Offshoring of engineering services is estimated to be a $40 billion opportunity for the Indian software services sector by 2020.

According to a report prepared by Nasscom and Booz Allen Hamilton, globalisation of engineering services will be the next growth frontier for India and this is expected to create 250,000 jobs in India.

According to the report, the total offshore engineering spend is expected to grow to $150-$225 billion by 2020, and India, with its talent pool and existing experience in engineering services, is well-suited to realise 25 per cent of the opportunity.

Announcing these details, Nasscom President Kiran Karnik said: "The Indian IT and software industry is continuously renewing itself and seeking to grow by addressing newer service lines, the latest being engineering service.

"Companies in India have developed capabilities and skill sets, and have invested in technology platforms to leverage the opportunity. The growth in engineering services signifies the need for global corporations to expand their R&D pool beyond their home countries."

As per the report, India enjoys a relatively strong position in the automotive and high-tech/telecom engineering services market with $25 billion opportunity by 2020.

Aerospace offers the greatest potential for expansion, though it is also one of the toughest opportunities to tap because of its close association with the defence sector. The report calls for greater support from the government to realise the opportunity.

B Ramalinga Raju, chairman, Nasscom and also chairman, Satyam Computer Services [Get Quote] said: "Engineering services will give India the edge as it aggressively gains momentum in the manufacturing space. This presents a great opportunity as a lot of companies are looking at an alternative to China and engineering services expertise is of strategic importance in that angle."

He added that a well thought out strategy that combines strong marketing efforts with investments in infrastructure, workforce and expertise is required.