ADVERTISEMENT

Product digitalisation driving engineering services growth: Nitesh Bansal, Infosys

Product digitalisation driving engineering services growth: Nitesh Bansal, Infosys
Nitesh Bansal

The increasing digitalisation of products has helped information technology companies grow their engineering research and development (ER&D) segment, Nitesh Bansal, senior vice president and global head of engineering services, Infosys, told TechCircle.

"The pace of innovation required in the product space has increased significantly as it has been increasingly digitalised and personalised. It has become an experience and not just functionality. Hence, the research is deeper and workload is higher. The amount of software that goes into every product has grown manifold and there are not many products without software," said Bansal.

IT industry lobby Nasscom estimates this to be a $2.3 trillion market while the outsourcing business is estimated to be only $60 billion. However, the industry is growing at double the pace of IT outsourcing at around 20% annually.

The product companies were traditionally conservative to outsourcing as the product was core to their strategy and business, according to Bansal "Hence the market for us was small in the past despite the engineering spend being bigger than IT spending and product innovation spending higher than IT spends depending on how product intensive the company is," said Bansal.

That is slowly changing as most physical product makers don't have the software expertise in-house to make the radical shift while market demands have changed at a much quicker pace.

Bansal, who has been with Infosys for over 21 years and was mostly running the company's European business for over 17 years, said the change for specialised digital talent came about as the skills required for ER&D were earlier mechanical or electrical engineering whereas today it requires software skills. "You cannot build that overnight and hence outsourcing is growing at a faster clip," he said.

ER&D services are slightly different from IT and firms focus on the product lifecycle from the engineering design stage all the way till production. The product could be a simple mechanical tool to a complex product like an aircraft and the product could be electronic, electrical, mechanical or composite material-based and everything in between apart from including components of hardware and software.

For instance, engineering giant ABB's motion business president Morten Wierod recently told TechCircle that the value generated by the software and related services for its motors and drives constitute about half of the overall business.

Infosys is trying to become the research partner for large engineering firms by providing end-to-end product design and engineering capabilities apart from assistance in after-sales and service, Bansal said. The company works with aircraft manufacturers, machine tools makers, medical device firms to small sensor manufacturing firms.

Bengaluru-based Infosys lags in engineering services with Noida-based HCL Technologies and Bengaluru-based Wipro deriving a large part of their revenue from engineering services.

For HCL, almost a quarter of its revenue comes from engineering services. French IT firms Altran and Alten are the global leaders in ER&D while TCS and Wipro figure in the global top ten along with HCL.

Infosys is estimated to derive close to $1 billion from engineering services while its FY19 revenue was $11.8 billion. The company does not disclose any official figures for its revenue from ER&D business.

Among other Indian firms, L & T Technology Services, Quest Global and Tata Elxsi focus on ER&D while Cyient, Persistent Systems, Sasken and Happiest Minds also have a large portion of their revenue from this horizontal.

Bansal, who has also worked across industries like financial services, insurance, manufacturing, automotive, pharma and retail before taking over engineering services, said his experience across industries will help Infosys understand customer requirements better.

"While 90% of the company does enterprise IT, we in the engineering team does products. There is a lot of innovation happening in the space like 3D printed products. Autonomous vehicles are also an extension of machine to machine connectivity and intelligence. With the internet of things (IoT) emerging as a tool for industries to digitalise manufacturing industries, it has emerged as one of the key pillars for the engineering services growth," said Bansal.

In each of these industries, customers are trying to transform themselves under the digitalisation paradigm, Bansal said. "The way they design products have gone digital and how they service customers have gone digital," he added.

Share this Post

Comment(s)

ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT