Aviation designs power IT outsourcing

NEW DELHI: What’s common between designing an airplane wing and an automobile’s high-tech diagnostic system. Probably none. But there’s an India Inc component in both of them. Global majors from Boeing to Airbus are getting the former done in India while DaimlerChrysler, Ford and BMW are outsourcing the latter to Indian vendors.

The two outsourced services together have elevated the kind of work that is now being wired to India. It is part of the engineering outsourcing services business estimated at $7-12 billion globally. Currently India-based vendors like HCL Technologies, Satyam Computer Systems, Infosys Technologies, Wipro, TCS, GE India are estimated to undertake work worth $400-500 million annually and this is set to boom.

Says Kiran Karnik, president, Nasscom, "in both automobile and aerospace there is lot of interest among global majors. This is from the point of selling, manufacturing and designing. We see engineering services such as design work, stress tests, flight management systems for aircraft as one of the next big offshored opportunities for India."

Infosys Technologies has worked on designing part of the Airbus A 380 wing, currently undergoing test flights. The tech major also works with Spirit Aerospace, which was earlier part of Boeing. Aerospace comes under its 5,000 people Product Engineering and Life Cycle practice, comprising 10% of the Infosys revenues. Another vendor HCL Technologies has 1,000 engineers working in the aerospace arena.

Says Dushyant Naagar, senior manager, aerospace practice, HCL Technologies, "we are working on various systems for the Boeing 787 scheduled for takeoff in 2008. The systems include flight management and landing gear. We have also worked on the Airbus A 380, with their tier 1 suppliers." Apart from working directly with the airplane manufacturers, HCL also works with aerospace suppliers like Hamilton Sundstrand.

The foreign majors are coming to India not only for savings on cost but also because India and the other emerging markets are becoming important for manufacturers. In fact the civil aviation ministry is currently working on a policy paper indicating that a certain percentage of work must be sent to India when it buys aircraft from say an Airbus or Boeing.

As far as automobile outsourcing work is concerned, it is getting a boost as makers can reduce IT costs per car by as much as 60%. Wipro Technologies which has a 1,000 people team is developing applications for global car majors. For auto related BPO tasks Genpact has about a 1,000 people executing finance, accounts payable, analytics and procurement tasks for global auto makers.

Says Kris Gopalakrishnan, COO, Infosys Technologies, ``product engineering services will be a big area. Some of these tasks fetch good billing rates. For instance, for aerospace design architects, the billing rates can be four time those for IT services tasks. Margins are better but risks are also higher as this area can be cyclical.’’