hampions, as Muhammad Ali, the legendary American boxer, once said, aren't made in gyms. They're made from something they have deep inside them – a desire, a dream, a vision. I nurtured a dream of building a global engineering services company in India. But my grand plans hit a roadblock even before they took off. In the early 1990s, large multinationals looked askance at engineering outsourcing. Products were zealously guarded like the crown jewels by organizations, and multinationals were highly sceptical about outsourcing their core competence. They were particularly apprehensive about IP and associated protection laws in countries like India. As a result, Cyient (then Infotech Enterprises, the company I founded in 1991) took a detour and found a potential adjacency in digitization and geospatial services. But I never took my eyes offmy first love: the engineering services business. This was the premise of Cyient's IPO in March 1997. We started with a small team, working on opportunities that came our way. A chance encounter led to Cyient signing a fiveyear contract in 2000 with Pratt &Whitney (a subsidiary of United Technologies Corp, now merged with Raytheon Technologies), one of the world's largest manufacturers of aircraft engines. This was a pioneering adventure for Cyient and the entire Indian outsourcing story, opening the floodgates for the 'Engineered in India' brand. Over the next five years, we gained significant traction, particularly with global customers in the aerospace and rail transportation industries. Yet, most of the industry, including Cyient, had a limited understanding of the engineering services market, its opportunity size and potential adjacencies. Engineered in India – Expanding the Horizons In the early years of the Indian IT outsourcing story, associations such as NASSCOM and CII contributed enormously to the rapid growth of the industry. I have been a member of the NASSCOM Executive Council since 2003 and vocal about the unique requirements and challenges of engineering services versus pure-play IT or BPM services. This proactive engagement led to founding of an engineering services council (ER&D Forum) at NASSCOM that launched several initiatives. One of themwas the commissioning of Booz Allen & Hamilton (BAH) to study the engineering services sector on the industry's behalf. BAH came out with a report titled "Globalisation of Engineering Services: The Next Frontier for India" in 2006. From $750 billion in 2005, the report estimated that the global spend on engineering services would cross $1 trillion by 2020. Out of this, the report predicted that $150-225 billion market was offshorable, and India could capture 25-30% (about $50 billion in annually). The report acknowledged the formidable strengths of India – availability of highly skilled resources, a strong track record in IT-BPO sectors, and cost savings. It also stressed the need to build domain capabilities, infrastructure, and international reputation to become the preferred destination for these complex, high-value services. This report came at an opportune moment and helped accelerate the growth of the outsourced engineering services market in the country. However, the market remained relatively small during the early years. Given my background in mechanical engineering, Cyient's focus in the initial years was entirely on mechanical engineering services. But the BAH report opened our eyes to electronics and semiconductor design, embedded software and manufacturing as significant new opportunities. Several pure-play IT services companies ventured into engineering services mainly through the embedded software services route. Advances in sensor technology, wireless communications, distributed computing, and big-data capabilities then began permeating the product design and engineering process. India began to be trusted with designing fuel-efficient aircraft engines, sophisticated nuclear power plants, vast 4G (and now 5G) communication networks, complex heavy industrial equipment, next-generation automotives, future-ready metro rail coaches, large medical technology equipment, and even a wide variety of consumer goods. Engineering the Future in India The emergence of Industry 4.0, industrial automation, robotics and 3D printing soon enabled the creation of the 'digital shop floor.' This brought massive digital innovation and transformation to the engineering world, wherein physical products were enhanced to become smarter, connected, autonomous and intelligent. In the intersection of information technology (IT) and operational technology (OT), service providers integrated previously siloed information across an enterprise such as ERP, PLM and MES. This led to increased productivity, optimized operational costs, enhanced equipment utility, improved employee safety, and lessened environmental impact. The digital engineering spend is currently growing at 20%CAGR, driven by metaverse, 5G, intelligent automation and Cloud/AI (Zinnov, May 2022). And this focus will continue unabated till 2025 to touch a massive $1.3 trillion, especially in light of increased spend on defence, semiconductor consumption, digital acceleration, and a heightened focus on sustainability. As technology acceleration continues, India remains the engineering services destination of choice for large multinationals. According to a 2022 survey, about 85 per cent of the 100 large multinationals surveyed already leverage ER&D services providers or set up global capability centers (GCC) for their engineering R&D activities, with ~ 75 per cent of such centers located in India. More companies are expected to increase their India presence as the country is fast becoming a hub for digital engineering skills. The increased comfort levels with decentralized/remote engineering R&D teams and the proven ecosystem the country offers are indeed securing the future of world engineering services in India. At the launch of Booz Allen Hamilton's report 'Globalisation of Engineering Services: The Next Frontier for India' in 2006 B.V.R. Mohan Reddy is Founder Chairman CYIENT and author of Engineered in India: FromDreams to Billion-Dollar CYIENT mohan.reddy@cyient.com Engineered in India: Co-creating the Future by B.V.R. MOHAN REDDY From being looked askance 30 years ago to becoming the preferred engineering and R&D services destination, India has come a long way in building trust, skills, and innovation to earning international reputation and securing the future of the world's engineering needs | 16 | | 17 |
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