems at over $5 billion, taking the total
outsourced/offshore market potential to a whopping $12
billion. Automotive design accounts for a bulk 65-70 per
cent of the market, followed by aerospace at 15-16 per cent,
and electric/electronic machinery design at 10-12 per cent.
Other key vertical segments considered good targets for
outsourced engineering services include utilities and
pharmaceutical companies.
"We estimate that the biggest revenue opportunity within
engineering services is the automotive segment where the
potential offshore outsource-able component is close to $4.8
billion. This is followed by the aerospace segment with a
market potential of $1billion, and construction and heavy
machinery space where the potential stands at $800 million.
The opportunity in the medical devices segment is about $300
million," says Nasscom's Mehta.
Interestingly, according to an online survey of American
Automotive Executives conducted by AT Kearney, India leads
the outsourcing market when it comes to auto-outsourcing
with 24 per cent of auto manufacturers giving it the
thumbs-up for outsourcing. Bigger automotive markets such as
China and Mexico lag behind at 15 per cent and 13 per cent,
respectively, while other locations such as Brazil, Thailand
and the Philippines corner less than 10 per cent of the
actual outsourcing markets. |
