TCS, the biggest software organisation in Asia, has a long list of clients in the automotive area: General Motors, Ford Motor Company, Bajaj Auto, Mahindra & Mahindra and Ashok Leyland at the OEM (original equipment manufacture) level, and Delphi, Visteon, Lear, and Bosch at the tier 1 or 2 levels (that is, the top rungs) of automotive component manufacture. Others include names like GE Transportation Systems.

According to Ravi Gopinath, head of TCS's manufacturing and process industry practice, the assignments cover a range of tasks, such as design and analysis, modelling, simulation, and online testing. This is not the right place to go into the technical details of work done or in process. But it covers the entire gamut, at the technical level, of design, computer-aided manufacturing, product data management and so on. Beyond that, TCS has obvious strengths in enterprise level solutions, including supply chain management (SCM).

The list of Taco's customers also reads like a who's who of the world automotive industry. They include the biggest -- DaimlerChrysler, Ford, General Motors, Toyota, and a wide range of major component suppliers, among them Johnson Controls, Valeo, Visteon and Yazaki. Tata Technologies too has built an enviable list of overseas and Indian customers in the short time it has been in existence.

Expect a better hit rate

Collaboration is not a completely new idea. Some of these companies have already been cooperating with one another on an ad hoc basis. For example, according to Nitin Anturkar, executive vice president at Taco, the company is collaborating with Tata Infotech in the area of embedded systems, and has already started work for a couple of customers since September 2000.

Taco’s SCM strategic business group has won a prestigious award from Honeywell’s British subsidiary for the supply of engine blocks in collaboration with Tata Engineering. This project, which began in March 2001, is an ongoing assignment. Says Dr Anturkar, “We are confident we shall get much bigger orders in the future.”

The new efforts are aimed at shifting from ad hoc cooperation to more stable collaboration. That way these companies can plan their bids jointly and expect a higher success rate when they go for large contracts, especially from global leaders, which prefer to deal with turnkey suppliers to having to manage a multitude of individual component vendors.

Strong synergies
"There are several reasons why such increased collaboration should work," says Rino Raj, chief (planning), information technology and e-enabled services at Taco. "One, it would sharpen the focus of the group in the automotive area.

"Two, there are skill gaps in the resources of each of the companies we are talking of, if you consider the entire gamut of engineering services for the automotive industry. But if we consider the resources available with all the companies in the group, these gaps get filled up, and we are in a position to compete more effectively for large and turnkey projects.

"Three, joint delivery means that we don't wastefully duplicate skills in different companies in the group. Instead, we utilise the existing resources more effectively. And, finally, avoiding unnecessary competition among group companies can help us get better margins."

Unmatched strengths
This view is echoed by Dr Gopinath. "At TCS, we are not experts in product design, but we understand the principles of automotive design. We are IT specialists," he says. "So if we can work with people with automotive domain expertise, we gain and they gain. This is where our collaboration with Taco or Tata Technologies makes sense."

TCS has built substantial strengths in its own area. This has enabled it, for example, to sign up with CAD software producer Unigraphics to help this American company develop some parts of its programmes. TCS has also been selling Unigraphics packages in India since 1992.

TCS has been recruiting people with the domain expertise in the different industry areas in which it offers solutions and services. But, in the automotive area, its domain knowledge gets vastly augmented by the resources of Taco and Tata Technologies.

This is something that a casual observer may not see. Being a part of the Tata group gives TCS a latent strength that other software organisations cannot match. Latent, because the real results will come if the group can weld these companies into a closer-knit unit, in which their synergies can be exploited better than they have been so far.

The facility that TCS's engineers have -- of being able to interact with engineers and managers in the group's automotive, engineering, electronics and process industry operations -- gives them the proximity to real-life situations that others can achieve only when they depute their engineers to client sites, and then too its not the same thing. But being able to interact, and actually doing it, and doing it routinely are two different things.

The work it has done for three decades for leading global companies has enabled TCS to touch frontier areas. Combine that with routine shopfloor-level expertise in the other companies and you get a very, very potent mix.

Which is what the group management wants to create.

High confidence level
Being a part of the Tata group helps each company. The group generates enough confidence for other automotive manufacturers to avail of its engineering services. Even its rivals believe the group will be ethical in all its dealings with them.

Toyota's Indian subsidiary has assigned the design and prototyping of the outer door panel of its Qualis multi-utility vehicle to Taco, which will design the panel and have it produced by Tata Engineering, whose Sumo competes directly with the Qualis. The outer door panel is considered a class A surface because of the precision and smoothness required in its manufacture.

This is where, curiously, the existence of a separate entity outside Telco helps. The group has managed to get orders like the Toyota Qualis door panel job because rivals have confidence in Taco's skills.

A larger piece of a large cake
The combination of resources is so powerful that it can catapult the Tata group into the position of a major supplier in the automotive engineering services business.

It's a large cake we are talking about. Dr Anturkar estimates the global engineering services market at about $100 billion, of which, he says, work worth about $10-15 billion is outsourced. There is a growing dependence on IT-enabled skills and this favours Indian groups like the Tatas, which have invested massively in developing IT expertise and in building a global presence in this area.

While the links with Tata Engineering may remain ad hoc and project-based, those among some of the other companies to begin with, TCS and Taco are likely to be strengthened soon. Will they merge? Unlikely, and even unnecessary. The fit between them seems suited to a strategic alliance rather than to a merged entity. But you never know how things shape up. Some reshuffling may make sense. What exact shape the alliance will take is not clear yet. Joint ventures? Joint bidding? Joint project groups? These issues are being hammered out.