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February 11, 2005

The opportunity and challenges in automobile design outsourcing

Businessworld has published a cover story on the trends in the outsourcing of automobile design work to India:
Several companies like Ford, General Motors (GM), DaimlerChrysler, Toyota, Honda, Nissan, BMW, Robert Bosch, Johnson Controls now have in-house engineering design centres in India or outsource work to third-party vendors here. Indian firms are working on at least $500-million worth of automotive engineering design services (AEDS) projects. That figure could double in two years, perhaps earlier.

M.K. Padmanabhan learnt to design rockets and aircraft before he figured out that designing cars could be a profitable business. He turned entrepreneur after two decades in Indian Space Research Organisation and at NASA (on deputation) and a decade in the private sector. He and D.H. Bonde teamed up to float Plexion Technologies.

Plexion is among the fifty-odd engineering design services firms that have sprung up in the last three years. Not all of them have been as fortunate as Plexion. It managed to raise $5 million as seed capital from JP Morgan. Months later, it bagged its first order from DaimlerChrysler - to develop the detailed drawings for a car accessory.

Arun Natarajan is the Editor of TSJ Media, which tracks venture capital activity in India and Indian-founded companies worldwide. View sample issues of TSJ Media's Venture Intelligence India newsletters and reports.