CSM Software set to rope in strategic investor

CSM Software, a Bangalore-based engineering services outsourcing firm, is likely to rope in a strategic partner in the near future.

This company, which has a topline of around $15 million, is a two-decade old firm and has clients in the aerospace, automotive and heavy engineering industries.

According to market information, the company is expected to divest a majority stake to a strategic investor which will enable the company fuel its expansion plans.

CSM Software presently employs around 300 people. The company's primary delivery centre is in Bangalore with offices in five other Indian cities, apart from Germany and the US.

R Swami Narayanaswami, promoter and MD, CSM Software, had earlier exited a couple of his ventures, including CSAR Corporation he founded in 1982 in the US, which was later merged into MSC Corporation in 1999. Narayanaswami has the experience of working with NASA in the US.

Satya Srikant, CEO, CSM, said though the company was not looking for a strategic investment, there are some strategic partners who are also showing interest in investing in the company.

"Such offers keep coming in. Sometimes people come to us with a funding proposal. However, our primary agenda is to look out for meaningful and strategic partnerships to help fulfill our objectives," he said, denying there will be a divestment of majority control.

This space of engineering services sector is gaining traction in India, largely fuelled by the impending large amount of orders which are bound to flow into India as a result of the offset clause.

The Indian government's offset clause is expected to bring aviation and related offshoring deals worth over $10 billion to the country over the next five years riding on the orders worth about $40 billion from the Centre.

According to a recent study by the Nasscom and management consulting firm Booz Hamilton, the offshoring of engineering services (ESO) to India will provide $40 billion opportunity for the Indian IT firms by 2020.

Globally, the spending on engineering services which stood at $750 billion in 2004, was projected to reach $1.1 trillion by 2020.

During fiscal 2004-05, only $10-15 billion of engineering services were offshored. The offshoring of engineering services is estimated to grow to $150-225 billion by 2020.

India, which enjoys about 12 per cent of the market share in the ESO segment, is expected to corner about 30 per cent of the market by 2020, according to the Nasscom-Booz Hamilton study.

CSM Software, during its 15 years of existence, has served 400 customers including the Tier I suppliers to global players like Boeing in addition to players like L&T, TVS, Tata, BHEL, HAL, NAL, General Motors, Bharat Forge, Patni, Honda, BMW and Nissan.

The company's five business divisions - services, training, products, management consulting and onsite design support "" offer an integrated solution to customers and it leverages partnerships with Dassault Systemes, MSC Software, MoldFlow Corporation, CD-adapco and Delmia.