Aviation Outsourcing Comes of Age

An investigation into how the relationship between outsourcers and the major players in the industry is set to develop in the future


However, as well as cutting-edge technology, the right skills at the right cost are also needed to achieve success. The increased value of outsourcing to the aviation industry could only have come about if the industry was prepared to trust third parties to take on projects. And only with the right talent and the right skills can outsourcers prove that they are capable of delivering results. To this end, outsourcers look to hire not only the best engineering graduates, but also increasingly recruit laterally from within the industry and internationally, building up a workforce from around the globe, including the United States and United Kingdom. In the same way that IT services outsourcing now no longer means simply shipping projects off to low-cost destinations such as India, in the future the aerospace outsourcing industry will move toward an increasingly global delivery model, with outsourcers providing the capability to design anywhere and build anywhere.

Aerospace OEMs like Airbus, Boeing and Bombardier are turning to third-party outsourcing organizations to outsource engineering services and tap into a global skills pool to find the expertise they need to improve processes and products. Captive units are already being set up or partnerships formed to outsource structural design and development, embedded development, control system design, simulation, high-level cockpit equipment support software and composite structuring. Lower-tier suppliers too will have to adopt this more flexible approach if they are to survive the cost pressures from above.

Recognizing this, most IT services outsourcing companies are strengthening their focus on providing engineering services to the global aerospace industry. Most companies in the sector are exploring collaborative partnerships with niche players in industry, the technology sector and academic streams to be able to provide specific competencies to their customers.

What the Future Holds

Engineering services outsourcing in the global aerospace industry is continuing to grow. Thanks to the ongoing competitive pressures on the aerospace sector. With this continuing market pressures, it is expected that the aerospace industry will represent a $4 billion market in India for outsourcers in the next 10 years.

Service providers have to understand the nuances of the needs of the client along the life cycle to deliver value. Initially cost and quality have taken an upper hand but as one moves along, the factors that would enable service providers to create a sustainable competitive and comparative advantage lie in the aspects relating to creation of more value for aerospace clients in terms of speed, flexibility, productivity, innovation and risk management. Service providers need to strive towards creating a space for themselves that would emphatically position them as ‘service partners’ who create business solutions and not as mere service providers.

As outsourcers and aerospace OEMs work in a more collaborative fashion, outsourcers will be expected to provide end-to-end capabilities, working on conceptual design, sourcing and component manufacturing. And it will be those organizations that have the specific engineering skills, vision and innovative qualities in-house that will be able to benefit and win out for this forthcoming boom in engineering services outsourcing.

Challenges like economic pressures, strong competition and changing buyer requirements are forcing the A&D industry players to develop and deliver new products and services by being efficient as well as responsive. Outsourcing partners’ solutions should be able to address the full value chain to help these players succeed at growing their business. They should be able to support these players and integrate their processes right from sourcing, to fulfilment and sales service. They need to build capabilities that enable integrative value chain transformations by collaborating all the stakeholders from supplier through OEM to the customer.

About the Author: Suresh Babu is the Global Head of the Aerospace Practice at Tata Consultancy Services. www.tcs.com.

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