IT – up and flying

Technology has a big role to play in aerospace, QuEST tells eWorld.

Paromita Pain

QUEST Machining and Manufacturing, a provider of product development and engineering solutions, some time ago announced the formation of a 50:50 joint ownership company with Magellan Aerospace, headquartered at Toronto, to launch “India's first independent processing facility to cater to the needs of the Aerospace Manufacturing Industry.” And IT deployments have an important role to play here.

Aravind Melligeri, President, QuEST, Bejoy George, Vice-President-Global Sales and Natarajan Iyer-Vice-President, HR, share their views on the IT in aerospace scene in a chat with eWorld. Excerpts:

What kind of growth and opportunities do you see in the aerospace segment — both domestic and defence in the coming years?
According to the latest industry figures released by Nasscom, the global spending on engineering services was $750 billion in 2004, with aerospace accounting for 8 percent, and it could rise to $1.1 trillion by 2020. The total offshore engineering spend is expected to grow to $150-$225 billion by 2020 and India, with its talent pool and experience in engineering services, could pick up 25 per cent of that.

We believe there is an opportunity of close to $1 billion/year of exports to be achieved by 2012. The aerospace industry is growing at 30-40 per cent per year. The current revival of the industry also coincides with firms going in for newer designs and aiming at producing a better and fuel-efficient aircraft.

In India itself, there is going to an unprecedented growth in air traffic (50 per cent passenger and 300 per cent cargo). With the current offset clause pegged at 30 per cent of the purchase value and looking at the buying estimation itself, at least $3 billion worth of business is expected in the next 10 years.

Infrastructure plays a critical role in determining how companies operate — unreliable power, transport, poor quality of life will lead these companies to consider other nations who are doing a better job in putting in infrastructure matching the West. Government can also influence through Offset requirements. Some nations have 100 per cent offset and India is considering 20-30 per cent.

Please explain the concept of the offset model. Offset models are used as a method of using a country's buying power to both purchase high-value projects and to achieve its social and economic development objectives.

Offsets are used to leverage development in areas unrelated to the core project that resulted in the Offset obligation, and bring broader economic and social benefits to the purchasing country.

India's 2005 offset policy requires foreign aerospace firms to spend a percentage of the value of any aircraft orders from India, such as in establishing a training centre or buying services and supplies from local companies. India has a large industrial base and offsets will further enhance its technical and manufacturing potential.

They will also help to increase investments in domestic research and development.

What is the scope for IT deployments within this field?
In the engineering outsourcing space, IT is considered an enabling technology to automate business processes and functions, including Project Management, Project Costing and Billing or even a full-blown Financial ERP, MIS and other Reporting tools, HR Information Systems, Customer Relationship Management, E-Learning, Knowledge Management, Office Administration and company Intranet.

The total money involved in IT-related work is therefore comparable to any core IT services industry. Most engineering services outsourcing companies would not prefer developing and maintaining home-grown systems. The cost of niche-technical software licences works can account for 5-30 per cent of the direct operating costs. Some of them need to run on high cost and high performance computing infrastructure or servers, which could be up to 10 per cent of the capital investment.

The cost of the average hardware engineer's use is high, more than a typical IT or a BPO company because the engineers use high-resolution graphics cards, high memory, multi processors and high resolution monitors.

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