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Global Engineering – Co-creating Value

While some people perceive that Indian IT Industry (including engineering services) is taking away jobs, fact is that Indian IT Industry has created several thousand jobs globally. India IT companies started relationships with Global companies in the mid-90s by leveraging cost arbitrage. However, over the last 15 years the value proposition of Indian IT companies evolved more around capability and capacity. Starting from doing low end work, Indian companies have quickly moved up the value chain by focusing on process excellence, alternative solutions and innovative ideas. As Indian companies started moving up the value chain and started executing high-end work, it has become imperative to have a strong local presence to – essentially to build domain expertise, manage customer relationships, and provide program management expertise. As a result, Indian companies either created jobs by hiring local talent in Global or acquired Global companies. No denying some talent was also transferred from India with appropriate work permits. On aggregate, for every 5 jobs created in India, companies have created at least 1 job Globally. In most cases these jobs are highly paid jobs.

By quickly moving up the value chain, Indian companies have supported their partners’ Globally in product development by providing design, R&D, after market engineering support. With this support from Indian companies, companies Globally have cut down product development cycle time and as a result reduced time to market and gained significant advantage over their competitors. In addition, in leading edge technology industries such as Aerospace, Indian companies have supported their Global partners in providing highly competent technical skills and have managed some very critical subsystems development. By working together, India and Global businesses have co-created value for the stake holders in both the countries.

By adopting frugal engineering, Indian companies have helped companies Globally to bring down the cost of products and increase their marketability. This resulted in increased revenues, increased market share and optimized sustainable cost structure. There are several examples where Indian companies have reengineered existing products with lower component count, lower cost, increased functionality and reliability – these examples range from mission critical safety systems to aerospace products to consumer electronics. A great example of co-creating value through partnerships.

This frugal engineering proposition, by virtue of reducing the total cost and time for product development, has in many cases also resulted in Global companies taking up programs and projects that, hitherto, were shelved due to budgetary constraints. These additional programs and projects have created additional revenue streams and additional jobs. Another great example of co-creating value.

Access to new markets is another great example of co-creating value. Global companies have recognized that India is not just a supplier of talent but a big consumer of many of the products made by global companies. But these products do require a significant amount of localization and customization to suit Indian needs – whether it is localizing a car or farm equipment or rail transportation systems. Who can localize these products better than Indian companies that have already worked on product development? While Global companies brought historical knowledge about the product, Indian companies brought capability, capacity, technology and knowledge of local requirements. Together, they created compelling products for Indian markets and helped Global companies increase their revenue, market footprint.

By working together, India and the Global companies have co-created value and in the process created more jobs Globally and in India; reduced cost of product development with resultant savings being invested for newer products, created better shareholder value by increasing revenues and profits; developed products to address the growing needs of new and emerging markets. India trade relationship with many countries around the world is a great example of multifaceted “co-creation.”

Mohan Reddy

The author, BVR Mohan Reddy is Chairman of Infotech Enterprises, a leading Engineering services company

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