Over the past one year, we have pushed the boundaries of virtual development,” says Amit Chadha, CEO & MD of pure-play engineering services firm L&T Technology Services (LTTS). “One, we now have secure remote access to our labs. Second, we also have developed Home Lab environment in select client situations where our engineers have high compute equipment replicated at their homes,” he tells Sudhir Chowdhary in a recent interview. Excerpts:
With engineering services known to be physical movement-driven, how have you adapted to the ‘new normal’?
Engineering and R&D services involve a suite of services—from ideation, conceptualisation, design, product development, testing and after-market launch, to support and enhancement of existing products. In the current global scenario, a lot of the work has evolved from physical to the secured virtual space—through simulation, high-end systems and servers —and this work can be done and accessed from anywhere on the planet. However, unlike other industries such as IT services, the ER&D segment necessitates a part of the work to be executed and experimented upon in labs and requires physical presence of workforce in design centres.
What are the major trends you have witnessed in recent times? How do you foresee relevance of engineering services?
A major trend that we have observed is the pace at which change is taking place. The acceleration of technological change and disruption that has been affecting processes, products, robotic automation in business functioning in the past few quarters has been different from that in the past decade.
The second mega trend that we have observed, is that companies are partnering with startups who have point solutions and are creating a technology ecosystem along with them. Enterprises are not undertaking end-to-end product development and manufacturing all by themselves, instead relying on assembling services from various outlets; hardware maybe designed by one company, while embedded work will be done by another. Bringing all these specialised capabilities and integrating them together from start to finish in a few months rather than years is a mega trend that has emerged.
With travel disruptions in the last 15 months under the ‘new normal’, customers are much more comfortable with this nature of work being done out of offshore delivery centres. In terms of technology trends, the biggest change I see are in the areas of electric autonomous connected vehicles, 5G technology, digital healthcare and digital manufacturing.
There is increasing competition from global players in the engineering services sector. How do you plan to stay ahead of the curve?
According to ratings agency Zinnov, the global ER&D market will grow to $1.95 trillion in the next 3 years from the current ~$1.4 trillion. It has been steadily growing thanks to the R&D investment by global organisations for pursuing innovation and penetrating new, emerging markets and the increasing sophistication of the ER&D services industry.
As an ER&D destination, India has also gained prominence over the years as a strategic R&D hub focused on innovation and disruptive technology. Hence, clients seeking technology partners or India captive centres are no longer offshoring only for cost benefits, but to achieve flexibility and availability of talent, time to market and localised products for developing and developed markets. This is where our engineering domain expertise will help us stay ahead of the curve.
What early trends are you witnessing in the domestic market? How do you see this region shaping up in the next three years?
LTTS’ domestic market mostly comprises plant engineering and product design related business, both for Indian conglomerates and MNCs. On the product design front, LTTS works with various global engineering centres or captive centres in segments such as transportation, industrial products, medical and telecom, while on the plant engineering side we help on the engineering support domain for FMCG and chemical companies.
India continues to be a leading destination of choice for ER&D services. But there have been a few noticeable trends which have emerged in the ‘new normal’. In plant engineering, there has been a push from the government, with its “Invest in India” initiative, and promotion on setting up manufacturing facilities in India. We are hopeful that things will change for the better in the next few months, as growth from a manufacturing setup stand point improves for OEMs, FMCG, and chemical companies.