The future looks bright as the industry has good number of companies?MNCs, IT service providers and Indian manufacturing OEMs.
The engineering sector is undergoing a phenomenal transformation in India. What used to be some kind of simple drafting work has gradually moved up the value chain to become the preferred destination for manufacturers from the West and other countries. Of the Fortune 500 companies, at least 200 have their own R&D facilities in India.
Offshoring is not as easy as outsourcing. Initially, non-core engineering services such as drawing were offshored in tons to India. It was just documentation. Later, the companies understood that in addition to cost benefits, India also offers huge amount of capability which they could use for the development of products and processes. Though cost is an important factor, I believe, the capability and capacity of Indian companies are the major factors that have been attracting a lot of foreign companies. India produces about 400,000 engineers every year. Even if 30 percent are qualified, it is still a large number. Further, with the capacity expected to become the consumer over a period of time, it makes sense to come closer to the market and design products that are suitable to the market. Therefore, western companies have been concentrating on India, establishing their R&D centres and designing products to suit the market. While cost is an important element, this kind of set up helps the manufacturers to use the capacity and capability, and importantly provide appropriate access to the huge local market.
According to Booz Allen Hamilton, India alone produces about one third of global engineers every year and this is bound to increase by 2020. India also has the largest number of employable engineers in the world. Next to India are Russia and China, which are at a distant second and third and together constitute about 20 percent. Given this, India is likely to hold the top position in terms of quality and quantity for a foreseeable period. This is a huge long-term advantage for India.
Further, language is a big problem for the Chinese and the Taiwense. If you want to do only well-defined jobs such as drawings, then language is not a problem. The moment you want to discuss the design with your clients, language becomes an important element. Further, engineering is a collaborative effort spread across the world, which involves a number of people doing many tasks, and the standards available for designing a product are usually written in English and thus, knowing English is very important.
Domain expertise is a major challenge for Indian companies as we do not have a great manufacturing history. We are a service-oriented economy. We still depend on other countries for high-end products. Domain expertise cannot be achieved until you get on to manufacturing. Engineering Infrastructure is another roadblock. You need to have an appropriate lab to test what you are doing. Apart from ‘The Automotive Research Association of India (ARAI)’, we don’t have proper testing facilities. We also don’t have an established manufacturing ecosystem which involves suppliers, experts etc. The speed of execution is another challenge that needs to be overcome as soon as possible.
The aforesaid problems can be solved together by the industry and the government. In this connection, the National Association of Software and Service Companies (NASSCOM) has given a set of recommendations to the Government. It will take some time for the results to come.
On the other hand, the Government should take some initiatives such as starting more Finishing schools, which train graduates on specific domains like automotives, aerospace and make them understand the basic aspects of subsystems and control systems. There are only two or three finishing schools in India and the number needs to be increased. The engineering labs and infrastructure of public sector units can also be shared. The government should also provide SEZs for manufacturing and give R&D subsidies for companies in service sectors.
I don’t know whether we can create the domain expertise, but we build technology skills among employees in a significant manner through a Triangle Training Initiative. We divide the triangle into three portions. First portion is the awareness level, where we have employees who only have theoretical knowledge. We conduct sessions where we relate whatever they have studied to the problems that they are handling. They are not provided any solutions, but are asked to find the answers themselves. Second portion is the Practitioner level, where the employees are made to practise whatever they have learnt. In the second level, we help the practitioners through Quality Improvement. They are made to listen to and interact with people from the industry, who will give suggestions and help them fine-tune their thinking process. Third portion is the expertise level, where we have a small set of people with considerable expertise in their area. They become the trainers for the basic level of the triangle. This kind of set up is important as we have a high attrition rate in this industry, and if you don’t have a formal training process in place, you are going to be in trouble.
Satyam believes in a Partnership and Innovation Model and our branding comes from it. It is very difficult to develop on your own without having an appropriate partnership with your clients. While innovation is the key to success, we want to innovate through partnership with either our customers or suppliers. Continuous innovation through partnerships will build a brand for you. Further, with customers increasingly looking for a range of product services such as design, manufacturing and servicing, warranty management than just the engineering or design services, it is the partnership model that helps in serving them better. Unless you understand the requirements of your customers’ customers, the product will not be accepted in the market.
We minimise our variations and ensure that there is consistency in the process. We provide quality services, on time at comparable costs consistently, and that is our brand. We don’t have to do anything other than this to create a brand. We have been successfully doing that and we will continue to do that. This is what has fetched us the top rating by the Brown-Wilson Group. I believe that if we can maintain consistency in our services, we can stay in the top 2 in the next year as well.
The future definitely looks bright as the industry has good number of companies—MNCs, IT service providers and Indian manufacturing OEMs. A number of Indian OEMs such as M&M have realised the huge potential that automotive engineering services offer and have set up separate companies to grab the opportunity.
The key to sustain is to be innovative. Innovation happens in three different domains and in three different manners: Technology, Process (the way you do your work) and Product. Of these, Product innovation is the toughest. Innovation can also be incremental, transformational or breakthrough. Indian companies need to be innovative and increase the number of patents filed from India to remain competitive. The future will also witness more consolidation in this industry.
