Infosys, Satyam vie for $200 mn deal

Bombardier, the world’s third biggest aircraft maker, has invited tech vendors to bid for an outsourcing contract potentially worth up to $200 million over next few years, as the company seeks to increase outsourcing of design projects in order to lower its operational costs.

While Mahindra Satyam and Capgemini already work with Bombardier and are in discussions with the aircraft maker for this contract, India’s second biggest software exporter Infosys and smaller rival QuEST Global are also pursuing this opportunity.

The contract will involve engineering design projects for Bombardier’s CSeries jetliners being procured by Lease Corp. International Aviation and Lufthansa are in transactions worth over $3 billion.

From around $1.8 billion currently, India’s engineering services outsourcing (ESO) market is expected to reach $50 billion over the next ten years as more aviation and manufacturing companies seek to lower their design costs by outsourcing to the country.

When contacted, a Bombardier spokesperson declined to provide any specific details of this contract. “Bombardier Aerospace is active in India through associations with Capgemini and Mahindra Satyam in Bangalore since 2005. Bombardier Aerospace in its normal course of business continues to hold exploratory discussions with several entities located around the world to address various business opportunities,” said Marc Duchesne, Manager, Public Affairs & Senior spokesperson, Bombardier Aerospace.
Apart from smaller focused firms such as Infotech Enterprises and QuEST Global, large Indian software firms including TCS, Infosys and HCL have been attempting to increase their revenues from aviation design projects.

While Infosys would not comment on any specific customer, a person familiar with the company’s strategies told on conditions of anonymity that Infosys is among vendors bidding for the Bombardier contract. “Infosys is in conversation with Bombardier which is the main OEM among the four to five big players in this market. Bombardier’s future road map is throwing up an enormous potential as they have formed the blueprint for C-Series,” he said.
Companies such as Infosys now want a bigger pie of the outsourcing contract, which will include some portion of mechanical engineering design work as well.

“Bombardier is looking for design work for metallic and composite structures to be done in India which also includes work like floor panels, la

nding gears, doors, fuselage, wings. Infosys is looking for complete package rather then doing work for one part or another,” the person added.

Aviation customers are increasingly looking at sourcing design and other IT projects from India not necessarily for cost savings, but also because the country offers a pool of skilled engineers who understand complex avionics.

“QuEST Global has typically provided our customers with cost savings from 20% to 40%, in business models where we setup a dedicated engineering team for them consisting of at least 20-25 engineers providing a similar range of services. These kind of cost savings can be achieved in a period of 18 to 24 months from the setup of operations,” said Bejoy George, chief marketing officer of QuEST.

Two of the world’s biggest aircraft makers Airbus and Boeing have been outsourcing to India-based vendors over past many years. Boeing awarded a deal to HCL Technologies to develop software for its 787 Dreamliner and has also formed collaborations with several institutions such as IISc, IIT and National Aeronautical Laboratory, for development of futuristic aerospace technology.

Hindustan Aeronautics Limited (HAL) is developing components for Airbus’s A380, including the doors. QuEST on other hand is making the components that go in to the landing gears of aircraft’s made by Airbus and Boeing.