The Hindu Business Line : Growing in the PES space

Ajay Chamania is Senior Vice-President and Head of Product Engineering Services (PES) at Patni, a group that he helped to start. The PES vertical of Patni focuses on Storage, Consumer Electronics, Automotive Electronics, Industrial Automation, Medical Electronics and Telecom.

In a chat with eWorld, Chamania dwells on the market for product engineering services and Patni's strategy for the same. Excerpts:

Could you elaborate on Product Engineering Services?

In PES outsourcing, software companies are outsourcing chunks of their product development functions to specialist partners and are making greater efforts towards marketing and branding their products.

PE testing is a totally different ball game from software testing. The infrastructure demands of PE testing are also completely different from conventional software testing. Conventional software testing can be feasible, but can bring you only 90-95 per cent close to real life situations.

In PE testing of software written for an automobile, the only place to do it is inside an automobile. Similarly, software written for piloting a locomotive has to be tested inside a locomotive on the rails. Testing in such cases happens at the client's location, under the supervision of our engineers.

What is Patni's growth strategy in the PES space?

About 20-25 per cent of our resource investments are in the PES space, which contributes to about 10.6 per cent of our revenues. We are seriously looking at acquisitions both globally as well as domestically in the storage and consumer electronics space. Acquisitions have always been a part of our growth strategy.

We want to associate with companies that can bring in hardcore chip designing capabilities. Patni is looking at boutique companies in India, North America, Japan and Europe. We also have plans to double our headcount from the existing 2,000 by the next financial year.

With so many boutique companies sprouting, do you think this space will witness major consolidation?

The advantage that boutique companies bring is specialisation in niche domains, making them good acquisition targets. With all the larger deals coming the way of larger players, consolidation is very much a possibility.

Does the talk of a possible slowdown in global IT spending bother you?

We are not bothered by concerns of a slowdown. If anything, that will be a tremendous opportunity for Indian companies. The kind of work done here is highly critical to our customers' business and to their very existence. Companies today are not only outsourcing their key R&D to benefit from the costing aspect, but they also want to leverage the core engineering talent and domain focus that exists in this country. PES is a high-margin area, as pricing is the last thing that companies want to cut out of the equation.

Talking about the core engineering talent in the country, the kind of resources you need in the PES space are highly specialised. How do you go about sourcing talent?

The scarcity of capability available in India for hardcore R&D services is one of the major problems plaguing the sector. Many companies have created a critical mass, but this is not a field where you can employ freshers straight out of college. Quality expectations here become very high as we expect our engineers to be `thought partners' to our clients.

In order to address this problem, we have tied up with four institutions in Mumbai, Pune and Delhi. PCS collaborates with them in niche domains such as medical electronics, industrial storage, etc. We leverage the academic work they are doing and at the same time provide them with the much necessary industry exposure.

We are open to tie-ups with other quality institutions on this aspect. I firmly believe that tighter collaboration is required between educational institutes and IT companies to create high quality professionals.

How does Patni promote its PES vertical in the global space?

As part of our marketing strategy, we have diversified into three teams; sales, solutions and design. The solutions team comprises industry professionals with a lot of experience, who then become the face of the industry. Having the sales and solutions teams makes a big difference because when these people promote Patni, the story becomes a lot more convincing. We participate in trade and road shows abroad specific to the industry. We also set up booths at international forums where companies showcase their equipment. This enables improved visibility among global companies.

How is your client list composed with respect to venture capital-funded companies? How is your experience working with venture-funded companies?

Globally we have 43 clients, of whom only 5-6 are venture capital-funded companies. Venture capital funded companies are great to work with, but at the same time their business model may not be really supportive of offshoring because of rapid changes in the business cycle.

In terms of product challenges and technologies used, there is not much of differentiation between venture funded companies and established companies. Established companies too face challenges of marketing and technology.

adith@thehindu.co.in

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