The High Growth Offshore Product Design Services Market
Offshore Product Design Services (PDS) is a study of the engineering services performed in the product design cycle by service providers that do a large portion of the work with engineers located offshore in low cost regions.
Unlike the NASSCOM study, this is more granular research focused on the service providers, their market shares, and their strengths in different industries, forms of engineering, and regions. The forecast is focused specifically on what growth offshore suppliers will experience, and does not include forecast revenues that will result from Captive Center activities (a focus area for the NASSCOM study).
The PDS market is over a billion dollars in size, and yet is still growing at a very robust rate. Clearly one explanation for this is the extraordinary power of the Global Service Delivery (GSD) model. The GSD model has proven itself across areas such as custom software development, IT infrastructure support, call center services, application implementations, and now PDS. The value proposition is simple; knowledge workers from low cost nations are paid at about 25% of their counterparts in the West. The Internet infrastructure and mature business models among leading offshore IT companies support the GSD model.
Strategic Issues
While the market is growing quite quickly, an inability to do more complex forms of Product Design Services could limit the growth of many service providers in this market.
- How can service providers increase their value propositions by improving their customer engagement models?
- How does the GSD model differ in product engineering as opposed to IT development?
- How can service providers lower turnover among their PDS engineers?
- How scalable is this business model on a global basis?
- Will the demand for mechanical/electrical or embedded software grow faster?
