In conversation with Pradeep Elamanchili (Vice President of Global ASIC Engineering at Western Digital), we take a closer look at the key ingredients that will take Indian engineering services to the next level, with innovation at the center of value-delivery.

The startup culture in India is booming, with over 80,000 startups as of June 2021. With the third-largest startup ecosystem globally, India has everything going to become a global innovation powerhouse. But how can the country get there in the next decade?

As a services entity, India already drives incredible value – and cost-effective service excellence continues to be a key focus area. However, cost arbitrage is no longer a key differentiator. With other low-cost regions likely to emerge stronger in the future, it is in the country’s best interest to leverage its startup environment and immense talent in Engineering Research and Development (ER&D) to move up the value chain. Moreover, with the rising demand for more intelligent, connected digital products and platforms, there are several opportunities and challenges that India will have to navigate to become the world’s innovation capital.

In my conversation with Pradeep, we discussed ways Indian engineering services companies can achieve this. Here are some highlights from this discussion:

Pivoting from a service focus to building product companies

India has tremendous untapped potential to transition from a service entity to a product-driven one, especially with the lines between software and hardware beginning to blur. More companies in India need to take the lead in building products and platforms end-to-end. According to Pradeep, this will mean being involved at every stage– from defining product specs, developing the hardware and software, architecture, development, testing, and validation, etc. Such a holistic approach can help envision, engineer, and deliver a complete product. The question is – does India have the capital to do this? “Success relies on efficient deployment of capital,” notes Pradeep. So, while the United States or countries in Europe can provide the capital, engineering and development can still happen in India.

Grooming product managers to apply systems thinking

Product development is an amalgamation of multidisciplinary approaches and interconnected networks and requires product managers to have a robust system view of the entire process. This means understanding the granularity of how a whole product comes together. Engineering to a given spec is something India does well. “To be able to write that spec requires somebody to start thinking about the customer system,” adds Pradeep. Product managers will need more comprehensive training to help them analyze the product at multiple levels – for instance, the application or workload – and then break it down into software and hardware components. Product leadership/management will be vital moving forward.

Grooming CEOs with multidisciplinary experience

Having good product managers will not suffice for India to step up its innovation game. Organizations in the country also need to reassess how they build the next-generation of leaders. The traditional functional leadership approach needs to give way to multidisciplinary leadership development.  “New age companies are going to be built by leaders who have competencies in more than one domain,” explains Pradeep. For example, financial/business acumen combined with software expertise is critical to good organizational leadership.

Using metrics that measure value creation

Defining the right metrics for innovation will be crucial to understanding the value delivered as a product business. For instance, from a silicon perspective, we need to go beyond the lines of code written or the number of transistors on the die. The approach needs to be upstream. “What is the end value you derive? That’s what needs to be measured,” reiterates Pradeep. Companies should measure value creation based on the impact on both top-line revenue and bottom-line – this will be a key innovation metric. For example, Western Digital develops multiple ASICs for many products that are designed almost entirely out of India. This is just one of the ways to measure value creation from innovation.

Moving up the value chain and becoming self-sufficient

With semiconductors powering next-generation digital products and becoming a source of future innovations, how critical will it be for India to have its own fabrication capability? With global uncertainty looming over every industry with the pandemic and changing geopolitics – there has been a massive global chip shortage, impacting multiple industries. In such an unpredictable environment, having a domestic semiconductor strategy may be a national security imperative – especially since semiconductors power critical industries such as defense, healthcare, telecom, mobility, and ICT.  China is already investing heavily in becoming a global semiconductor leader. India imports 100% of its semiconductor requirements, and 37% of this comes from China.  India must take a strategic approach to invest in fabrication capability, which is capital-intensive and complex. While the country has brilliant R&D talent in chip design, manufacturing may be the key to moving up the value chain.

As a software powerhouse, India is already part of some of the most innovative products. Think about this – According to industry estimates, over 70% of the 50 most innovative companies globally have an R&D center in India. A leading player in service delivery makes India a popular destination for setting up Global Capability Centers (GCCs), and it is estimated that the country accounts for 50% of the GCCs worldwide. Combine this with its robust ER&D talent pipeline and startup evolution, and India is perfectly positioned to be a global innovation hub. But this does require a top-down culture change, where everything revolves around the product and the value it provides, not just in terms of revenues or profitability but also the end-consumer experience.

About the Author

Karthikeyan Natarajan

Executive Director and COO, Cyient.

 As Cyient’s Executive Director and Chief Operating Officer,   Karthikeyan   (Karthik) Natarajan manages global operations and     plays a key role in   driving the company’s transformation from a   services to a solutions   provider. He leads the Go-to-Market, including   sales and marketing and   delivery transformation efforts across major   industries along with digital   solutions and design-led manufacturing   (DLM). With over 28 years of   experience in the engineering and   technology domain, Karthik brings a   strong focus on product   development, R&D, and engineering strategies   for global   organizations, including Fortune 500 companies. He also   serves as a   Chair of the Engineering R&D Council and is part of the   Executive Council at NASSCOM.