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Engineering
Outsourcing
The technology
industry began offshoring assembly and testing in the 1970s; followed by
chip fabrication and much system design work in the 1980s and '90s. Next went software development,
which was outsourced to offshore service
providers, followed by business process outsourcing (BPO). Now experts believe another
offshoring wave looms engineering design.
Recently,
India IT industry trade group National Association of Software and Service
Companies (NASSCOM), in association with consultancy Booz Allen Hamilton, released a study on the
design-engineering sector that takes a systematic and comprehensive view
of the role of engineering services and assesses the evolution of the
engineering market between 2005 and 2020. The report estimates the global
spending for engineering services at $750bn per year. And the world-wide spending on engineering services is expected
to increase, by 2020, to more than $1 trillion. Of the $750bn spent today, only
$10 to 15bn is currently being offshored and is
expected to grow to $150-225bn by
2020.
India brings home
about 12% of today's offshored market and with Canada, China, Mexico, and Eastern
Europe sharing the rest pie. The report said engineering work
such as designing and testing cars, consumer products and military
equipment is the 'next frontier' of outsourcing for India. Based on the current momentum of
the market, engineering design outsourcing to India should generate about
$3-5bn by 2010.
Traditionally,
lower cost has been the primary reason why companies looked to offshore
engineering services. And
although this continues to be true, a large talent pool and requisite
infrastructure are also key reasons why India, for
example, has the potential to control what the NASSCOM / Booz Allen Hamilton report estimates will be 25%
of the industry's market share by 2020 across a range of
sectors.
India has some
inherent strength that could well transform it into a potential powerhouse
when it comes to engineering services. At the top of the list is the
widespread availability of highly skilled, English-speaking
engineers. India accounts for 28% of all
of the available ESO and BPO talent in low-cost countries. The next largest source of
low-cost talent, Russia
and China, contribute only 11 and
10%, respectively. The large
pool of over 1400 engineering colleges, 35,000 engineering professionals
graduating every year, is also a key strength of India.
Companies like
Emerson Electric, Sandvik, Neilsoft and Vertek
are currently increasing its investment in India, developing quality
engineering talent and design and development capabilities. While Emerson has already established its Design Engineering
Centre in the country, Sandvik is also going the extra mile by investing
in a process modelling centre as well as a design and development centre
in Pune. In addition, Nasscom
will also be endorsing the establishment of over 40 to 50 Test Labs in the
country, which could look at promoting engineering services and components
exports business.
Some of the
challenges that threaten to keep Asian countries from capturing a major
chunk of the global ESO pie: Is the availability of insufficient project
managers, lack of in-depth domain and product development experience,
insufficient expertise of the Asian engineers on technologies used
abroad. Hence, despite past
offshoring trends and present hints of change, it is still too early days
on Engineering design offshoring. |
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According
to Global Survey, People and Processes More Important Than Technology in
Securing the Enterprise
The global analyst firm
IDC, sponsored by the
International Information Systems Security Certification Consortium
analyzed responses from 4,016 information security professionals in more
than 100 countries with nearly 40% employed by organizations with US$1bn
or more in annual revenue and has published the result of third annual
Global Information Security Workforce Study. According to the report the most important elements in effectively
securing their organizations' infrastructure are (in order of
importance):1) Management support of security policies, 2) Users following
security policy, 3) Qualified security staff, 4) Software solutions, 5)
Hardware solutions. It also
states that now organisations are beginning to recognize that technology
is an enabler, not the solution, for implementing and executing a sound
security strategy. And that people are the
critical component of an effective information security
program.
'2006
Cost of Data Breach Study' states costs rise year on
year
Ponemon, a Michigan-based
research firm in its study titled '2006 Cost of Data Breach Study', has
claimed that customers do not like their data to be
handled by any third-party vendor without their prior
knowledge. The study was based on a survey of 31 companies known for data
breach this year. This year
the total cost of data breach was estimated to be
between US$226,000 and 22M.
In 2006, there was a 31% increase in the number of data breach
incidents reported, amounting to a loss of US$182 per customer as compared
to US$138 per customer in 2005.
It is believed that about three-quarters
of the costs were incurred on phone calls to notify the customers of data
breach, the discounted services provided to compensate for the data loss,
and the loss incurred, if any.
Among the key findings, 72% of the data breach cases occurred due
to security digital information, while 14% occurred due to malicious
attacks. Also, 94% of the
companies took some preventive measures. Around 160,000 customers were affected due to data
breach.
Gaps
in network skills could lower APAC
competitiveness
According to a study by
IDC, the Asia-Pacific region,
excluding Japan, will face shortage of
221,000 skilled professionals in the field of wireless technologies,
security, and IP telephony.
By 2009, Asia Pacific will have 20% skills gap for general
networking skills, as compared to 26% for advanced skills. The number of countries in Asia
Pacific facing technology skills gap will double from four to eight by
2009. Among the other
findings, around 65% of the respondents consider data centre and
cross-technology skills to be of importance.
BBC to
outsource its services to India
The British
Broadcasting Corporation (BBC) has announced its plans to outsource
finance-related work from its British operations to India. The company has signed a ten-year,
£85M deal with Xansa. The
contract includes in its purview finance and accounting services, such as
processing of purchase and sales transactions, payments to artist and
contributor, financial management and project accounting, processing of
payroll and expenses, etc.
According to a Xansa spokesperson, an estimated 250 people will be staffed under the contract and will work from
the company's Chennai centre.
The broadcaster intends to save nearly £200M over the duration of
the contract.
Starbucks
brews up IT services deal
Under the
terms of the contract, Unisys will provide a number of services, including
service desk and helpdesk services, data centre services, network and
server monitoring and support, business continuity and recovery consulting
services, global program management to plan and implement the services and
to coordinate service delivery.
Clifford
Chance World's largest law firm looks at India
Integreon Managed
Solutions, Inc., would be opening a service
centre in Delhi to support the administrative
functions of Clifford Chance. The company is
expected to save US$18M annually through this offshoring
activity. The new facility is
expected to start by 3Q 2007
Symcor Extend IBM Agreement
for Managed Operations Support
Symcor has
signed a three year, US$26.6M managed operations support contract with
IBM. Since 1999, the company is
providing managed operations services to Symcor. IBM will continue to manage the operations and
technical support of Symcor's mainframe and storage
infrastructure. |
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China
to Encourage Outsourcing in Five Cities
Under the country's 6th
Five-Year (2006-2010) plan, China aims to build service outsourcing bases
in 10 cities, encourage 100 multinationals to outsource services from
China, and foster 1,000 large and medium-sized service outsourcing
enterprises.
China is striving to increase
its service outsourcing export volume fourfold by 2010 compared with
2005. In 2005, China's export of service
outsourcing was $900M.
Capgemini
outsources networking services to BT
Capgemini has
announced the outsourcing of a major part of its European Networking
Infrastructure Services (NIS)
operations to BT. The company will provide these services to CapGemini’s
clients and will employ around 250 professionals of CapGemini’s NIS
employees in Europe including the UK and Spain.
National
Life Group, MAG Industrial Automation Systems Awards Contract to
Perot
Perot Systems has won a
10-year, US$110M ITO contract with MAG Industrial Automation Systems. Perot will provide services,
including consulting, helpdesk, desk-side support, applications
maintenance, and development services across 30 locations of
MAG in North America, Europe,
South America, and Asia. During this week, National Life
Group also awarded a multiyear ITO contract to Perot
Systems.
IBM Services
Subsidiary Signs $32M Deal With Farm Credit
IBM services subsidiary ISM
Canada has signed a
$32M USD, five-year renewal agreement with Farm Credit Canada to provide a full range
of infrastructure services.
AT&T Completes
Acquisition of USi
AT&T Inc. announced
that it has completed the acquisition of USinternetworking, Inc.
(USi). The transaction complements AT&T's existing managed services
capabilities and paves the way for the company to drive more deeply into
the applications management space with new offers for businesses of all
sizes.
BT
Buys Counterpane to Shore Up Customer Data
BT
has acquired Counterpane Internet Security. The acquisition is part of BT's
strategy to expand and develop its global professional services. The acquisition will help BT to
deliver managed security services with better auditing and reporting
facilities to its customers.
Capgemini
acquires Kanbay
Capgemini is buying
technology services group Kanbay International for $1.25bn to accelerate
its growth in India and
bolster its position in finance consulting and in North America.
Satyam`s
net up 28.56% in Sep`06 qtr
During the
quarter, the company experienced a 28.56% rise in profits from Rs
2,507.26M to Rs 3,223.40M.
Sales for the quarter rose 37.63% to Rs 15,377.10M compared with
the corresponding quarter, a year ago. The company added 35 customers
during the quarter, including a leading airline, a Korean auto major and a
European confectionary giant.
NIIT
reports 23% growth in profit
NIIT has
reported a 46% year-on-year increase in its 2Q 2007 (ended on September
30, 2006) revenues to INR 21.99bn.
The IT solution segment of the company contributed INR 20.6bn,
while INR 139M was contributed by the BPO
segment.
Patni
Computers Q3 net up 37%
Patni Computer Systems Ltd
on Thursday reported a 37% increase in quarterly profits at Rs 102.4
crore. Total revenues of the
company stood at Rs 697.1 crore, up 28% as against Rs 519.7 crore posted a
year ago. |
