Airbus deal: Small rivals beat Infy, MSatyam

Two of India's biggest software firms -- Infosys and Mahindra Satyam -- have been outbid by smaller, niche rivals QuEST and Cades for an outsourcing contract potentially worth over $300 million from the world's largest commercial plane maker, Airbus. According to at least three people involved with the discussions, Airbus plans to outsource more design projects for its 380, A350 and A320 series of planes to vendors based in India to slash costs by up to 40% and focus better on competing with rivals such as Boeing.
These projects involve designing wings and other avionics systems for the planes and are more complex and better priced than traditional outsourcing work that include back office operations and writing software codes. "Airbus' strategy is two-fold -— give more work to hungry niche suppliers and develop a much bigger base of vendors in India for addressing the defense offset clause," said a person familiar with the aircraft maker's outsourcing strategy. He also confirmed that both QuEST and Cades have been given letter of intent (LoI) for this contract by Airbus.
Airbus and other Indian service providers had not responded to an email query sent by ET last week. By 2012, when Airbus readies its A350 planes, the company plans to send as much as 20% of all its projects to India. Much of this growth in outsourcing to India can be attributed to the country's defense offset clause that makes it mandatory for companies to source at least 30% of the value of contracts awarded from local suppliers.
10/05/11 Times of India

To Read the News in full at Source, Click the Headline

Categories: Foreign May 2011, Indian Aviation- In General May 2011