GS100: 2011 Global Services Compendium
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An increasing number of companies worldwide are looking at Engineering Service Outsourcing (ESO) options to cope up with the changing market demands comprising faster time-to-market for products, lower design engineering costs, higher product quality.  

The recovery in the ESO market has been rather slow post recession, though the last two quarters have seen the market gaining some momentum. And this is very likely to continue as product engineering services are expected to be a major growth driver for service providers this year. The report ‘Globalization of Engineering Services’ by National Association of Software and Services Companies (Nasscom) and Booz Allen Hamilton reflects that by 2020 the worldwide outsourcing expenditure is expected to reach $200B. 

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Service providers believe that the changes in the ESO market are fairly visible and would be seen throughout the year. “Following the global financial crisis, companies last year were investing in outsourcing services, yet were doing so on a modest-level. Today, companies are operating with more confidence, and as a result, the way in which they seek outsourcing support has evolved as well. Previously, outsourcing was used as affordable labor; however, today, the paradigm has shifted.

More and more, we are talking to companies interested in longer, more strategic relationships.” says Michael Minkevich, Vice President, Technology Services, Luxoft.

Current Scenario

Companies worldwide are targeting new growth avenues and one way of doing this is expanding their offerings to international locations. As a result, clients are showing more preference for
engineering service providers with a global footprint. The focus is especially high on emerging markets and in order to capitalize on the opportunity, service providers are also developing strategies and products that are in line with the specific customer needs of these locations. India is the most preferred destination for engineering services outsourcing, followed by US and China. Other emerging destinations include Taiwan, Ireland and Poland.

In an earlier Global Services
article, Alok Sinha, Sr V-P, Engineering Design Services, Symphony Services wrote, “There was a time when BMW would ship to India. Today it has a design center here. It’s the same with GM, Mercedes, Volvo, GE, Bombardier, Boeing and many more. This is a great market to be in, and also to begin building a pipeline for cheap engineering design. But it may be interesting to note that it’s not just about the transfer of wealth or knowledge. India is also a recognized hot bed of innovation. Leaders like GE, GM, Honeywell, have already taken the initiative to push a considerable amount of their development to Indian shores, leveraging the talent pool and the cost advantages available.”
 GS100: 2011 Global Services Compendium
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