India emerges avionics manufacturing hub

By agencies   |   Monday, 25 July 2005, 07:00 Hrs
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BANGALORE: India is emerging as a hot destination for global aircraft manufacturers. Not just as a market but also as a key outsourcing hub for design, development and production of avionics hardware and software.

Consider this: Airbus SAS, which has already allocated manufacturing work worth over $80 million to Hindustan Aeronautics Ltd (HAL) for making aircraft doors, is keen to outsource work on its double- decker superjumbo A380s. Infosys played a vital role in designing a portion of the Airbus A380’s wing; and, HCL Technologies will provide software and hardware development services to Boeing for its new 787 Dreamliner project.

Although aerospace core technology outsourcing in India is still in its nascent stage when compared to auto outsourcing, as per Nasscom estimates, Indian IT firms can look at potentially a $1 billion market from this sector, over the next 3-4 years. Current market size is estimated to be about $100-150 million.

According to Sanjay Dutt, Head, Product Lifecycle and Engineering Solution (PLES) unit at Infosys, “The aerospace industry is coming up with many new aircraft required by several new airlines. Increased interest in India as a market of future compels managements of interested companies in these industries to inevitably consider India as sourcing base - not only for Indian market but for their global products”.

Boeing is also working with the Indian Institute of Science (IISc), Bangalore, to conduct research in aerospace materials, structures and manufacturing technologies.

The mandate is to develop technologies which are of critical importance to the future of aerostructures — nanotechnology, structural alloys, composites, smart materials and structures.

“More and more software is increasingly being used in the aerospace industry in India. You can get both aerospace engineers and the IT guys and there is cost advantage”, says Boeing senior vice-president (sales) Dinesh Keskar. No wonder, aircraft manufacturers such as Boeing and Airbus are expecting to cut costs by sending some of their software development and engineering work offshore to Indian IT and aviation companies in the public and private sector. The two aircraft manufacturers are also keen to set up engineering centers in the country.

Boeing and Airbus are eyeing a potentially huge market here— analysts say, India could spend up to $40 billion on purchasing more than 300 passenger aircraft in the next 10-15 years. It is imperative more work be outsourced to India.

David Velupillai, regional manager, Airbus, which also has relationships with Infosys, HCL Technologies, Midhani, Computervision and Vidhyacom, says, “The amount of parts we need depends on production, which is expected to go up 10% to 360 aircraft this year. We look to expand existing relationships and explore new opportunities for outsourcing from India”.

India, which has a sizable skill pool across the engineering domain, processes and service delivery expertise — already demonstrated in its successes in the IT services and BPO space. Availability of testing and prototyping facilities; access to and understanding of cutting-edge design technologies further equip Indian players to capitalise on this outsourced engineering services opportunity in the aerospace sector.

Says Bejoy George, general manager, strategic initiatives, HCL Technologies, “India is emerging as a big source for avionics hardware and software for international aerospace companies at all levels. While China is also a source for such services, sourcing from India is assumed to be growing at a faster pace”.

As per a Nasscom report, engineering design forms the core of the aerospace industry. Though the vertical is not alone in facing cost pressures, its impact is accentuated by two factors.

First, demand is not direct — but derived from the downstream segments of the industry, and the manufacturers need to undertake upfront investments in new aircraft design and engineering — over fairly long gestation periods. Further, the magnitude of investment required in the segment is even higher.

Aerospace industry has not been an early adoptor of core product engineering outsourcing. However, companies like Boeing and Airbus have started to realise that outsourcing is probably the only option for them to remain competitive. Computer-aided design (CAD) and computer-aided engineering (CAE) outsourcing in aerospace primarily revolves around four major sub-systems of the aircraft, namely landing gear, engine, flight controls and devices. Apart from these sub-systems, the fuselage, wings and flaps are the most commonly outsourced components at the airframe manufacturer (Boeing, Airbus) level.

So, what kind of work is coming to India? “Till a few years ago, it was mainly verification and validation kind of work which was coming to India. Unit testing, integration testing, coding, and other low-end work like documentation was sourced from India. Recently, however, major aircraft makers are sourcing full system design work, too,” says George.

“Now, Indian IT firms are involved right from the systems requirement stage, all the way till systems testing and certification support. Other areas of work being outsourced here are hardware engineering, embedded software engineering pertaining to system development and support and maintenance, and mechanical engineering like modelling, detailing, etc,” he adds.

Going forward, opportunities for Indian IT firms exist in developing hardware and software in various aero sub-domains like flight management systems, flight control systems, cockpit display and information systems, flight warning system, engine control systems, navigation, surveillance/air traffic management, etc.

The domestic aerospace sector, represented by HAL, BEL, ISRO, etc, is a rich source of knowledge and trained professionals. In addition, the process rigour of Indian IT companies, combined with the cost arbitrage advantage which India offers, makes it attractive to foreign aerospace companies. Also, access to the domestic market through the Indian IT companies is another attraction.

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