Source: www.tradingmarkets.com

MUMBAI, India– India holds a relatively strong position in the global Engineering Services Outsourcing (ESO) market, with a potential of US $40 billion by 2015. India’s strengths lie in the automotive, aerospace and hi-tech telecom sectors accompanied by a large talent pool and experience in this field. The growth in engineering services signifies the need for global companies to expand their R&D centers beyond their home countries.

Another attractive factor for these global manufacturers is low labor cost along with quality, one of the main reasons that makes India a major outsourcing destination.

Indian engineering service providers are technically proficient and have a fervent eye for detail ensuring that service levels remain better than competing countries. Most of the Indian engineering services providers are at par with competition and offer an array of services, which include computer aided design (CAD), computer aided manufacturing (CAM), computer aided engineering (CAE) while vertical specific engineering services companies provide product life cycle management solutions, reengineering and design change management, too.

To target the maximum potential from engineering service providers and automotive manufacturers, there is a need to address key issues like quality manpower, low cost services and put India on the global market as an engineering service provider. Frost & Sullivan is organizing a two-day high-powered MindXchange to address these issues through its summit “Opportunities in the Automotive Engineering Services Outsourcing Market” to be held on the 11th and 12th August, 2008 at the Leela, Goa.

The summit seeks to understand and discuss the growth needs of companies in the engineering services outsourcing as well as the automotive industry by fostering common understanding of business needs and opportunities that could lead to business partnerships. This forum endeavors to nurture strategic business decisions by bringing together key decision makers and thought leaders from the domestic and international automotive industry and engineering services companies.

Eminent speakers such as, Dr. Arun Jaura, Mahindra & Mahindra; Tarak Balaji, Delphi; Vivek Narayanan, Pierburg; S. D. Pradhan, Argentum Motors; and senior representatives from Satyam Ventures, BMW and many more are expected to be present at the summit.

Satyam Ventures is the event partner and Auto Monitor, Autocar Professional, Dataquest and The Machinist are the media partners for the event.

Source: www.business-standard.com

Mid-size IT firms in the country, which are bearing the brunt of a US slowdown, sub-prime crisis and currency fluctuations, are finding succour on the home turf. While the number of IT services deals is increasing in the domestic market, the sizes too are getting bigger and the margins are increasing.

Moreover, with research and advisory firm Gartner’s prediction of IT services market growing at a compound annual growth rate (CAGR) of 20.4 per cent for the next five years, the scenario will only get more lucrative for these firms.

IT services deals now range between Rs 40 crore and Rs 80 crore on an average from less than Rs 10 crore earlier. BPO deals too, which earlier averaged at Rs 60 lakh and Rs 80 lakh, now range between Rs 6 crore and Rs 8 crore on an average, according to Gartner.

Arup Roy, senior research analyst, Gartner, says while telecom, government, manufacturing and BFSI sectors have traditionally been the big-spenders, verticals like retail and utility are also catching up.

Industry players say $25-50 million (around Rs 100- 200 crore) deals are becoming the norm. S Venkatramani, head, India operations, Tata Consultancy Services (TCS), says, “We are beginning to see deals getting larger on a regular basis and in some cases comparable to the West as well.”

TCS won a $40 million ( Rs 100 crore) transformational deal with New India Assurance and the company reportedly has bagged the e-passport project by the Union government worth over Rs 1,000 crore.

Wipro Infotech is another case in point. Wipro bagged a deal from Pantaloon Retail worth around Rs 200 crore. It also signed a Rs 2,400 crore outsourcing deal with Aircel.

Says Anand Sankaran, chief executive, Wipro Infotech, “Three years ago, a $500-million deal in the domestic market would have been difficult, but now with the growth in business, firms are ready to go in for end-to-end outsourcing.”

The margins in the domestic market are also getting bigger. A few years ago, margins in the domestic market would be in the range of 8-10 per cent. Currently, the margins vary between 15 and 20 per cent, says Roy. For TCS, it has been a 100 per cent growth in the margins and are at par with the APAC level.

It’s the same story at Wipro. The domestic market is also maturing in terms of the work being outsourced. Says Venkatramani, “Majority of the work that TCS has been doing in the domestic market is transformational in nature. One of the reason is that domestic firms have no legacy systems. That means the work we do start right from the consulting stage to process re-engineering and then solution identification.”

Despite being a multinational, IT giant, IBM, scored on the home turf with cumulative IT outsourcing deals of nearly $2.5 billion — most of them in the telecom sector.

However, Nipun Mehrotra, vice-president and general manager, Global Technology Services, IBM India/South Asia, said that other than the large deals, the number of small-sized deals too has grown to the tune of nearly 100 per cent.

“We are seeing good success in even getting mid-sized customers to buy infrastructure services that best addresses their business needs and which can scale up as they grow,” he said. In 2007, IBMs unique client base grew by 100 per cent over the previous year.

The company said that it has been winning deals of less than Rs 20 lakh, between Rs 20 lakh and Rs 8 crore and above Rs 8-10 crore, and posting high double digit growths across each of these categories of deals.

The mid-cap story is no different. For firms like 3i Infotech, and Firstsource their decision to be in the country’s market ahead of their peers has paid well. India contributes about 4 per cent to Firstsource’ revenue in FY07 but by the end of FY08 the company increased this share to about 11 per cent.

On the other hand, 3i Infotech not only managed to beat the currency fluctuation with its early focus on the domestic market but also maintained a CAGR of 60 per cent for the last four years. India contributes about 35 per cent to the company’s revenue.