India to have $1 bn Product Engineering Service player: Zinnov

Zinnov reiterates that India's product engineering services industry attains maturity and moves in full swing. Sundararaman Viswanathan, Manager-Consulting, Zinnov confirmed that India will soon have a USD 1 Billion Product Engineering Services player, he denied to mention the name of the company.

India accounts for about 23% of the overall Engineering and R&D outsourcing market, according to an annual report, ' Global R&D Service Providers (GSPR) Rating 2013' by Zinnov.

The report stated, the total exports in the Engineering R&D outsourcing segment from India stood at USD 16.3 Billion. However, the growth in the Engineering R&D and outsourcing segment lagged the overall Indian industry growth rate and stood at 10.9%.

Telecom service providers have enhanced spending from USD 1.399 billion in FY 2012 to USD 1.540 billion in FY 2013, up by 10%. Network upgradations and adoption of 4G technologies in US, China, EMEA and India is driving demand for product engineering services.

The report highlighted that India and China are garnering a major share of the engineering services revenue; over 225 new R&D centers were set up in India in the last 5 years. Sundararaman stated that, "Indian service providers are at an inflection point with significant shifts in business models, increased demand for solutions and globalization driving up the competition amongst global players."

To take on the new challenges and continue to grow at a rapid pace, the engineering service providers need to look at whitespaces and start investing in them now. One such opportunity that Zinnov's sees is in the space of 'Engineering Analytics' - it is expected that global companies will spend over USD 27 Billion on Engineering Analytics and the addressable opportunity for service providers is quite sizable. Especially activities around building the analytics infrastructure, engineering the systems and machines to enable data capture for further processing and analytics services are the key opportunity areas.

Commenting on the study, Sundararaman Viswanathan, Manager-Consulting, Zinnov, said, "Today there are several new opportunities for service providers to take advantage of, such as engineering analytics, which presents significant potential for growth. We are seeing a trend of solution strategy increasingly becoming a major component in majority of the deals, as service providers are building solutions to demonstrate competency, enhance product quality and reduce time to market across sectors."

Key Indian SPs

Zinnov has broadly divided service providers into three groups - first group is Wipro, HCL, TCS, Tech Mahindra and Infosys, which has a significantly large product engineering practice and amongst them they cover most of the outsourced R&D activity. The second set of leaders include companies like iGATE, L&T TS, Infotech, Mindtree and Symphony Teleca that continue to expand their coverage across verticals and are transforming to take on a larger play across all the verticals. The third category is a set of niche leaders like Aricent, KPIT Cummins, Persistent, Sasken, eInfochips, Quest Global, Tata Elxsi and Tata Technologies. This makes the Indian supplier landscape a diverse and mature market place for companies that are looking to source product engineering services.