‘MARKETING OF OUTSOURCED ENGINEERING SERVICES: WITH A FOCUS ON IT ENGINEERING

SERVICES’

By:Himanshu Shah (51)Shailendra Khiriya (27)

Flow of presentationUnderstanding Engineering services

ESO in practice

Primary Research

Research Finding

Conclusion and Recommendation

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Concept of Engineering Services

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Engineering services are those service functions that deal with or related to core engineering processes.

There is a distinction between engineering function and engineering services function.

Today, companies are considering their engineering and design functions on par with other internal business support functions that are considered for outsourcing.

Why outsource engineering services? Cost savings Cost restructuring Improve quality Knowledge Operational

expertise

Access to talent Enhance capacity

for innovation

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IT Engineering services Application Development &

Maintenance

Content Management

Database Management Services

Engineering Software Design &

Development

Data Mining & Warehousing

Software Code Translation

Design of Chips, Circuits

Network & Information

Security

Artificial Engineering

Real Time Systems

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Market demand of ESO Presently, ESO forms only 3-4% of the

world wide spends on Engineering R&D.

The total expenditure of ESO is

currently estimated at USD750bn per

year.

This is growing at a steady pace and is

expected to reach USD1tn by 2020.

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Fig1: Break up of Engineering Services Out sourcing (ESO)Industry 2.0: Feb 2010

Market potential of ESO in India

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Current spend on engineering services outsourcing is around Rs6,000bn and is expected to grow to Rs8,000bn in 2020.

India is presently having 10% of this which comes to Rs600bn. However there is a potential to increase this share.

Engineering services off shoring could help create 150,000-200,000 additional jobs – up to 1,000,000 with multiplier effect.

Factors favoring India are huge availability of engineering talent at lower rates, strategic expertise, fluency in English, flexible to work in shifts, and can work under pressure to meet project deadlines.

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Framework of ESO model

Onshore

Offshore

Factors considered in selecting the services to outsource

Transferability

Maturity

Risk

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Key pointers in selecting the ESO vendor

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Exploratory Research14

Steps of getting an outsourcing project

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Business model of IT ESO16

Contd…17

Descriptive researchObjectives: Finding the major markets &

major services outsourced in IT engineering.

Understanding the importance of factors considered in selection of services to outsource

Understanding the importance of factors considered in selection of ESO vendors

Understanding the effectiveness of various channels of marketing

Finding the optimum promotional mix

Finding the major competitors for Indian ESO industry

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Research methodology19

Survey method: Personal survey Research tool: Structured questionnaire Sample frame: IT engineering services

companies in Ahmedabad and Gandhinagar Sample unit: Senior project managers handling

ESO projects Sample size: 11 respondents from 8 companies Sampling technique: Convenient sampling

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 Q: Which services offered by your company in maximum demand?

Response:The services which are in maximum demand for off shoring are as follows:

IC Design and verification

FPGA

Development and maintenance of software

Embedded system

Product development

Remote infrastructure

Infrastructure Management

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 Q: Rank the following channels for getting projects in the decreasing order.

Response:

1.Partnership with tool/vendor Company

2.Referrals from existing/past clients

3.Direct Marketing

4.E mail inquiries

5.Tender sales/RFB

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 Q: Rank the following tools of promotion in the decreasing order of their effectiveness.

Response:

1.Direct Marketing

2.Conferences/Seminar

3.Internet Marketing

4.Publishing technical articles in journals

5.Trade fairs

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Q: Which are the main countries from which maximum clientele are obtained?

Response:

U.S

UK

Germany

France

Canada

Australia

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Q: Please mark the following factors on a scale of 5, considered in deciding the services to outsource

Importance of the service in the performance of the final product

 

Cost savings possible if the activities are outsourced.

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Amount of interaction and judgment required on the part of the client to handle that service

Availability of standards/ benchmarks available to perform and judge the services.

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Risks involved in sharing the information/intellectual property

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Q: Please mark the following factors on a scale of importance considered in selection of Engineering Services provider.

Similar projects handled before

 Price quoted for the project

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Reputation of the Engineering Services provider

Projected time quoted for the project

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Q: Which countries are the major competitors of India in Engineering Services Outsourcing?

Response:

1.Asia: China, Russia, Indonesia, Japan, Korea, Hong Kong

2.South America: Brazil, Mexico

3.Europe: Vietnam, Philippines

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Conclusion32

Contd…33

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Recommendations for ESO vendors Establish domain knowledge of the services

in maximum demand Maintain timeliness in handling projects Work on CRM. Increase visibility on internet Participate in conferences and seminars Retain talent, train and develop engineers

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Recommendations to develop Indian ESO sector

Build the “Engineered in India” brand Build domain expertise through symbiotic

relationships with experts Focus on infrastructure creation Undertake initiatives to improve workforce Leverage local industry ‘offsets’ Align government policy and incentives

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Bibliography37

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