There are a number of factors that will contribute to the strong growth of ESO in India. While at a very broad level, there are so many industry verticals that will grow in this industry such as telecom, avionics, embedded systems etc, for the purpose of this article; only factors that influenced the emergence of core mechanical engineering industry and aspects of product development are discussed. Factors that contributed to the emergence of ESO include:

• Growth of the domestic Auto industry
•  Pressures on the global Auto industry
•  Aerospace industry
•  Other manufacturing industries
•  Workforce availability in India
•  Mature offshore practices

ESO- not an easy pie

Unlike IT Services Outsourcing, ESO is extremely complex. Some of the challenges of this market are outlined below.

•  Complex nature of engineering design. Sound engineering services delivery revolves around sound technical skills, domain expertise and ultimately sound engineering judgment.
•  Engineering design work centers on product IPs of manufacturing companies. Most of the services outsourced are related to design services around patented products, design specifications or customized interiors of a total engineering solution. Companies wait to develop a comfort zone before collaborating to set up industry Best Practices at offshore centers.
•  Sales cycles are fairly larger compared to IT services due to various complex processes involved.
•  Continued availability of quality manpower

Sustainable advantage of the Indian engineering services industry

Maturing Engineering Industry: As the Indian economy was opened up, many companies entered India and set up manufacturing plants, JV's and design centers. Our own indigenous industry rapidly started adopting global best practices to adapt to the changing scenario. It started with the automotive industry and moved into almost every sphere including heavy engineering, architecture and plastics and now to the current hot favorite, the aerospace industry. The world is recognizing the potential of India in providing quality design engineering and analysis. India will soon employ about 250,000 engineers for this space. Today, there are around 2000 automotive suppliers of which 500 are major manufacturers with a turnover of $10 billion and they're growing exponentially at >15% every year. 18% of their output is for the export market. This has provided space for our technology to grow, to make our R&D better, have more space for design engineering etc.

Talent pool: Cost benefit is not the only primary reason that companies outsource their engineering projects, unlike, perhaps, in the IT sector. The talent pool that is available in India is immense with 35,000 engineers passing out each year. Domain knowledge available among the Indian workforce is considered quite good. While most developed countries are facing an increasing problem of an ageing workforce and an acute shortage of high technology skills, the ready pool of quality talent in India is a strong attraction to companies worldwide. People who are well trained not only in the high technology tools but also with domain expertise are available with relative ease at a fraction of the cost of such skills elsewhere. However, it must be added that there is a time element involved in reaching the productivity factors of the West.