The CEO of Elektrobit, Maria Anhalt, says India is playing an increasingly global role in her company’s strategy with plans to expand its R&D centre.
As the auto world goes increasingly digital, what does this mean for your company given the current semiconductor issue?
As a software company, we are not impacted directly by the supply chain issue but as our customers are affected, we were indirectly impacted. We work closely with customers from R&D. Our operations and processes are already digital. We now intend to go into the R&D phase in a truly virtual way using Cloud, digital mock-ups and virtual validation. At Elektrobit, we want our customers to lower the dependence on hardware and move to the Cloud improves the time to market. The chips shortage and geopolitical situation between China and US means that there was delayed vehicle delivery and so auto companies had prioritised markets, relative to distribution and in some cases to postpone decisions altogether. We offer our customers hardware-independent software, reusable modules that run across the vehicles. This enables customers to integrate without much dependence on semiconductors. In addition, we have relationships with silicon providers, so we can enable out-of-box integration and will help them with the platforms which is our next step.
Post-Covid, OEMs are now revving up. What’s the future for the sector?
The automotive domain is moving into automation and software-defined vehicles. Take Tesla, it is an EV company and can afford to reinvent its business approach starting from the green meadows. The established players are taking the evolutionary approach. A study last year by CapGemini suggests that the key driver for software is the adoption of a common software platform. The same study says that by 2030, new vehicles on new platforms will be 35 percent, five times higher than we anticipate. So right from real-time communication, ADAS, self-driving, cameras and sensors will require a complete overhaul of the platform. All companies have begun to invest for the future and a platform for the next generation vehicle. There are, of course, the downsides of security, safety, updatability and scalability, and these are opportunities for us. Elektrobit is an expert in auto software, and we are at the forefront. Our products and services are the building blocks and enable the auto operating system to ease the transition to the next phase, which is electric.
What are your plans for the India market?
I see India as a critical element of the value chain in the mid-to-long term. India’s role is two-phase. On the one hand, it’s the diverse market comprising PVs and two wheelers that we are helping these segments to build a base software platform that is modular and help our customers build an agile development process. We can enable the setting up of economies of scale, and can serve a broader group of customers, and reduce costs. Our expertise here is also helping us serve other markets like India’s. For India, and its trend in motorisation, or even Africa, we have the opportunity to invest in different segments of cars, and experiences
Elekrobit's R&D centre in Bengaluru where its global head of strategy is based.
The second phase is India’s talent pool, great educational levels and engineering talent. I have known India from my previous job, and for over 15 years. The talent available has global experiences having worked with multinational companies. Our R&D centre at Bengaluru helps us define the products and solutions required not only for India but globally as well. Incidentally, Elektrobit has completed six years here and we continue to invest. The R&D centre here does product development, significant customer-specific programmes and services around connectivity, safety and user experience. Even during the pandemic, we did not slow down. In fact, we are hiring at a high pace. We have a high referral rate of 40 percent, happy engineers and age diversity. I can hire a hundred more software experts without having an issue with profitability. We are also placing global roles in India. Our global head of strategy sits here.
I envision a significant growth for our centre here. We are growing in double and triple digits and I would like to place more responsibilities here and more global roles. It depends on the maturity of the location. We can move from satellite to ownership of a component or business and I am committed to making this a more mature site.
What are the challenges you face to hire, and in particular for specialised EV business?
I believe that people are motivated by three factors: purpose, mastery and autonomy. We have to create an environment in which an employee is seen to be contributing to something bigger, and that they are part of a successful software company that is leading a transformation. We have to give them trust, autonomy and delegation, as this motivates them to take ownership and develop themselves. We must allow other countries to take on global roles in the business as this also helps and motivates people significantly.
By mastery, I mean having and giving the ability to play between roles, between jobs and invest in development and learning opportunities. The fact that we are working on top-notch technologies at Elektrobit is an attraction for engineers and software experts and is motivating.
As far as challenges go, I would say there are two. For one, everything is now digitalised, not just the auto industry but other industries. So, the worldwide talent for software is widely in demand and is increasing, and demand is greater and supply. We have to, therefore, invest in people’s retention and to offer interesting jobs. So, the attrition is high in the business. At the end of the day, everyone wants to work for a successful company.
The other challenge is that during Covid, we are seeing more remote and digital working. People have had to work from home, and we did not have to invest more as we are a digital company. What has changed is remote employability. In the US, different salaries are paid for someone working in Seattle or in Texas. In Romania, it's different in Bucharest Bucharest or some other place.
In the past, you moved with your entire family with the job you got. But today, one can work for a company with a 30-40 percent hike in your salary, and you do not have to move. The remote-ability of employment has created a significant challenge for recruiters. So, what is critical to create an environment that still nurtures a company culture and belonging and as enables flexibility that they learnt during Covid. So, we are looking at a hybrid model. We have to teach them to work from home, and also establish relationships with others. Leaders have to be taught to manage and lead remote teams. It requires a rethinking of leadership, a more agile concept in leadership, on the one hand, and a more flexible approach in recruitment and hiring, on the other.
In Bengaluru, we have a big centre but we are looking for entirely virtual sites in places like Finland. So, we can hire from just about anywhere in the world. These are interesting times, and in my view, those who are more creative and bolder, and trust their staff will create the best environment.
You interact with Indian OEMs who outline their global plans. So, what are you hearing from them?
We do talk to OEMs and two wheelers, both segments are on our horizon. If we develop a software platform and if we design from scratch, it is not difficult considering both options. As compared to five years ago, there is a huge leap. I see the sheer numbers of vehicles have gone up, and this is partly due to the pandemic, but also the size of cars has gone up. I see fewer bicycles than what I saw on my previous visits. So, there are developments in the market in terms of mobility.
What does your company do for safety in terms of software?
It is critical and important for us; it’s built in, not separate. It is like security and scalability. Many consider the car as a smartphone with its user experience etc. For a vehicle, the scaling and real time is key as well as safety. If a phone is not available, one gets annoyed. If your car is not available, it can be human-life threatening, even fatal. The topic of safety is essential in software development. All our products have to comply with the ISO and AUTOSAR standards and other operating systems. This is a big differentiator for us given that tech companies that are invading the auto domain. But we have the knowledge to develop safe software and get things certified etc. This requires significant experience.
What are your synergies with Continental?
Elektrobit was acquired by Continental about 6-7 years ago and operates as an independent company. We serve Continental as a Tier 1 for end-to-end systems, ADAS, user experience entertainment and so one. A third of our revenues comes from OEMS directly and the rest from other Tier1s competing with Continental. However, we also serve companies like Sony as also Amazon. The fact that we serve the market end-to-end is beneficial to Continental. Today’s auto world like Teslas and Lucids (a UK EV company) also benefit from what we do and they get our well-tested software and solutions. If we build for them, it benefits Continental. So, it is a mutual benefit.
Non-Continental revenues are also going up too. The trends of software and separation of software and hardware and OEMs are going directly to the high-tech companies and not to tier 1 is changing the automotive landscape. One sees this happening in companies like BMW or VW, and we see high tech invading the auto sector, like Sony. Apart from Sony, we are seeing inquiries from adjacent companies like train that want seamless systems on the software, and also from aviation which has similar requirements and need certification, regulations and people-life safety.
How has the work environment changed post-Covid?
There were downsides around loneliness, loss of social contacts. As companies’ revenues fell, they laid off staff. But there were a few good things that moved the world forward. One does not need to travel that much, and while face to face is needed, we will perhaps not travel and fly as we did. That’s good for our air and the environment.
We have also realised that global business is not so much dependent on HQ, on centralised operations, as people learn to work collaboratively and are accessible from anywhere. With increased trust, we can make effective connections. I would like to work from home, because one can arrange one’s private and family life. However, one thing that is important is culture even as people work remotely. At Elektrobit, we are on boarding new people in big numbers and all cannot be remote. The human being is such that personal connect is essential before one can allow them to go remote. Culture and social belonging have to be considered in high growth business and what it means for purpose, mastery and autonomy in a hybrid work model.
What are your thoughts as a woman CEO?
I am proud to be a female CEO of a high-tech industry. As a whole, women account for half the labour force but it’s a quarter in automotive. That has to do with culture, upbringing etc. I have personally benefitted from working at home, and if WFH has enabled women to work based on their talent, I am hugely supportive. This is an opportunity to create a more diverse workforce. By the way, I also hear this from men who say flexibility is equally important and couples can share the load around personal and professional lives.
What does Elektrobit do to encourage more women to work?
For all those women who want to work and do not have the opportunity, it is worth investing in this precious talent. In Bulgaria, women student numbers in computer science are 40: 60 in ratio and if we lose these educated women, it’s not good. We want to have a diverse environment not only for gender, but nationalities and different viewpoints. From our hiring, we on boarded 24 percent women which is higher than other companies in our space. In our management board, 40-45 percent are women and that is significant for technology. We respect those women who consciously make a choice not to work. And this holds for men too. We have men at Elektrobit who have part time contracts as well.
What does software-defined mobility mean at a macro level?
I have a two-pronged answer. One is more down-to -earth, the other more visionary. When we talk about software defined, we are referring to tech, platforms and less about the economics. The software market is growing and one has to look at the shift in the monetisation of software in the vehicle. Last March, a Goldman Sachs study suggested that the market for software will be in triple digits. In today’s vehicle, the value of software is approximately USD 200; by 2030 it will be USD 5000. In ten years, there will be a significant shift.
From a visionary perspective, there will be more M&A and merging of tech and offerings even as companies like Sony that built a car. We developed the software for them. The future will see the power of software, partnerships, ecosystem and the breaking the top down system of one company owning everything. We are going to combine experience from many industries. The world is going to be more three-dimensional. When I was in the Google car prototype, they had developed 80 percent of test cases. If we go three dimensional, have streets in the air and where we don’t have pedestrians – which is doable technologically – the number of single vehicles will decrease due to shared mobility, delivery will be organised differently. There is the possibility of having white-labelled cars.
Elektrobit’s ESH principles say “We reconcile human interests, environmental concerns and corporate interests.” How does this get implemented on ground?
Software is a major contributor to making the world a better place to be, and reducing emissions. At Elektrobit, we want to create a work environment built around health and safety and which benefits the outcome of our work for partners and customers. We want to develop products and processes that preserve resources. We also want to promote sustainable actions across the supply chain. We aspire to contribute to a world where mobility causes zero fatalities, lower emissions. In our view, mobility should be seen as quality time. We have a programme called green@elektrobit.
What have been the defining moments of your career?
There are many but I may say the switch to auto from hi-tech is among the more important. I am Bulgarian by origin and studied in Germany and worked in the USA and other nations. I am a citizen of the world and respect cultures, diversity and adaptability. I feel that it has made me a better leader. When I switched from hi tech to auto, I had the choice to go to the competition for more money, designation or look at areas such as fintech, medical and automotive which are transforming due to software. I was aware that if I waited till close to retirement, I may not have the guts. So, I am happy I did it and to bring the hi-tech experience to auto and different perspectives to my job.
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