'Customers & acquisitions to get us to $1 billion'

'Customers & acquisitions to get us to $1 billion'

Tata Technologies the $500-million engineering and design arm of the Tata Group is en route to achieving $1 billion in revenues in the next three years, as envisaged by its MD and CEO Warren Harris. In a candid interview with Hrithik Kiran Bagade of DH, Harris presents the strategic roadmap that will guide the company towards seeing its 'billion dream', and what role  India plays in it. Edited excerpts:

Tata Group is Indian, but Tata Technologies has a global presence. Is  India an important component?

We are proudly an Indian company. Of the 8,500 people we've got, 6,000 are in  India. It is the engine around which we will drive growth. It is the focal point for investment in our talent. We will have local teams that will manage the customer interface, and that will be aligned culturally with our customers, where increasingly the fulfilment will be via places like Eastern Europe and  China. That's where we see building capacity.  India is by far, the top destination for us as far as fulfilment.

You had expressed that your company plans to reach $1 billion in revenues. Where has it come?

We are at $500 million right now. Our journey to a billion dollars is very much on, but in the last 12 months, we were impacted by things like Brexit. We do about $200 million in the  UK. When the  UK  pound depreciates against the dollar 50% in one year, it impacts our trajectory. The goal of the billion dollars was an audacious directional target to mobilise our focus on-ground. We believe that the Indian engineering outsourcing market is poised for exponential growth. We've seen the IT outsourcing wave, but believe that engineering services are the next wave, and our proposition is ideally poised to take advantage of that.

What will drive your target?

We will probably be a billion dollars company by 2021-22. It will be driven by organic growth, which we believe, will be 14-15% annually, and also by inorganic growth i.e. acquisitions. With Warburg Pincus coming in as a new investor; they're as ambitious on the inorganic side as we are, and believe there are many companies that could benefit from the scale and capabilities that we have. We've already mobilised a dedicated M&A team and will be targeting organisations that will provide us with new capabilities, relationships with marquee customers, and geographic expansion.

In August, you had expressed plans to hire 10,000 additional engineers. Can you elaborate?

For us to reach the billion mark, we are 8,500 people; and are at about $500 million. If we double the revenue, increasingly driving more business to India which is our plan, we are going to have to double the number of engineers. We are looking at work in the  UK, the  US  and  China, and bringing more of it to  India. We are very ambitious in moving India up to the value chain so that it can do more and so, we believe that we are going to need 7, 8, 9 thousand people, and a majority of them will be from India.

What are the new new-age concepts that you are working on?

Every OEM we are working with is investing more and more in these areas. In order to stay relevant and be meaningful, and for our relationships to be strategic, we have to be in these areas, wherein we're investing in talent too. As far as ADAS is concerned, it's not only about the systems but also about packaging them into a vehicle. If you look at the software side of the business, not only are we providing infotainment and productivity solutions, but also the solutions that configure version-control software.  

Are you working with products of Tata Motors and JLR? How many customers do you have?

We have relationships with Tata Motors and JLR. They are customer relationships, so we have to compete for that business it is not handed to us because we are a Tata Group company. We have to go against with the best companies in the market. We are pervasively involved with what both companies do in the product development space, and touch most of their products, and we do that both in the context of the mechanical product, and software systems in how they do business.

We have about 350 active businesses across the three verticals, so counter-intuitively, we need to bring that below 100 customers because, in order to scale, we need to be increasingly strategic to those customers we work with.  

What is your future investment plan?

Over the last 12 months, we've invested $30 million in an engineering headquarters in the  UK. We have opened offices in  Shanghai, moved to a new facility in  Romania, opened new offices in  Singapore we continue to invest in our global footprint, making sure we are close to our customers.

In terms of capabilities, we will continue to invest across the value chain and product development. Increasingly, the investment in software and embedded electronics are outpacing investment in mechanical capabilities. Going forward, we need to be balanced in software and embedded electronics.

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