India's premier IT industry body Nasscom expects engineering research and development (ER&D) industry to touch $40 billion by 2020 from the current $10-11 billion.
At a time when Indian IT services players are facing stiff competition globally due to issues like immigration and economic slowdown, ER&D segments has continued to witness a robust growth.
Som Mittal, President Nasscom in an interview with Shivani Shinde Nadhe spoke about how the segments has changed over a decade, why Indian players are better placed and growth opportunity of the services industry.
Nasscom expects ER&D industry to be $40 billion in the next decade from the current $10-11 billion. What opportunities exist for this to be a reality?
Product lifecycle business has to continue. But the reality is that there is serious shortage of resources, But there is a need for innovation, more products to be launched, more designs to be build ect. Globally talent is scarce. We will continue to attract more business here. What we need to work harder is on to show that we are providing a great business environment. The government has also worked towards resolving several of the tax issues like transfer pricing, R&D work etc.
Engineering services segment has been part of the IT industry for more than a decade what has changed now?
What started earlier as outsourcing for cost reasons has changed. Customers are realising that markets are now shifted to emerging markets. Product lifecycles are becoming shorter, hence time to market is short. So its no more about cost but adding that additional value to our customers across the segments. What has also changed is the fact that customers are talking about designing all the way up than just components. So we here terms like avionics, embedded etc. I think our relevance to our customers is increasing day by day. I have no doubt that India will be the global hub for engineering services going ahead.
I think the next phase of growth will be design led manufacturing. Especially with fabs coming to play design and manufacturing will go hand in hand. Also you will see our companies doing focus acquisitions.
How significant will be engineering services will be in growth of the industry?
It will be significant. Companies that gave us IT and BPM work are also giving engineering work. IT and BPM are important as it runs there business but engineering is what they do. It is getting us closely embedded into customer core strategy.
Though US has started to show some signs of recovery, uncertanties like shutdown, immigration bill continue to create hurdles. Comment.
Whether it is in the US or India our job is to see that hurdles are removed. Some of the issues like shutdown will not impact us, but if it goes on for a longer time it will impact a whole other sector. I am hopeful that by next week itself things would get resolved. We have become global and hence we have to face uncertainties we just need to be nimble footed to be able to address any issues.
I think 2008 slowdown has been a big lesson for the industry. We had know only how to manage growth for 40 consecutive quarters. But now companies are nimble and have learnt to manage well.
The Immigration Bill has many positives as well. For political reason some negative provision are also there. But good thing is that America is realising that those negative things are not good for them either. American corporation have been working here for more than decades, they have realised they cannot move work just like that.
All major IT companies have stated that growth for FY14 looks better, will Nasscom revising growth estimates?
We would wait and watch. We did look at several factors before we came to the growth target of 12-14%. Just 3-4 months back we were asked to revise it downwards. But there were certain factors, like global in-house centres were concerned about the taxation provisions which have been resolved. I think 12-14% we see clearly happening. But if we have to revise it upwards we will take a call later.