India's supercharged aviation industry, the fastest growing in the world, is being buoyed by huge jumps in passenger traffic and startup domestic air carriers.
And though India's commercial aviation sector is not without its problems--service delays are chronic and the industry is losing a pile of rupees--its long-term growth prospects have both Boeing and Airbus stepping up their investments in India to meet what's expected to be vast demand for new passenger jets well into the next decade.
If the current growth dynamics hold, there could be big spin-off benefits for the major outsourcing firms that can deliver quality engineering and design work, as well as other services, to big airline manufacturers. That's the hope anyway as Airbus, Boeing, and engine makers such as General Electric and Rolls Royce step up research and development work and sales in India.
Revenues in the aerospace engineering outsourcing sector are expected to catapult from US$1 billion currently to US$5 billion by the end of the decade, according to projections by India's National Association of Software and Service Companies study. There could also be lucrative opportunities for Indian manufacturers that supply spare parts to Boeing, Airbus, and other players.
Needed: 1,000 new planes
At the moment, the future of local aviation looks buoyant, thanks to India's high-speed economic growth and resulting travel boom. India's commercial aviation business is expected to clock 25 percent annual growth rate for the next 10 years--and will need about 1,000 new passenger planes during that period.
"With the market exploding in India, the need to create service capabilities on the ground has become even more critical," said S. Gopalakrishnan, president and chief operating officer of Infosys Technologies, who will step into the role of managing director and chief executive officer in June.
While aerospace engineering contracts--everything from stress-testing parts to designing them from the ground up--used to be the exclusive province of state-run agencies like Bangalore-based Hindustan Aeronautics, that's no longer the case. Private and listed Indian companies see huge opportunities and are trying to build up expertise in this arena.
"With Indian service providers displaying a risk appetite, the earlier piecemeal work has now evolved into big projects," said Ajit Prabhu, CEO of the Connecticut engineering services company QuEST.
Indian design in the A380
Indian outsourcers are definitely trying to take their game up a notch. Tata Consultancy Services (TCS) has worked on projects for GE Aviation involving digitally testing the configuration of jet designs and is currently designing the business class portion of a plane for an undisclosed aviation customer. Tata Technologies hopes to leverage the expertise of its parent company to reduce the cost and weight of airline components for international customers.
Infosys has designed part of the Airbus A380 super jumbo jet, which is now undergoing test flights. Last year it set up an engineering center to team with Spirit Aerosystems, a major supplier of structures including fuselage, nose sections, and floor beams.
However the challenge for Indian outsourcers is finding enough qualified engineering talent to meet future demand for aerospace work. An estimated 7 million Indians enter the workforce every year. Yet there are few engineers among them, executives say. The nation's 1,200 technical colleges produce just 400,000 engineering graduates each year, estimates industry body the National Association of Software and Service Companies (Nasscom).
In-house training required
Among those, only one fourth have the skills to immediately start work at a multinational or major Indian IT firm. So the cost of additional training must be footed by companies. Companies are also looking abroad for talent. "There is a paucity of core domain expertise," said Krishnamurthy B, a vice-president at Wipro.
Also, in order to move up the value chain from low-end work, companies are looking for acquisitions to build skills. Last year, Wipro acquired U.S. Quantech Global Services, a provider of computer-aided design and engineering services. Tata Technology's U.S. arm, Incat, is prowling for acquisitions in Asia.
For the moment, though, they are all packing their bags for the Paris Air Show in June. And the Indian contingent is interested in letting the aviation world know that it is deadly serious about playing a role in aerospace design and engineering. As Regu Ayyaswamy, TCS's vice-president of engineering and industrial services, pointed out, "This year we are going to have a much bigger stall."
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