As India completes its 60th year of Independence, there are indeed a number of reasons to celebrate. The vibrant growth seems completely unstoppable and is aggressively pushed ahead by a population that is hungry to savor the huge opportunities that are now before it. India, now, seems to truly have access to opportunities it has never had before. These opportunities that have long been deprived to the Indian population have only made every Indian aggressively ambitious to pursue personal, social and corporate growth and wealth creation. This hunger, that is now a way of life across the country is perhaps the most powerful reason to believe that this growth is sustainable in the long term.

This article seeks to give a background of the evolution of the Indian engineering industry Independence and its role in shaping the ESO (Engineering Services Outsourcing) industry in India.

History

The early days of Indian Independence, with a strong governmental mindset of leading the country into prosperity, saw some visionary decisions. Enormous investments went into large engineering and manufacturing infrastructure. The Government took strong strategic steps of setting up various bodies such as CSIR, PSUs, DRDO, Civil Public Work Commissions etc. Massive projects in the areas of power, defense and R&D were started. India's hydel projects, railways and the steel industry were early examples of the country's engineering prowess. All these set a base for a good engineering base to evolve.

While all the above were strong steps that were essential and indeed praiseworthy, Indian policy makers erred when it came to supporting the private sector. Consequently, while the engineering industry did grow despite the license raj, innovation, technical excellence, and implementation of manufacturing Best Practices - all these suffered and India lagged way behind even countries that were much smaller. Complex Labor law, complex company laws, quota system for manufacturing and lack of support for entrepreneurs left India at a stage of only having to play the catch up game rather than ever taking a lead.

However, with factors such as a huge foreign currency debt looming large, the Indian government finally decided to take steps to liberalize the economy in the early 90s. Two dramatic fallouts of this were:

•  GDP and, as a consequence, per capita income began to grow. As a result purchasing power of India went up pushing demand levels to new highs.
•  Competition ensured that quality levels were constantly pushed up.

As a result of the above, no serious player could afford to ignore the large Indian market that was emerging. This led to the raise in local manufacturing of white goods, machinery and most visibly the latest automobiles. What this did was to rapidly usher in the Global Best Practices into R&D and manufacturing in engineering organizations. Soon, the Indian work force became familiar and comfortable with engineering design.

As engineering practices evolved, the success of IT as an offshore service and the large talent pool in India made ESO a logical area for evolution. Currently NASSCOM reports suggest that ESO is really the next big wave waiting to hit India after the success in IT. There are already successes witnessed in the market that confirm that the outlook is indeed extremely attractive. NASSCOM suggests that this market is poised to become a $12 Billion market by 2020 and that India is well poised to lead in this space.