Nitin Tappe is a Senior Vice President and the head of the Global Operations at Geometric. He is responsible for building and delivering solutions and services for PLM, engineering services, manufacturing IT, and outsourced product development. Nitin is also responsible for driving quality and productivity, as well as building the technical competencies in the company. Nitin has been part of Geometric for over 16 years, during which he played various key roles in delivery, practice and sales. He joined Geometric as a software engineer in 1996, and was part of the Desktop Products & Technology group for five years. In 2001, he moved to head a delivery team in PLM services and then, a technology practice in the company. He has also been responsible for managing the relationship with a one of Geometric's strategic partners globally, from Geometric's US offices. In his last role, Nitin headed the Software Services Business Unit of the company. Nitin holds a bachelor's degree in engineering and has an M. Tech (Manufacturing) from Indian Institute of Technology, Mumbai.
Topic: Evolution of engineering outsourcing, and the key drivers for growth
Q: Outsourcing of core engineering services has been a laggard when compared to other sectors like BFSI; but this sector is opening up very well. Please comment
The work done by the core engineering team adds differentiation to the product, and involves the usage of a company’s critical IP. Hence, manufacturers have been wary of sharing this information with their outsourcing partners. Moreover, there was a belief that this type of pure R&D work could not be done from an offshore location like India leading to reluctance from manufacturers.
However, over a period of time, this mindset has been changing with increasing trust between the manufacturers and their outsourcing partners. Trust is extremely important in an engineering services engagement. Manufacturers have also slowly started seeing value in outsourcing beyond just cost arbitrage. On the other hand, as local markets started opening up, global manufacturers are forced to come closer to these emerging markets and do local engineering. They also started leveraging available local talent pool for global engineering needs.
Initially, they started outsourcing low end CAD work, and realized that the benefits achieved were adding to their competitiveness and bottom line, making them more open towards outsourcing. Macro-economic imperatives like troubled economies and need for capitalizing on the potential in emerging markets have also helped drive outsourcing of engineering services in recent times. For example, during the recent recession, the need to contain costs and remain profitable prompted even some of the most conservative organizations to increase their risk appetite and try outsourcing for engineering services. Now that they have realized the first benefits and are comfortable with operating models, they are stepping on the gas, and we are seeing a rapidly growing pipeline, even for higher end design and analysis engineering.
Q: There is lot of talk about change in customers’ expectations from their outsourcing partner. Do you really see a shift, based on your interactions with customers?
Our engineering services experience spans over 65 years; and we have seen some major shifts in customer expectations over the years, especially in the last decade. Outsourcing in this field started as staff augmentation where outsourcing companies provided skilled resources to meet the customer’s engineering needs, and the team worked alongside the customer at the customer site. Offshore was then seen as a form of cost arbitrage, just like any other form of outsourcing; but now customers are looking beyond and recognizing outsourcing as an avenue for engineering efficiency.
Earlier a directive approach was followed, wherein the outsourcing partner was given a task, which was to be completed at an agreed price; they were considered ‘executers’ rather than ‘partners’ for any activity. Today, an outsourcing company is recognized as a value engineering partner, who assists in problem solving. They are expected to take care of not only the stated needs, but also the unstated needs, which will help the customer in achieving the business results.
With this change the engagement models between companies are also undergoing a substantial change. Customers are demanding outcome based business models, wherein the engineering services partner shares risk as well as rewards. Typically, we see this trend in value engineering related engagements. With growing trust, customers want their engineering services providers to take part in their R&D activities, and are keen to explore and experiment together. On the other hand Captives and R&D centers are driving innovation and they need resource expertise from their engineering services partner. So, they will continue engaging with engineering services providers on a resource based model.
For the large product engineering engagements, we see a trend where customers are asking for ‘enablers’ from their service providers for productivity improvement. So, these productivity tools are acting as a differentiator for service providers to stand out in the competitive landscape.
Q: In order to leverage the growth potential in emerging markets, manufacturers are increasingly looking at ‘localization’ of their products to meet these needs. How can outsourcing companies enable this localization?
Today, new geographical markets present the biggest opportunity for manufacturers in most industry segments. They are expecting their engineering services partners to help them capture this market by bringing about synchronization between their R&D headquarters and needs of the local markets. Engineering services partners can help achieve this localization and even bring a R&D centric approach for improvements or product success.
Engineering services providers can enable this localization by bringing in their expertise and knowledge of local design constrains and regulatory compliances. We see, in many cases, localization related work acts as a door opener for getting the larger pie of global engineering.
India has won recognition as an able source of core R&D activities. If we look at some of our global customers, they have set up their captive R&D centers in India that are a part of their global R&D plans. The engineering services partners take on the responsibility of localization, which is mostly driven through the Indian subsidiaries. Through this strategy, manufacturers can extend the R&D infrastructure to the partner, utilizing the engineering services partner for localization as well as for access to engineering skills, so that the captive R&D center need not build it internally.
Q: With the world becoming flatter, manufacturers today are seeking support across multiple geographies. How can outsourcers support this global manufacturing need? Do you think it is important to have centers in each global location or can effective support be given from a near-shore/offshore destination as well?
Clearly, manufacturers need engineering support across multiple geographies. In my view, there is a need of global standardization and collaboration, and not heavy local presence.
Having a local presence, though seemingly beneficial, is not always a viable solution. The most important motives for outsourcing are to arrest the rising costs and gain access to knowledgeable talent pool. A near-shore center, which can provide you with cost benefits, is an ideal case for every company looking to outsource; but availability of talent pool and an environment conducive to achieve business objectives are not guaranteed in every location. In a world flattened by technology, any company, which has access to global talent pool and is reasonably situated at locations that provide cost benefits, is the best bet.
In my view, a local interface is required to understand customers’ requirements and deliver the final output. And at the backend, they can pass on the work to the location that has the required skills. Therefore, we typically have an onshore or near shore center interface with the customer so that the customer has someone in their time zone that they can interact with on a regular basis; whereas the actual work for the customer is done in a right sourced center, which has the most relevant domain knowledge. We call this model the ‘Virtual CoE’ model, and have successfully used this in various engagements.
To give you an example, our manufacturing engineering capabilities are spread across USA, Romania and India, but we deliver these across the globe though the closest delivery center, including the one in China.
Q: Geometric has built niche products and technology solutions over the last two decades. How does this IP benefit your services business?
Geometric has always had a strong focus towards innovation, and in fact it is a part of our core vision - To be the most innovative provider of product realization solutions.
Today we are differentiated because, for the last two decades, we have been investing in our R&D division. As an outcome, we have a strong, in-house built portfolio of technologies, process productivity solutions and interoperability solutions. This intellectual property (IP) is leveraged by our engineering services team to bring improved productivity and quality; allowing us to ultimately help customers build high quality products and take them to market faster.
For example: DFMpro, an innovative solution from Geometric, brings manufacturing validation upfront in product lifecycle. This helps in reducing iterations between design and manufacturing departments and brings manufacturing process automation. By deploying DFMPro, one of the leading player from the electronic devices sector, registered more than double improvement in design validation productivity that helped them to improve time to market significantly.
We are able to bundle our services with our patented technologies and solutions to offer our customers a package, which delivers additional value that’s more than any other competitor. Our IP is our differentiator in most of the engagements and also adds to our standalone revenue from license sales. Our IP thus makes engineering better both for our teams and for our customer’s teams.
Q: People are the biggest assets of any knowledge company. How do you keep your employees motivated and engaged?
As a part of my current role, I interact regularly with employees at different levels. During these discussions, I hear many employees reiterating that, what really motivates them at Geometric, is the opportunity to work on challenging projects. In these kinds of projects, they get the opportunity to apply their minds and think innovatively. Geometric promotes innovation and also recognizes the effort put in towards innovation through internal awards. We have institutionalized an Innovation portal, through which employees submit their ideas and a dedicated team headed by our Innovation Head evaluates and takes it forward. This helps employees continuously think out of the box and seek opportunities for improvement. These could be as simple as automation scripts for quality checks, or for repetitive steps to achieve best quality and reduce time and efforts.
Also to meet the changing customer demands, Geometric consistently invests in honing the domain expertise within the company. Employees attend external industrial training to upgrade skills on developments in the industry. Training and development of our employees both from a technical and behavioral perspective, also helps keep employees engaged with the company.
The Human Resource Department has its own employee engagement activities to make them feel comfortable and motivated at work. What really differentiate Geometric’s HR activities is that it is not just limited to employees; but extends to their families as well. We also encourage employees to participate in overall organizational development activities by empowering them to be part of teams that implement the selected improvement suggestions within the organization.