Infosys Technologies is aiming for a greater share of high-end auto engineering services projects, which provide better margin. Infosys, with about 8,000 employees in its engineering services division, earns about 8-10% from the business.
“We are certainly going to be in auto engineering services. The focus will be more on higher-end stuff where there is more scope for value addition. For instance we would look at high-end design works in the automotive space. We already do such high-end work for the aviation sector,” Chandrasekhar Kakal, head, package implementation and executive council member at Infosys Technologies, said, refuting recent media reports that said Infosys might exit auto engineering services.
“We only said there is less money to be made in the lower-end work in auto engineering services,” Kakal said.
The global engineering services market is estimated to be worth $1 trillion, of which the offshore component is just about 2%. Engineering services projects are generally in the range of $5-10 million and give a margin of 25%. Most other top Indian IT firms such as TCS, Wipro, too, have sizeable engineering services business.
Under engineering services, IT and engineering service providers work on modules of engineering work outsourced by firms, mostly based in the US and Europe, associated with automotive, aviation and other heavy engineering sectors.
In November, D Shibulal, chief operating officer and member of board of Infosys, said that the company’s engineering services business will follow the success in IT services.
Meanwhile, Infosys is ramping up its investment in certain “key areas” for future opportunities. “We are focusing on investing in training and education in a big way as per what we discussed in the recent analyst meet on our roadmap for next 10 years. Secondly, we are investing in key top level appointments in Germany and France and creating front-end structure there. We are currently investing in ramping up our presence in Mexico,” said Kakal.
At present, Infosys has 350 people working in Mexico, which it aims to ramp up to 1,000. “Once the business demand gains momentum we may need to add between 1,000 and 5,000 people more in Mexico,” Kakal said.
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