Automakers like Renault and Volkswagen seek to outsource their complex design engineering projects to India. The engineering services outsourcing (ESO) industry in India is set to achieve $55 billion in revenues by 2020.
Potential customer like French automaker Renault, which is working on its ultra small car for the emerging market, and Volkswagen plans to establish an engineering centre in India. Japanese automaker Nissan also is currently in discussions with both TCS and Wipro for a potential contract.
Meanwhile, IT is not the only expertise these customers are seeking. Many automakers are seeking to outsource projects for niche capabilities and new partnerships are also being formed on new technologies, such as noise and emission reduction.
With manufacturing and auto firms in the US seeing a revival in demand for their products, outsourcing of design and other IT projects is expected to gain momentum.
Meanwhile, India's domestic market for auto products is also driving this growth. Many automobile majors have already set up plants here in India. These trendy, fuel-efficient automobiles incorporate a variety of electronic modules and the production of such modules locally, in proximity to the automobile plants, is a definite advantage. TCS, for instance, is working on hybrid-battery technology for fuel efficiency, partnering with a US-based automotive major.