IT services firm Infosys is betting big on the engineering services segment, as enterprises operating in telecom, manufacturing and life sciences sectors spend more on new technologies like 5G and internet of things (IoT).
Nitesh Bansal, senior VP & global head of engineering service, Infosys told Business Standard that its current engagement levels with enterprises go far beyond providing embedded software.
“Today, there is not a single aircraft in the world where Infosys doesn't have a role to play. These engagements are critical and go far beyond embedded software,” said Bansal. “As companies operating in the engineering services segment are bound by extreme confidentiality clauses, information on their work is never public.”
According to the IT firm, the engineering services segment spreads across communication, manufacturing, retail & CPG and life sciences verticals. In the communication vertical, 5G related spend is the major growth driver. "Infosys has an early mover advantage in 5G, as we have set up five 5G labs across the world. As 5G has already become a reality in many parts of the world, initial spending has already been visible from operators," Bansal said.
In a recent survey done by Infosys called 'State of 5G -The Road Ahead', it was found that 5G would create a new revenue stream for enterprises. In the September quarter, the communication vertical that constitutes around 13 per cent of its total revenues grew close to 20 per cent year-on-year basis. "Engineering services is the single largest component in the media and communication vertical, and significant amount of this growth is coming from 5G (related spends)," said Bansal.
Apart from telecom, Infosys' engagements with aerospace and automotive segments is also witnessing sound growth. The Bengaluru-headquartered firm was selected by Rolls-Royce in March as one of its strategic long-term partners to deliver digital and engineering services. Analysts pointed out that the Rolls-Royce deal was significant, as it was in turbo engine space. "Demand environment in engineering services remains robust and we don't see any slowdown as our engagement levels with manufacturing companies are old," said Bansal.
Though Infosys doesn't report revenue contribution from individual practices such as engineering services, sources in the know said that revenues from this segment stand around $1 blillion. The IT services firm is also partnering with start-ups across the world for offering innovative solutions in the engineering services segment.