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Christabelle
Noronha
The automotive world has unequivocally acknowledged
that India is a source for its many requirements. Simultaneously,
an elite group of home-grown companies is carving out
potentially lucrative niches in this global industry.
A striking example of this is Tata Technologies (TTL).
Armed with a specialisation in engineering and design
(E&D) services, this is one company that has the
ability to make it big internationally.
In an increasingly taut market, E&D services are
being shipped out from expensive western manufacturing
centres to less expensive alternates in countries such
as China and India. TTL and other companies are primed
to cash in on this migration.
Particularly integral to the auto-manufacturing process,
E&D services are among the most technology intensive
of the myriad constituents that together form the auto-comp
conglomeration. TTL currently has a foot in this door.
It believes that in the future it will stand to gain
substantially more than a foothold in this corner of
what has, until now, been a foreign field for Indian
companies.
TTL’s credentials and competence to make the leap
to the big time are not in doubt. Carved out of Tata
Motors’ erstwhile management services division
and engineering research center in 1998, the company
has matured into the largest and only automotive-focused,
end-to-end E&D services enterprise in India. It
had revenues of Rs 105 crore in 2002-03, has a current
engineering and consulting manpower strength of 1,400
and onshore operations in Detroit, London and Singapore.
TTL is the lead E&D services provider for Tata
Motors, where it was and continues to be involved in
the Indica, Indigo and Safari programmes. The company
now provides E&D services to the largest automakers
of the world, including General Motors, DaimlerChrysler,
Ford, Toyota, Volkswagen/Gedas, Honda, Nissan, Fiat,
Peugeot and Renault, a fact that is indicative of the
company’s growth. TTL also markets its expertise
to the aerospace industry, where it works with Airbus
and Boeing. To top it off, the company runs the only
centre in India for advanced engineering design, dedicated
to the automotive and aerospace sectors.
A glance at what Tata Technologies is into illustrates
the broad sweep of E&D services within the automotive
and auto-comp industry. For Tata Motors, its main client
as of now, the company does end-to-end product engineering
and design from conceptualisation, product design and
analysis through tool design and production. Services
also include Product Data Management (PDM) and integration
with Enterprise Resource Planning (ERP) solutions. Then
there is the work it provides for big boys such as General
Motors, DaimlerChrysler and Ford, including services
like styling, computer aided engineering (durability,
NVH and crash, mechanism), knowledge based engineering
(KBE), tooling design, manufacturing analysis, two-dimensional
drawings and three-dimensional modelling, data conversion,
robotic simulation, product data management, etc.
TTL is no dilettante, as is evident from its sparkling
new campus in Pune, a 100,000-square foot facility designed
by renowned architect Charles Correa. Hosted in this
wireless, maximum-security marvel is the company’s
Centre for Advanced Engineering and Design, which when
complete will have 10 dedicated offshore technology
hubs, each capable of supporting 75 engineers in two
shifts, a customer-innovation centre, an employee-learning
centre and more. Two of the tech centres started operations
earlier this year and others are due to follow shortly.
Infrastructure is but one part of the TTL whole. “Our
value proposition is to radically improve the way leading
automotive manufactures compete,” says Patrick
McGoldrick, TTL’s managing director. “We do
this by driving down the cost of E&D services through
engineering process outsourcing (EPO) at our offshore
delivery centres here in India, and through strategic
invention and application of software.” We have,
for example, invented specialised knowledge-based engineering
software where reductions in engineering cycle times
by a factor of 10 are not unusual.”
EPO is to TTL what business process outsourcing (BPO)
is to the Indian companies offering a lower-cost option
to the western world. EPO is not, as yet, the largest
earner for TTL, but this is the big-ticket business
of the future.
“There is opportunity for growth through OEMs
like General Motors and DaimlerChrysler,” Mr McGoldrick
asserts. “The market attractiveness is high, as
is our capability to execute. So where will our profits
come from? Tooling design, which alone is a $1 billion
market, manufacturing analysis, fundamental design,
3D modelling, strength, meshing, Noise Vibration and
Harshness (NVH) studies and crash analysis.”
Crash analysis, especially, is a critical area. Cars
made for developed markets have to comply with increasing
safety regulations and much more stringent checks than
before. TTL, which helped establish Tata Motors’
crash-test centre in Pune, the only installation of
its kind in the country, has garnered significant experience
and expertise in this sphere.
“We’re getting more and more work in occupant
safety from global automotive companies. To meet these
needs we acquired the largest non-academic computer
server in the country. This machine, with its special
suite of multiprocessor software, allows us to perform
crash, structural, and NVH studies that significantly
reduce time, improve design quality and provide cost
savings,” he adds.
Crash analysis, however, is just one slice of the offshore
pie. “We execute large projects offshore and also
coordinate with onsite and near-shore project management.
One of the major motivations for them is cost reductions
of 50 per cent or more; but they soon discover many
other benefits as well. They are looking at what companies
such as TTL can provide in terms of collapsing development
time and improvement in quality,” says he.
Mr McGoldrick explains the General Motors partnership
model. “General Motors recently opened its E&D
centre in Bangalore, but it is staffing the place with
people from Tata Technologies and its other two partners.
Through us, General Motors is also using specialists
from Tata Elxsi and Tata Consultancy Services (TCS).
This is an example of how a Tata Technologies lead consortium
of Tata companies is successful at delivering each company’s
unique strengths to a large multinational customer.”
Tata Technologies is also helping automotive companies
learn how to move overseas work to India. The main challenge
for companies is to create a continuous stream of work
that will be performed offshore at equal or better quality
than they are getting today at a steady-state 50 per
cent savings.
To achieve this, TTL has developed a methodology to
help companies analyse their engineering processes to
select the ones that will give them the maximum benefit
from offshoring. Its methodology applies filters to
select work based on several process characteristics
like high labour content, well-defined input-output
relationship and the need for physical proximity. After
that it helps them apply filters based on their specific
organisational and societal factors.
TTL’s share of the global market in E&D services
is, in Mr McGoldrick’s words, “peanuts”,
but the man at the helm attaches a rider to the evaluation.
“Offshore development centres for information technology
started in India a very short time ago with very rapid
acceleration; we’re now at the starting point for
E&D. IT companies can’t address the area we
are engaged in; they may try and they may even get some
market share, but I doubt if they can meet the E&D
needs of automotive companies to the depth required.
TTL has some definite advantages to back up its ambition,
none more important than the India factor, from which
flows all of the rest. “It gives us a 30-50 per
cent savings stream and access to the largest English-speaking
engineering talent pool outside the United States. We
have the option of re-deploying onshore engineers to
critical projects, and we have the time-zone benefit.”
Add these to TTL’s internal merits: extensive
automotive E&D proficiency, a track record of consistently
attracting and retaining the brightest engineering talent
in India, a structured methodology, quality initiatives
such as Six Sigma, and, not least, the Tata edge. TTL
can leverage the skills of TCS, Asia’s largest
software and services enterprise, ride the strengths
of Tata Motors, through which it can offer bundled tool
design, prototype manufacture and testing, and provide
a comprehensive range of services under one banner.
Mr McGoldrick adds that the top 10 auto manufacturers
are all under increasing pressure to provide new variants
in new territories at lower cost and this is what makes
India, China and other countries obvious choices for
outsourcing from the likes of Ford and DaimlerChrysler.
In this context, Mr McGoldrick is far from worried
about the China syndrome. “We have to leverage
the India advantage by developing and using IT tools
like knowledge-based engineering to do E&D better
and faster with unsurpassed service levels. This is
how we intend to counter the China threat.”
TTL has had to change considerably to turn itself into
a nimble operator. “Three years ago we sat down
and tried to understand what we had to do to be successful.”
Mr McGoldrick acknowledges that the first step was to
create a cultural transformation in the organisation.
“We decided to do this through initiatives such
as the Tata Business Excellence Model (an open-ended
framework that drives business excellence in Tata Group
companies).”
Secondly, he adds, a customer-centric focus was adopted.
“We eschewed the idea of soliciting business from
anyone and everyone, and concentrated, instead, on the
big OEMs and on Detroit.” The third and last step,
he states, was to zoom in on profitable growth.
Along the way, TTL also overhauled its entire methodology
of prospecting for clients. Mr McGoldrick says that
today Tata Technologies is a focused E&D services
provider that partners with clients to understand their
business drivers and problems and to develop winning
solutions.
Mr McGoldrick admits that TTL has a long way to go
before it can claim to have refined the customer-acquisition
procedure. The Tata Business Excellence Model has spurred
the process of change on this front. “Our customer
satisfaction index has been going up. This year it was
4.2 out of (a possible) five.”
The weight of the past can be a heavy cross to carry
in the sprightly world of technology. However, TTL,
with the vibrancy of a youthful company, is full of
promise, as it journeys, from infancy to adulthood.
Also read other articles
on the Tata Group and globalisation:
Uploaded on January 5, 2004
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