Nasscom summit debates India’s growing importance through frugal innovation, engineering talent and business to be had globally.
A two-day ‘Engineering Summit 2012’ organised by the National Association of Software and Services Companies (Nasscom) in Pune last fortnight discussed the tailor-made opportunity for India in the engineering research and development (ER&D) area. Highlighting the availability of a massive pool of engineers with a low-cost approach and skills of efficient utilisation of given resources, the conference emphasised on India taking centrestage in the global automotive ER&D market.
According to a recent study done by the management consulting firm Zinnov, the ER&D market in India currently stands at US$ 14.7 billion (Rs 77,380 crore) annually and will grow at a CAGR of 14 percent to become a $37-42 billion (Rs 194,768- 221,088 crore) opportunity by 2020. What’s more, this market will also generate an additional employment of over a million jobs.
Automotive engineering services – vitalities and opportunities
“Known as a science that helps improve the way in which products are manufactured, engineering should focus on empowering many than serving a few to make the world a more balanced place to live,” highlighted Professor Stephen Lu from University of Southern California.
Citing an example of frugal innovation and synergies of outsourcing at Tata Motors, Dr Tim Leverton, Head – Advanced and Product Engineering, Tata Motors, explained that the fundamental concept of the Tata Megapixel concept was developed in Pune while the driveline was conceived in the UK. Based on the Nano’s platform, the Megapixel – which was showcased at the Geneva Motor Show earlier this year – is Tata Motors’ vision of a future city car concept for Europe. The Megapixel is a range-extended electric vehicle which combines a lithium ion phosphate battery along with a petrol engine. Tata aims to achieve CO2 emissions of just 22g/km, fuel economy of 100km per litre under combined driving mode and a range of 900km with a single tankfull. The project will also feature an advanced human machine interface (HMI) in the form of a touchscreen which can be a single-access point for controlling multiple functions such as temperature, ventilation, driving modes and performance of the car.
“Around 2.2 million fresh engineers graduate out of colleges every year in India as against less than 50,000 new engineers passing out every year in the UK. All enablers are present in India to produce the world-class products for global markets,” said Dr Leverton.
The availability of this talent pool along with the sensitivity to a low-resource environment is enabling frugal innovation and engineering solutions in the form of fresh ideas in the automotive world.
Coined in 2006 by Renault chief, Carlos Ghosn, ‘frugal engineering’ comprises the core principle of eliminating the non-essential features from the final product, thereby reducing costs and effort with low-cost design, manufacturing simplicity, and enabling greater efficiencies in product development, capital and overall operations.
Explaining the approach within Tata Motors, Dr Leverton elucidated that the organisation follows polycentric and disruptive innovation concepts. Teams from various locations work together through the global network to co-create solutions. For instance, while engineers at Tata and Jaguar Land Rover working together on several areas come under polycentric innovation, those aiming at new, highly competitive price points and setting standards for the future fall under the disruptive innovation concept. The Ace and the Nano are key examples of the disruptive innovation approach.
Passage to India
India is fast becoming a preferred investment destination for global automotive manufacturers as they increasingly set up their ER&D footprints for substantial strategic engagement beyond cost arbitrage to support both their Indian as well as global operations.
To maintain the growth rate of investments in India in the engineering services space, Ravi Pandit, chairman and Group CEO, KPIT Cummins, who foresees a sea of opportunities in the automotive domain, mentioned that “the industry needs to drive the concerted initiatives to further strengthen the innovation capacity and research capabilities through specific domain focus and by encouraging R&D collaborations.”
For engineering service providers, Pandit believes that the trend is now witnessing a shift where a value-based proposition includes anticipation of OEM issues in advance and offering possible sustainable solutions.
Challenges and recommendations
Quality and retention of the available pool of engineers in India appears to be the biggest roadblock in tapping the huge ER&D opportunity. The Nasscom summit recommended nurturing high-calibre engineers by incorporating the relevant research aptitude from educational and training perspectives and building a growth driving talent ecosystem.
“We have a program called ‘Ready Engineers’ where we work with colleges to provide specific training to third -and final-year students. It is a structured curriculum of six weeks where our in-house experienced engineers, who have worked on vehicle development and product design programs, impart real-time knowledge, hands-on information and also conduct tests, finally certifying them as ready engineers. The aim is to make them better and more usable engineers when they enter the market,” added Gopinath Jayaraj, president, global delivery, Tata Technologies.
Other challenges include the need to sustain cost competitiveness and to bridge the gap between engineering services and implementation through quality manufacturing practices. To capitalise on the growth potential, industry has called for a collaborative approach.
INTERVIEW WITH WARREN HARRIS, PRESIDENT & COO, TATA TECHNOLOGIES
How does Tata Technologies contribute to the automotive domain?
We are serving the automotive industry globally. What work we do in India is not just for the Indian clients but also for clients in Europe and North America. What is unique about the work at Tata Technologies is the complexity of work in India. Unlike our competitors, who are involved in resource augmentation and volume work that relates to many of the commodity services, we are focused upon providing high-end skills to support the capabilities of our customers and our projects reinforce that.
We are involved in all aspects of the automotive development processes, from concept stage to production. Within that, we can provide people, specific project support which can be the concept area, detailed engineering, pre-production or production planning or we can take the responsibility for the entire program.
We can provide the localisation support for multinationals and cover services across the full spectrum. We have a number of full vehicle programs that we are responsible for and these include complete platforms outsourced by the North American and European OEMs.
If a global automotive company wants to localise in India, what kind of services can you provide?
For a company looking to localise in India, we provide support to achieve a price point for an existing vehicle that is competitive and supports the business case. This includes identifying alternative suppliers, re-engineering of components and sub-systems, setting up manufacturing facilities, and ensuring that the quality requirements are achieved and the whole gamut of services.
What kind of platforms is the company currently working on?
Because of confidentiality, I can’t name the brands. What I can say is that we are working on five full vehicle programs that we are responsible for. There are a couple of electric vehicle programs where we are working on alternative propulsion systems. Of the five full vehicle programs, we are working on four existing platforms and one is an all-new platform.
In the Indian context, how do you see the opportunity in the coming years?
India is uniquely qualified to address two of the basic needs of the industry. I am based in Detroit and you know what happened in Detroit in 2008 and 2009. Today we have a massive shortage of engineers in Detroit to support and service the requirements of the three OEMs.
So I suppose that India has got a huge role to play in providing a remote access to provide the capacity and the skill sets that are increasingly required by the automotive industry.
India has a very tech-savvy workforce and you don’t find that in other parts of the world.
Also, secondly, I think that India has a unique set of skills in particular areas and this whole issue of frugal engineering and frugal innovation is where India is taking a centrestage. India as a country comes with scarce resources; the low-cost mindset is a part of Indian engineers’ DNA.
The type of selections done by the Indian engineers contributes to different solutions than an engineer in Germany or the US or the UK. What we are trying to do is position India not just as a capacity player or a cost arbitrage player but as a player where it can contribute in terms of value, unique set of skills, competencies which complement the requirements coming from various parts of the world.
What is Tata Technologies doing to gear up to take on this opportunity?
We are working to scale the organisation to be a US$ 1 billion entity in revenues by 2017, which will see our headcount scaled from 5500 people to almost 20,000 people. We are committed to be the number one global provider of engineering outsourced services with a specific focus on the automotive industry.
We are also working on the quality, infrastructure issues, HR, IT, delivery systems, and sales systems. Our annual turnover for FY 2012 stood at US$ 348 million (Rs 1,846 crore).
What is the size of the operations dedicated to the automotive domain and the construction equipment and heavy engineering sector?
More than 65 percent of the business comes from automotive while construction equipment and heavy engineering is less than five percent.
AMIT PANDAY