The other significant advantage for India is that the offset clause (that ties companies to buy some services from India if they are selling products there) mandated by the government for aerospace and defense contracts means that significant engineering work will need to be delivered out of India. Global majors such as Rolls Royce, Toshiba, Smiths Aerospace, General Motors are getting critical components of their engineering design work done in India.

Of these, companies like QuEST are focused on engineering services outsourcing while others have a diversified portfolio of work. Bangalore-based QuEST is a 1,000 people service provider with centers in India, the U.S. and Italy. Among current projects, it’s doing a significant part of the design from scratch to drawing of a complex valve for a U.S.- based water-treatment product manufacturer.

In other cases QuEST is helping customers coordinate their manufacturing by identifying and qualifying providers and managing the relationships. It has also set up a subsidiary called QuEST Manufacturing to make precision components.

Some India-based providers like Infosys have worked on designing parts of the Airbus A-380 wing, currently undergoing test flights. The tech major also works with Spirit Aerospace, which was earlier part of Boeing. Another provider, HCL has over 1,000 engineers working in the aerospace arena with clients like Boeing and aerospace suppliers like Hamilton Sundstrand and Smiths Aerospace.

Automobile outsourcing work, too, is getting a boost as makers can reduce IT costs per car by as much as 60 percent. At Wipro, 1,000 people are working on developing applications for global car majors.

However, the Indian brand name is not as strong in engineering services outsourcing as it is in IT services and BPO, and the country needs to build significant manufacturing capability to tap into the engineering space. While the current engineering graduate base is adequate, it is not suitable for engineering tasks, and the country will need about a quarter million engineers by 2020. Such services call for a good grasp of the engineering fundamentals.

Seeking Multiple Providers
Customers might source their requirements from multiple providers from across the world. For instance, they could source the basic work from India and the more complex work from Israel or Russia. “We see the possibility that large Indian outsourcing companies might come to Russia looking for experience in specific technology fields,” says Sukharev of Auriga. “And we are sure that such partnerships could bring value to both parties — Indian software outsourcing companies might find unique tech expertise in Russia while Russian software providers would definitely benefit from working with mature Indian services providers.”

Whatever be the model, sourcing engineering services will definitely be the next big thing globally. As a report on Globalization of Engineering Services from consultants Booz Allen Hamilton notes: Many companies begin offshoring to cut costs, but then expand their commitments for more strategic reasons.

Companies like General Motors use offshoring primarily as a tactical tool to help cut costs, while  others like Toyota see the offshoring of product development in more strategic terms as a way to help open up new markets and boost overall productivity and quality. Whatever be the reasons, American and European companies looking for engineering services are set to look beyond their shores.