Information technology firm Mahindra Satyam is looking to leverage group synergies to move from aerospace design services to manufacturing of components. The firm has begun to build on a few contracts that will include design plus manufacturing, a top company executive has said.

The move towards ?design to build? will help the firm garner a bigger pie of the Indian outsourced aerospace engineering market, valued between $600 million and $700 million. The market, without the defence offset windfall, is expected to balloon to $4 billion by 2020.

?We are getting ready for the offset. We are a design services company. Now we are getting into ?design to build? because of group synergies. This means we will be able to manufacture as well. This will help in better positioning,? said Karthikeyan Natarajan, VP and head, Integrated Engineering Solutions, Mahindra Satyam.

Under the offset clause, companies bagging defence tenders need to source 30% of the value of the contract awarded from India ? this may include IT, engineering, manufacturing, supply chain, maintenance, and MRO. On the defense side, the government is expected to spend $40-50 billion on modernisation programmes over the next five-seven years and to the extent of $100 billion over the next 10-12 years, experts say. This implies $30-$40 billion offset needs to be managed within the country.

The executive said Mahindra group companies like Systech and Mahindra Defence Systems can be leveraged for manufacturing.

Global aerospace OEMs could increasingly demand the manufacture of components to meet cost pressures in selling to emerging geographies. ?A $100 million aircraft sold to an western airlines company may have to be sold to India and China for $90 million. It does not make sense to create assemblies and other facilities in high cost markets. So they are asking if we could develop some manufacturing and assembly in India. So the work packages of the future will not be just design,? Natarajan said.

The market for global aerospace OEMs is shifting from western to emerging markets. India and China is expected be in the top three commercial aviation markets by 2027.

Aerospace outsourcing will also receive a boost in the coming years because 300,000-400,000 engineers would retire from the industry in the next 5-7 years. The average age of the aerospace engineering workforce in the western world is already 57-58.

Mahindra Satyam has about 2,800 employees in the engineering solutions division and is one of the top aerospace engineering services company in the country with more than 10 customers. The firm focuses on aero structures, avionics, electrical systems, and interior design.

Mahindra Satyam is not disclosing revenues due to a pending restatement of accounts.