The rewards for developing capability in engineering services at a time when most offshore service providers were scaling up application development and maintenance services have come to Patni in the form of consistent growth. The last three years have seen the contribution of this business grow consistently — from 4.6% in 2004 to close to 11% in the first three quarters of 2006. This does not include the revenue from software product development and testing services targeted at the independent software vendors.

While Patni targets multiple verticals within product engineering services, medical electronics segment remains its largest segment, with clients such as St. Jude Medical and Toshiba. Patni has stepped up its thrust on consumer electronics and ASICs, having acquired ZaiQ Technologies, a design and verification company, to enhance its capability in this area. Patni has invested in developing domain expertise in most verticals. For example, it employs doctors to train its development and solution teams working on medical electronics. It has also invested in developing tools in areas where open standards are available (such as consumer electronics), thus shortening product development lifecycles and saving cost.

Product engineering is a high margin, fast growing area and the company’s early leadership heralds well for it. The company’s rationale of treating commercial software engineering as a separate service line will be watched carefully by its competitors and customers.