The Hindu Business Line : IBM eyes aerospace, defence sectors

Stepping up its focus on the Indian market, International Business Machines Corp (IBM) is now eyeing the country’s aerospace and defence sectors with its enterprise optimisation and microelectronics solutions.

IBM is evaluating strategies including partnerships with private and public sector companies to tap into the Indian defence market.

“We see India as a significant market as part of our growth strategy and would be investing to develop it,” said Mr Tom Kilkenny, General Manager for IBM’s global aerospace and defence solutions.

IBM sees a potential to earn up to $5 billion from these sectors in India over a 10 year period, Mr Kilkenny said. India tops the list of emerging markets for IBM from a growth perspective, while the Big Blue continues to earn a major portion of its aerospace and defence revenues from mature markets in the US, Europe and Japan.

‘Offset’ opportunities

Sensing the potential in the unfolding Indian defence and aerospace market, large local software companies such as TCS, Wipro, Satyam and HCL Technologies are working on IT implementation contracts. The offset programme is expected to open up new opportunities for these IT vendors as for every defence contract worth Rs 300 crore or more, the multinational vendors have to source components or systems from Indian companies for 30 per cent of the deal value.

Market potential

Research firm Frost & Sullivan estimates the Indian defence market to touch $36 billion by 2013.

With emphasis on modernisation and indigenisation, the Indian defence forces are investing over $3 billion on C4SI (Command Control, Co-ordination, Communication, Surveillance and Intelligence) in the next four years.

IBM plans to target aerospace component and defence equipment makers with its enterprise optimisation solutions that help companies in productivity improvement and reduce time-to-market. Through its Advanced Aerospace Solutions Environment, a framework of software tools and assets, Websphere family of middleware technology, Rational suite of testing tools and SOA (service oriented architecture) IBM expects to enable design capabilities, build, manufacture and supply chain for these vendors, Mr Kilkenny.

“We also see a potential to embed our micro-electronic technologies in products of our customers,” Mr Kilkenny said.

About a fourth of IBM’s global revenues from aerospace and defence vertical is associated with embedded aspect of the business.

Aerospace and defence is one of the 18 industry verticals that the Big Blue has been keenly targeting globally for the past 25 years. IBM, which has over 2,000 consultants and systems integration professionals, besides hundreds of developers and researchers focused on the aerospace and defence vertical, services customers such as Boeing and Lockheed Martin.

India has emerged as the largest offshore delivery base for IBM which has over 73,000 employees in the country.

The company, which has major share of the large IT outsourcing contracts handed out by Indian companies in recent years, earned over a billion dollars from the local market last year.