The opportunities galore for tech companies, especially with the advent of Prime Minister Narendra Modi''s vision to make Digital India and Make in India a success, are unprecedented. Connecting 1.2 billion people through technology and enabling quality healthcare, security and information requires a world class engineering framework on which smart cities equipped with the latest digital technology can flourish. As engineering firms gear up to make the PM''s vision a reality, L&T Technology Services is taking a lead in this endeavour.
Engineering Services Outsourcing (ESO) out of India is no longer niche. It has the potential to be the biggest growth driver for the technology outsourcing industry and be a key player in the digital nation drive. India has capitalized on the IT boom for last 15-18 years and this trend has now matured.
"The addressable market for global ESO domain is expected to grow to $215 billion to $300 billion by 2020. L&T Technology Services is already the number one pure play engineering service provider in India and it is rated in the leadership zone across eight verticals and two horizontals thus validating dominant position," says Dr Keshab Panda, Managing Director and Chief Executive Officer of L&T Technology Services, highlighting the opportunity at hand. He explains that the Engineering R&D service market is opening up at this point of time and there lies a huge potential to tap this market especially in the Embedded and Software services domains.
L&T Technology Services is already making big bets with this in mind. "We are making the right moves to capitalize on this fast growing market for services industry with a multi-pronged vertical strategy. We are betting high on digital engineering, especially smart technologies such as Internet of Things (IoT) for Smart Manufacturing and Industries 4.0 with focus on fast growing verticals like automotive, medical, industrial among others," he says.
Collaboration Meets Disruption
While L&T Technology Services is approaching the global opportunity in multiple ways, the road ahead is of collaboration between all stakeholders. L&T Technology Services believes that IoT''s true value will unlock if innovators, vendors and enterprise customers join hands. The company has increased its digital engineering offerings through partnerships and alliances with global companies including Cisco, Intel and Sierra Wireless to create new machine to machine (M2M) and IoT solutions that can change the world. Its innovation engine has co-authored over 240 patents with customers and has also partnered with the likes of UTC and Danaher.
The collaborative approach also includes the government and similar authorities. L&T Technology Services has become a strategic partner in the IoT CoE for start-ups and is leading the initiative created by NASSCOM in association with the Indian government.
"The governments of countries, India as well as international, where we work, play the dual role of policy making for free and fair trade practice and to invest in future trade. The challenges for the industry can be divided into two facets of visa and immigration," Dr Panda observes.
According to him, immigration and visa readiness are important aspects for ER&D companies to collaborate with customers and the need of the hour is to streamline and ensure faster turnaround of these requirements. "With increased emphasis on ''Make in India'' initiatives, the government needs to create an environment that encourages collaboration by ER&D services companies with India centres of global players. Through this, Indian entities will flourish and ensure wealth is brought back to the country," states Dr Panda.
The L&T Technology Services India Play
Giving an insight into its operations, especially the delivery centre spread across India, Kumar Prabhas, Chief Operating Officer and Board Member, L&T Technology Services notes, "The centre at Vadodara in Gujarat is our HQ. It is the second largest employee base for the company in India. Apart from many corporate functions, the Vadodara centre houses multiple teams spanning industry segments such as Off-Highway & Polymers, Plant Engineering, CPG and Industrial Products. It also houses a few cutting edge mechanical engineering labs. The Bangalore centre has the largest offshore employee base. This centre has grown into a highly diverse sectoral function with Telecom, Hi-Tech, Aerospace, Automotive, Industrial Products and Medical teams. There is also a rapid expansion underway in Bangalore."
Mysore base is largely an Embedded Systems hub, where many testing and development centres and labs are located. Some of the company''s larger ODCs including Industrial Products, Medical, Application Engineering and Automotive sectors operate out of Mysore. Chennai has been one of its newer expansions, where it''s Automotive, Off-highway-Polymer, CPG and Mechanical engineering teams operate. The L&T Thales Technology Services JV is also based out of this city.
L&T Technology Services has been in Mumbai for a long time and recently expanded into the Airoli SEZ with industrial products and telecom businesses. Some of its solutions teams in Analytics and Power Electronics and Automotive Electronics segments are also currently housed here. While, the most recent centre at Hyderabad came along with the Dell Engineering Services (e-Serv) acquisition. At present L&T Technology Services has over 10,000 highly skilled professionals, with 12 global delivery centres and operations in 35 locations around the world.
What Is Working For L&T
L&T Technology Services operates at a global scale and a large number of its customers are Fortune 500 clients. Some of its key international competitors include Altran Technologies, Alten, Akka Technologies, Harman, among others. Some of the big IT players such as TCS, Wipro, HCL, in India also compete with its ER&D services. Despite the tough competition, L&T Technology Services has been registering enviable growth. The company has grown at 19 per cent CAGR from FY11 to FY16. Revenues have grown to a run-rate of USD 500 million from a base of USD 70 million in 2009.The contributions to growth have been both external and internal. Taking stock of the ER&D opportunity, Mr Prabhas says, "Engineering R&D service is at its inflection point now where information technology was in 2000. This is the sector that''s going to boom as it is growing at a rapid pace, even faster than the IT industry, which is already matured and commoditized. ER&D has more headroom to grow because the addressable market is much bigger today than what is already addressed. ER&D is also mission critical as whatever we do for clients in this space goes as part of their products that they sell to their clients."
In summary, the pillars of L&T Technology Services growth strategy would be the new lab based service offerings for testing; the focus on solution development with ecosystem partners; new segments in consumer electronics like wearables, remote management of industrial machinery and global partnerships with product companies for IoT. Smart city solutions would be a big component too as would be the push towards future technology such as green energy solutions
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