India's Hopes for its Design Industry

Offshore and domestic customers seek an edge to satisfy India's consumers, who have more money to spend and are demanding better products

The five-story building off one of the hot, dusty boulevards of South Delhi looks little different from others in the quiet residential neighborhood. But descend the steps to the basement apartment, open the heavy oak door, and you'll find a thriving design firm called Desmania. The dozens of employees in the crowded room spend their days designing products, crafting logos, and creating Web sites for clients in India and abroad.

The work is a dramatic change from what Desmania did just a few years ago. After its founding in 1996, the business mostly tweaked the look of imported appliances and packaging so they'd appeal more to Indian consumers. But lately, Desmania has grown some 30% annually as it has picked up global contracts from such household names as Samsung, Nestlé (NSRGY), and Procter & Gamble (PG). And more Indian companies are hiring the shop to come up with new products, both for the domestic market and export. Next March, Desmania expects to move to a new $3 million building in a Delhi suburb, and founder Anuj Prasad is adding teams specializing in cars and toys. "There's tremendous potential for all areas of design in India—products, packaging, automobiles, anything," Prasad says.

Desmania's growth parallels that of India's design industry. As domestic companies start building global brands and multinationals seek to boost sales in India, design firms are thriving. Indian manufacturers realize they need better products if they want to break out of their home market and get more money for their goods abroad. And foreigners are learning that Indian consumers are no longer content with imported, me-too designs. The profession is growing in popularity at Indian universities, and scores of design firms have sprung up across the country.

While this new growth isn't immune to the global slowdown, there's reason to expect this fledgling industry will flourish in India. For decades, with protected markets, there was little reason for Indian companies to bother with good design; most people were happy to buy whatever they could get their hands on. But as the economy has opened and incomes rise, consumers have begun to demand better products. Even if growth slows, companies will be reluctant to skimp on design and risk losing customers. "Corporations are realizing there's an Indian design sensibility, and if they cater to it they'll have a market," says Hari Nair, Whirlpool's (WHR) Asia design chief, based in Delhi.

NO BLOCKBUSTERS YET

A slowdown in the U.S. and Europe might even help India's industry. Many Indian designers say they charge roughly a third what an American, Italian, or Japanese firm might for similar work. Entrepreneurs worldwide look to India for help designing new gadgets, and bigger companies are hiring Indians more often, too. Ticket Design in the city of Pune, for instance, recently crafted a series of house-brand toothbrushes for a European retailer. "Where companies are looking to cut costs, we're getting work that might have gone to Western designers," says Vinay Rao, director of Bang Design in Bangalore, which has worked for Microsoft (MSFT), Dell (DELL), and other tech companies.

Still, he and other Indian designers say they're not going to put big Western design firms out of business anytime soon. While lower-level shops "might lose some work to us," Rao says, "the very top design companies won't have a problem."

Indian firms have another edge: their understanding of what marketers call the bottom of the pyramid. With hundreds of millions of Indians living in poverty, the market for super-affordable products is huge. While Tata Motors (TTM) has perhaps the best-known example, a $2,500 car called the Nano, companies across India are dreaming up goods and services that can be sold at rock-bottom prices. "At every level you find that there's entrepreneurial effort going to service the really poor," says George Mathews, an Indian director of Icarus, a design consultancy in Bangalore.

Until a few years ago, most design work in India was relatively low end. There were a lot of engineering jobs—arranging the circuit boards and connectors inside a phone, for instance. Another big business was adapting foreign-designed refrigerators, TVs, and packaging for local preferences. A third was crafting small elements of products for Western companies—an egg tray, say, or the cap for a shampoo bottle. But lately, India has become far more sophisticated. While the country's designers have yet to come up with any true blockbusters, more Indians have started to design products from scratch.

Few companies are more emblematic of India's upshift than Tata Elxsi. A subsidiary of conglomerate Tata Sons, Elxsi early on sold design software, then started training customers in using the complex programs. In 1994, Elxsi realized that if it could teach others to use the software, it might be able to design products itself, which led to a design-engineering business. Then in 1999, Elxsi launched its own industrial design unit, which has created products such as a water purifier for Unilever and a solar-powered lantern for BP (BP), crafted packaging for GlaxoSmithKline (GSK), and helped automakers such as Honda (HMC), Ford (F), and Toyota (TM) shape car exteriors. Today, 70% of Elxsi's work is for non-Indian clients, up from about half three years ago.

The unit now has some 200 designers and engineers at Elxsi's campus on the eastern fringe of Bangalore, where manicured lawns dotted with mango and guava trees surround a cluster of whitewashed buildings. The newest addition is a group that comes up with ideas and products such as a personal media player, which Elxsi hopes to offer to corporate customers. "We realized that all our work was reactive—clients would come to us and say this is what we want," says Anil Sondur, general manager of the industrial design division. "We felt we should do things on our own."

Lately, India has started to attract young designers from around the world who think a stay in the country will give them an edge in their careers. Students from South Africa, Italy, and elsewhere work at Elxsi. Ticket Design has had Turkish designers visit for several months. Idiom, a Bangalore firm, has several foreigners on staff. "Within a few years, we're all going to have to work with India," says Fabian Garin, a 25-year-old from the French city of Lille, who has spent the past five months at Desmania. "So it's good to be here and understand the market."

INDIAN CONSUMERS: "CHOOSY ABOUT DESIGN"

There's no shortage of Indians who want to get into the field, either. At least 2,000 vie for the 110 seats at the elite Indian Institutes of Technology. But while the nation's universities churn out 400,000 engineers a year, the 18 schools offering degrees in industrial design graduate fewer than 1,000 students annually. Those who enroll feel the field is more interesting than software. "I've been drawing since I was a child, and I wanted to get away from the monotony of IT work," says Roshan Valder, 24, who worked for three years in Bangalore as an engineer. Now he's in his first year of the design program at the IIT in Mumbai, where on a steamy October day he's creating his first project: a toy wooden armadillo that waddles from side to side.

Multinationals, meanwhile, are boosting their design presence in the country, both to control costs and to tailor their products to local tastes. Hyundai tapped its Indian team for key elements of the i10, a subcompact that sells well in India and Europe. And Renault's 16 designers in Mumbai adapted the company's Logan sedan for India, adding brighter colors and a more upscale look and feel to the ultracheap car.

LG Electronics has a dozen designers working at its Delhi factory. Their spacious workshop on the third floor is filled with test-model refrigerators and TVs, color swatches, and sketches of new phones. Four times a year, they visit families to get a better understanding of consumers. That has led to such products as a cell phone with an extra-loud speaker (Indians like to share their Bollywood tunes with friends) and a refrigerator with a compartment where meat can be separated from other foods—for households shared by vegetarians and meat-eaters. "We can't lose LG's brand identity, but we always want to bring an Indian touch," says Sharad Dahake, who heads the Delhi team. "Indian customers are getting very choosy about design."

With Nandini Lakshman in Mumbai and Mehul Srivastava in Delhi

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