Indians parents are crazy to see their children as engineers. For sometimes, it appeared there is going to be saturation soon in the demand. However, the success and growth rate of Indian IT and BPO sectors have kept the demand of properly educated engineers increasing. Today, many studies have predicted a shortage in near future. With changing business model, any number of engineers with good knowledge of their core domain subject (electrical, mechanical, civil, electronics, metallurgy, chemical, and for that matter any stream) and communication capability will remain in demand. It is because the companies, world over today are willing to contract out elements of their engineering, design, and research and development that were earlier exclusively kept in-house. Smarter the companies, more is its outsourcing of high end processes. Outsourcing will no more be limited to non-engineering information technology, manufacturing, and business processes. Innovation and R&D that had been a company’s competitive edge, and serve as the engine for growth are going out for outsourcing to capable service providers.
The worldwide sourcing of innovation is going far more rapidly to such nations as India, China, Thailand, and Brazil. Can Indian business leaders and its engineers compete and remain at the top? According to a study, current global spending on offshored engineering is $15 billion. By 2020, the figure will expand by an order of magnitude to $150 billion to $225 billion. More and more companies realize today that the decision to offshore engineering processes can lead to real gains in cost, quality and productivity over in-house levels.
The market for engineering services – product and component design, plant design, process engineering, and plant maintenance and operations – covers across a number of sectors: automotive, aerospace, technology/telecommunications, utilities, and construction and industrial machinery, which together account for the bulk of the world’s corporate R&D spending.
The rapid pace of global spending on engineering services is due two main reasons 1) the growing demand for ever more complicated consumer and industrial products and 2) the increased electronic and software content of everything from toys to airplanes that makes for more offshorable engineering work. And the older practice of retaining innovation in-house is no more sustainable.
Engineers are in short supply in Western economies. A 10-year-long pattern shows that fewer students in the United States and Europe are choosing engineering as a profession. India produces 95,000 graduates a year in electrical, information technology, and computer-science engineering that are the kind in highest demand, while the U.S. turns out 85,000 a year.
A Booz Allen/NASSCOM study estimated that as many as 6 million engineers are available in emerging markets to take on R&D assignments of all sorts. Twenty-eight percent are in India, and 11 percent are in China. India enjoys an advantage over China and others, as India has already optimized the business of IT offshoring that can be easily adapted to serve the engineering sector too. India could expand its revenues from engineering services by 25 to 30 times, reaping a market potential of $50 billion in 2020. However the forthcoming competition will be fierce. Within the next decade, the low-cost position currently held by India could shift to countries such as South Africa, Philippines, and Vietnam. India must gear up its competitive advantages.
A host of industry leaders are already expanding their innovation activities in India. At the automotive R&D innovation site of one major automotive component supplier in Bangalore, 3,000 employees are working on high-end electronic control units, tools, and diagnostics. A second facility is planned for Coimbatore by 2010, where 6,000 employees will work on software and engineering. Cisco is winning the most U.S. patents for new products developed at its Indian R&D operation. One automotive supplier that offshored 20 percent of its engineering found that 5 percent more often than American designers, its Indian contractors came up with designs that met specifications the first time out and did not need to go back to the drawing board. And they did that despite having a decade less experience on average than the auto supplier’s own team. One major automotive company that took part in the Booz Allen/NASSCOM study expects to save as much as 50 percent by outsourcing its power-train engineering and is seeing real improvements in quality. An industrial machinery maker is saving 60 percent by offshoring its electronics engineering and has quadrupled its rate of new product introduction.
Can India maintain its competitiveness? It must to absorb the talents produced by thousands of engineering colleges. And in turn, the engineering colleges and institutes must ensure the knowledge levels of the graduates it produces.