Designing Dream Machines -- In India
Few folks are surprised to learn that their PC or cell phone was designed by a no-name Asian electronics contractor. But what about something really complex? Could Detroit, say, outsource the design of a whole passenger car to low-cost engineers in Asia? Not yet. But visit the engineering operations of outfits such as Tata Consultancy Services, a showcase of India's fast-evolving design capabilities, and that day seems closer than you may think.
At TCS labs in India, engineers are working on virtually every aspect of car design for an array of foreign clients. In Bangalore, for example, engineers are tweaking the designs of a drive train for a passenger car to be built by a Western auto maker. Using virtual 3D prototypes, ergonomics experts run complex analyses of design changes to the car's interior, helping determine whether the steering wheel or radio controls are at an optimal distance from the driver. "Just one millimeter off can irritate the driver," explains R.G. Prasad, who heads TCS' 850-engineer industrial design operations in Bangalore. TCS experts also scrutinize the structure of a car's outer body, devise embedded software to monitor an engine's performance, and analyze crash-test results. And they help design factory production lines that will be built back in the U.S.
Nobody is saying the Big Three are planning to outsource the conceptual design of whole vehicles anytime soon. For now, auto makers tend to farm out less creative, more tedious engineering tasks such testing for design flaws. But clearly, the volume and sophistication of engineering design work is growing rapidly in India. Bangalore's Harita Infoserve Ltd. is developing interior parts and conducting computer tests on components for General Motors Corp. (GM ). Bangalore's Plexion Technologies has worked on the interior design and windows for a DaimlerChrysler (DCX ) bus. Toyota (TM ), Ford Motor (F ), Ferrari, and Honda Motor (HMC ) all are boosting Indian outsourcing, as are key component makers such as Robert Bosch, TRW Automotive (TRW ), Visteon (VC ), and Collins & Aikman (CKC ).
Detroit's enthusiasm is providing a new boost to the subcontinent's fast-growing info-tech services sector. Within five years, India's contract industrial engineering revenue is expected to grow from around $500 million now to $10 billion. Worldwide, the product engineering services industry is expected to double, hitting $53 billion annually by 2009, predicts market research firm IDC.
It's unclear how much engineering design work is reflected in these numbers, but it won't be trivial. Last year, for example, auto makers accounted for some 60% of the industrial design work done by Indian suppliers, according to Indian software services trade group Nasscom.
Design outsourcing contracts are sweeping into numerous industries. U.S. producers of everything from machine tools and farm equipment to heavy-duty power generators are rushing work to India as well. At one end, the wave is likely to encompass more midsize companies such as MarquipWardUnited, a $125 million manufacturer based in the small town of Phillips, Wis. To speed up development of the company's $300,000 machines that create cardboard packaging, executives turned to St. Louis design partner Barry-Wehmiller International Resources (BWIR), which in turn employs 200 industrial engineers in Chennai, India, and an additional 50 in the U.S. BWIR intends to boost its Indian design engineering force to 300 by yearend. Likewise, Chicago's Fleetwood Goldco Wyard Inc., a $100 million manufacturer of factory equipment, used BWIR to develop expensive pasteurizing machines for a leading U.S. packaged foods company.
OPPORTUNITY TO GROW
With midsize equipment makers struggling to fend off mounting competition from China, outsourcing arrangements pay off mainly by cutting development time and costs. Many of these manufacturers have had to pass up orders with tight delivery times simply because they lacked the necessary engineers. "Where we are, it's hard to hire and train people in a hurry," says Operations Manager Blake Pluemer of MarquipWard United, which supplies production lines to the likes of Weyerhouser Co. (WY ) and Georgia Pacific Corp. (GP ). "Now we can shrink and expand as needed. This gives us an opportunity to grow."
In Detroit, economics is driving the move to India, which has an abundance of engineers and design outfits that charge less than $15 an hour for their services. And advanced, interactive design technologies are becoming simpler and less expensive. These are the tools that enable engineers around the world to use the Internet to swap, test, and modify virtual products that may have thousands of components. Prices of basic computer-aided design software from the likes of Needham (Mass.)-based Parametric Technology (PMTC ), Cincinnati's UGS, and France's Dassault Systems (DASTY ) have dropped from $20,000 per copy in the mid-1990s to as little as $3,000 today.
These factors have played to the strengths of big Indian design houses, which can afford to hire hundreds -- even thousands -- of engineers. What's more, huge operations such as TCS, one of India's leading software-services giants, can offer a breadth of engineering services unmatched by U.S. rivals. Most independent engineering firms serving Detroit have fewer than 10 engineers, who specialize in just a few niches. Because such expertise is expensive, carmakers "tend to outsource very high-end jobs," says PTC Chief Product Officer Jim Heppelmann. In contrast to Detroit boutiques, the Indian outfit has 2,000 industrial engineers, 400 of whom specialize in auto electronics and embedded software. As a result, "virtually every part of a product can now be affordably outsourced," he says. PTC says it sees a sharp drop in design software sold to U.S. engineering operations -- and rapidly rising sales in India.
Indian companies also offer a broad range of technical capabilities. Among the strengths of TCS is expertise in developing software tools and algorithms to analyze all sorts of engineering challenges. For clients setting up auto factories in the U.S. and Europe, TCS engineers, many of whom have experience in the Indian auto and aerospace industries, simulate the production processes under various scenarios and suggest the optimal method to configure the assembly lines and work areas and the best way to program assembly robots. They also develop models to study the impact of a collision on any part of a car body at different angles.
When it comes to a car interior, such broad expertise is especially valuable. "Every tweak in the design of a car interior has a cascading effect on every other parametric that then has to be analyzed," such as the configuration of the dashboard or the space between a passenger's head and the ceiling, says Ravi Gopinath, TCS vice-president for engineering and industrial services. "We can then come up with solutions very quickly."
It's not hard to discern where these diverse capabilities converge. Ultimately, Gopinath says, TCS and other Indian engineering contractors would like to win jobs to develop an entire vehicle. "It would be our dream if a car manufacturer just said: 'Here are the specs. Go and do the complete job,"' he says. That's unlikely. The design of a car engine, body, and interior are too central to a carmaker's competitive edge and require an intimate feel for the preferences in the home market. But, Gopinath notes, "we are getting into larger parts of the development cycle." IDC analyst Joe Barkai confirms the trend: "We'll see manufacturing companies giving much more ownership of design to their trusted partners in India."
Ultimately, TCS and other Indian engineering houses say they hope to sell their own conceptual designs for industrial products. If so, a future economy car could well carry a label saying "designed in India."
By Pete Engardio in Bangalore