Software Firms Eye Slice of Aerospace Outsourcing
With the global recession impacting IT companies, Indian software firms are eying the huge aerospace and defense (A&D) market as airplane makers and Defense companies look to control costs by outsourcing design and management systems.
Research firm Frost & Sullivan estimates the Indian Defense market to touch $36 billion by 2013 and companies in India are expected to get offset orders worth nearly $4 billion through 2011.
Sensing this potential, companies such as IBM, Wipro and HCL are working on IT implementation contracts. The offset programme is expected to open up new opportunities for these IT vendors for A&D contract worth over Rs 300 crore.
Talking to CXOtoday, Anup Vittal, Industry Leader-Aerospace & Defense of IBM India, said, "With A&D OEMs and tiered suppliers increasingly outsourcing IT and engineering services, there is a very large window of opportunity created for software (IT) companies. A&D companies are increasingly being asked to demonstrate product development agility, human capital management, improve upon service offerings in the aftermarket space and enable enterprise cost effectiveness."
"All of these capabilities can be developed by partnering with established software organizations that are capable of driving innovation and improvements. This, in turn, makes it a very lucrative market for software companies to exhibit their expertise," said Vittal.
IBM is bullish about the A&D market in India and sees a huge potential to earn up to $5 billion from these sectors in India over a 10-year period. Additionally, as a qualified A&D offsets partner in India, IBM is well-poised for significant growth in this region, as companies in India are expected to get offset orders worth nearly $4 billion through 2011.
Similarly, Wipro offers application development and maintenance and enterprise business integration. It also has the expertise to offer IT services for the maintenance, repair and overhaul (MRO) of civilian aircraft, and is already offering these services to some of its clients.
HCL’s main area of expertise in A&D sector are avionics, aero structures and mechanical engineering services for aero engines and addresses the aerospace industry’s key points.
Karun Khanna, director of Alpha Design Technologies, said, "Looking at the huge demand for software in the A&D sector, most of the IT software players are all now eying a large share in this sector. Since they all have high domain knowledge, it will give this sector the much-needed boost."
India’s opening up of the Defense sector to foreign direct investment, the ongoing modernization plan of its Armed Forces and enormous new opportunities in the civil aviation sector have opened innumerable new avenues.
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