|
After
tweaking code, testing software, answering calls and
processing documents, it’s time for global service providers
to look at offshoring of engineering services. This
comprises a gamut of services, be it designing an airplane’s
wings or an automobile’s high-tech diagnostic system using
2D drafting, 3D modeling, conceptual design, design
validation, quality consulting and other engineering
solutions. Global corporations such as General Motors,
Intel, Texas Instruments, GE, Daimler Chrysler, Bosch,
Boeing, Airbus, DuPont, ABB, Bechtel and Caterpillar are
keen on buying such services from a host of providers in
destinations like Russia, China, Mexico, Israel and India.
The excitement is not without good reasons. Engineering
services, a $750 billion a year global industry promises to
be the next big frontier for offshore firms to tap. While
only $10 billion to $15 billion of the $750 billion is at
present offshored, the potential is huge — about $150
billion to $225 billion is expected by 2020, according to
consulting firm Booz Allen Hamilton. In the same time span,
the global spending on engineering services is projected to
increase to over $1 trillion. Already global companies in
telecom, automotive, aerospace, utilities, construction and
industrial machinery domains are looking at global
engineering service providers to cut costs and provide
innovative solutions for next-gen products.
Offshoring Drivers
Though cost saving is the key driver for engineering work
being offshored to global providers, there are other
benefits as well. Across managements, the benefits are
threefold. First, at the CEO and board level, engineering
outsourcing helps companies cut costs by outsourcing
expensive R&D and engineering support. Second, at CTO level,
engineering outsourcing helps augment capability —
outsourcing helps engineering teams reduce their
product-development cycle and improve time to market, and
helps in innovation by drawing in ideas and talents from
different geographies and cultures. Third, at the
program-manager level, outsourcing helps add to capacity
through ramp up and multiple shifts at an outsourced
location.
Such benefits make providers like Russia’s Auriga very
attractive for buyers of engineering services. Auriga is one
of the oldest companies in Russia providing services from
development centers in Moscow, Kazan and Nizhny. The company
is headquartered in the U.S., has a European sales office in
France, and is planning to increase its presence further in
Europe.
“We have a special focus on delivering high-end IT
outsourcing services for high-tech product companies, ISVs,
OEMs, especially for software, telecom, health care and
medical devices industries,” says Alexis Sukharev, Founder
and President, Auriga. “The services include complete
product engineering (from the product concept to support and
deployment) and all sub services included in it — software
development and maintenance, software testing and quality
assurance, re-engineering and porting, localization,
consulting, professional services.”
Some of its clients include Queplix, BroadVision, NMS
Communications and Drager Medical. For Drager medical, a
Germany-based manufacturer of medical equipment, Auriga is
developing a remote view subsystem for patient monitoring
and a new version of its critical care workstation. While
for NMS Communications, a U.S.-based provider of telecom
applications, Auriga is developing new signaling, support
and voice-processing services.
Like Auriga, there are other Russian companies that are
actively providing engineering services to customer
companies globally. Another Russian engineering services
provider DataArt offers engineering services in financial,
telecom, media and life sciences domains. “We do new
application development, and software R&D in our chosen
verticals. We serve both end users (e.g. investment banks)
and third-party software manufacturers (ISVs), primarily in
the mid-size sector,” says Alexei Miller, EVP, DataArt.
Alexis Sukharev, Founder and President, Auriga
“We see the possibility that large Indian outsourcing
companies
might come to Russia looking for experience in specific
[engineering] technology fields”
Global Providers
Russia is one offshore destination that is very attractive
for such work as almost 50 percent of the student population
in the country majors in technology, science or engineering,
which is far more than in China, India, Japan or the U.S.
Moreover, Russian science graduates spend between five and
six years at university before entering the workforce,
ensuring a more thorough training, according to Russoft, the
Russian IT association.
Currently, more than 1.3 million degreed professionals are
circulating in the economy, with an estimated 2.35 million
more in the university system. If the numbers and studies
seem too academic, the actions of global technology leaders
speak of the strength of the Russian talent pool. Across the
region, independent research and development centers are
owned by Sun Microsystems, Intel, Alcatel, IBM, HP, and many
others have been springing up.
“The advantage [of engineering services offshoring] is in
the combination of cost and value, which make certain types
of high-end, analytical work very relevant to Russia,” says
Miller. “While cost is comparable to destinations like
India, the quality of easily available R&D talent [in
Russia] is higher. Russia has the resources to offer for
advanced mathematical research, quantitative analytics,
etc.”
But providers across the globe are not too far behind in
cashing in on the opportunity. As per a spokesperson of an
Indian-based engineering service provider, “Russia has a
tradition of excellent engineering. China, Mexico, Eastern
European, India and other low-cost countries will all be
viable destinations for customers looking to outsource
engineering [services]. India’s advantages are talent,
scale, program-management skills and experience,
intellectual-property protection regimes and cultural
compatibility to increase the engineering work that will be
offshored.”
Source:
http://www.globalservicesmedia.com/Content/general200707282538.asp |
