India eyes bigger slice of aerospace outsourcing
- Date: 2007-02-21 - Word Count: 320
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Source:www.Economictimes.Indiatimes.com
Indian software firms say they are well placed to grab a bigger share of the aerospace market as airplane makers and defence companies look to control costs by outsourcing design and management systems.
Asia's fourth-largest economy is already a hub for global corporations to outsource software services from application development and system integration to supply chain management.
Global spending on engineering services was $750 billion in 2004, with aerospace accounting for 8 percent, and could rise to $1.1 trillion by 2020, according to the National Association of Software and Service Companies, India's IT industry lobby group.
The total offshore engineering spend is expected to grow to $150-$225 billion by 2020 and India, with its talent pool and experience in engineering services, could pick up 25 per cent of that, according to the association.
"Aerospace as a vertical is being focused more than the others, especially by companies like ours whose core strength lies in engineering," M Ashok Kumar, executive vice president of HCL Technologies Ltd's aerospace practice, said.
HCL Technologies, India's fifth-ranked software services exporter, has over 30 aerospace customers including plane makers Boeing Co and Airbus. "Given the current business scenario, we're highly optimistic that the future is bright and the sky is the limit," Kumar said.
Boeing would increasingly use Indian companies to get technology work done cheaper, Dinesh Keskar, senior vice president of Boeing's commercial airplanes division, told Reuters at the Aero India 2007 earlier this month.
The services provided by Indian software companies to aerospace firms include aircraft design, development of on-board electronics systems such as flight control and engine control, and ground systems like air traffic management.
Offset Policy Boost
Analysts say Indian's 2005 offset policy, which requires foreign aerospace firms to spend a percentage of the value of any Indian orders in India, such as in establishing a training centre or buying services and supplies from local companies, was also likely to boost outsourcing.
Indian software firms say they are well placed to grab a bigger share of the aerospace market as airplane makers and defence companies look to control costs by outsourcing design and management systems.
Asia's fourth-largest economy is already a hub for global corporations to outsource software services from application development and system integration to supply chain management.
Global spending on engineering services was $750 billion in 2004, with aerospace accounting for 8 percent, and could rise to $1.1 trillion by 2020, according to the National Association of Software and Service Companies, India's IT industry lobby group.
The total offshore engineering spend is expected to grow to $150-$225 billion by 2020 and India, with its talent pool and experience in engineering services, could pick up 25 per cent of that, according to the association.
"Aerospace as a vertical is being focused more than the others, especially by companies like ours whose core strength lies in engineering," M Ashok Kumar, executive vice president of HCL Technologies Ltd's aerospace practice, said.
HCL Technologies, India's fifth-ranked software services exporter, has over 30 aerospace customers including plane makers Boeing Co and Airbus. "Given the current business scenario, we're highly optimistic that the future is bright and the sky is the limit," Kumar said.
Boeing would increasingly use Indian companies to get technology work done cheaper, Dinesh Keskar, senior vice president of Boeing's commercial airplanes division, told Reuters at the Aero India 2007 earlier this month.
The services provided by Indian software companies to aerospace firms include aircraft design, development of on-board electronics systems such as flight control and engine control, and ground systems like air traffic management.
Offset Policy Boost
Analysts say Indian's 2005 offset policy, which requires foreign aerospace firms to spend a percentage of the value of any Indian orders in India, such as in establishing a training centre or buying services and supplies from local companies, was also likely to boost outsourcing.
Related Tags: outsourcing, businesses, software development, acquisitions
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