HCL Technologies expects faster growth in its engineering, research and development services (ERS), the

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Indian market for which is expected to grow to between $10 billion (Rs 44,970 crore) and $12 billion (Rs 53,964 crore) in 2010.

According to G H Rao, corporate vice-president for engineering and R&D services, “ERS is the second largest revenue generator for HCL after engineering application services, earning Rs 546 crore revenue for the second quarter of this year out of the company’s total of Rs 3,033 crore.”

HCL offers product-engineering services to consumer durables, IT infrastructure, computing, automobile, and aerospace sectors. The factors that boost the company’s confidence are increasing concerns ab­out cost effectiveness of pro­ducts, growing complexity of product design and localisation requirements, Rao said.

Even though its ERS revenue has been falling from Rs 632 crore in the second quarter of last year to Rs 567 crore in the first quarter of this year and further down to Rs 546 crore in the second quarter, HCL is the only Indian information technology player with a major focus on ERS. Rao said, irrespective of eco­nomic slowdown, gro­wth for most multinational companies has been coming from emerging markets, adding that localisation and cost concerns will drive participation of Indian companies in the ERS segment.

“When Indian IT companies increase domain knowledge, core product development will be outsourced more. However, most companies will retain research within their organisations,” he added. Another emerging trend is that design is not restricted to products alone but is about the whole ecosystem as well.

For example, designing an iPhone alone is passé. The design should include features such as connectivity to Apple iStore and ability to download iTunes.

“The marketplace is fast changing towards a combination of products and services. Blackberry now earns close to 20 per cent of its revenue from professional services such as (connecting to) SAP and Siebel. ERS companies are expected to deliver such service requirements as well,” Rao said.