We have a good differentiation in the market

Written by Sudhir Chowdhary | Updated: Aug 18 2014, 06:39am hrs
This is an exciting time for India, says Krishna Bodanapu, MD & CEO of Cyient, the new name for the two decade-old, Hyderabad-based engineering services firm, Infotech Enterprises. Today, citizens want effective delivery of services, improved governance and transparency in the functioning of various government departments. There are also rising citizen expectations for smarter economies and sustainable growth. While technology will play a major role, there is a lot more that is going to be done in the country from an engineering perspective, stresses Bodanapu, who provides the strategic direction for growth and is responsible for all operations. We are still a cost sensitive market and we have the knowledge base within India to undertake projects like smart cities. There are good opportunities for companies like ours to participate, he tells Sudhir Chowdhary in a recent interaction. Excerpts:

What was the rationale behind going in for a new brand identity

There were two reasons. One was we were getting to a scale where we had to differentiate ourselves by putting time, effort and money in building a differentiated brand. We wanted to clearly articulate to our stakeholders what is our value proposition, what is our vision, what is our brand promise.

The second part of it was the commonality of our name because Infotech Enterprises, which invariably got truncated to infotech, was a very common name and it was not very reflective of what we do because we do very little of IT, though IT is an enabler to the work we do, that is not our core business. So taking these two into account, we thought if we want to do a brand refresh and if we have a problem with the commonality or the commonness of our name, then it was a good time to change our name.

The name change, the logo etc is just a very visible part of the brand transformation but the more important part of the brand is what goes behind it, what is our brand promise, how do we live the brand promise, what does it mean to each one of our stakeholders.

Cyient has connotations to the words client and sciencetwo important components in our companys successand ient references Infotech Enterprises, our foundation and continuity. All of our efforts in this important initiative were developed to fulfill our vision of Designing Tomorrow Together.

Given your strong focus on engineering services, are you trying to be a Hitachi from India

I would say yes and no and the reason for that is that the key for us is also to move away a little bit from just being pure engineering service provider to being a little bit more in the physical space, although you cannot have one without the other. In some ways, the Indian industry is strange because here you have a services industry that developed before manufacturing. Typically, that has never happened anywhere else. Even the recently successful economies like Singapore or China, the continuum there has been agriculture to manufacturing to services, whereas we have skipped that. That is an element that we are trying to bring in around our strategy of how we help customers actually bring products to life rather than just do the design and then disappear.

So yes, I mean like a Hitachi or Siemens, again maybe not at that scale immediately just because some of them are very large but that is the focus.

How was your last quarter and what is your outlook going forward

The last quarter was quite good. We grew 7.8% quarter on quarter. We grew in excess of 20% after taking out the currency impacts etc. We also acquired a company called Softential in April this year, which skewed the numbers a little bit because that was not there last year or the last quarter. Even if you take that out, we have grown in excess of 4% closer to 5%. So Q1 was a good start for the year and the outlook looks quite positive at this point. We believe that we have a good differentiation and the services and the solutions that we sell are in very good demand globally and therefore the momentum will continue.

What can enterprises do to innovate and stay ahead

The focus is shifting from the technology to the usage of technology. That is where the opportunities for companies like us lies. What I mean is that there is a pure technology aspect of it, for example for an airline, you can reduce the weight or make it more sturdy etc. But the real opportunity lies in not say boiling the ocean with the latest and greatest technology but to understand what the users objectives are at the end of the day.

There is a survey that the airline industry did. If you ask somebody what is your decision criteria for buying a ticket, nobody will say cost; everybody will say comfort, reputation, reliability etc. But some 97% only buy based on cost. So understanding that fundamental thing is critical in an airline industry.

Understanding how technology is getting used is giving a lot of interesting opportunities for companies like ours to innovate. So we are not necessarily innovating on the technology itself but taking that R&D which has been done already and applying it to how it gets used is where the opportunity lie.

Where does Cyients innovation approach come into play

When we look at innovation, we look at it in two ways. One is what we call process innovation and the second is product innovation. Process innovation is around doing the same thing but doing it more efficiently and doing it better. So it involves automation of tools, you look at how do you execute a task. If there are 20 things that you do, every time you reduce one step, the process becomes more and more efficient. So that is the process innovation side.

Then you have the product innovation, that is, how you take a technology and make it more relevant. There are typically five elements to any product design. First is safety. Safety is never to be compromised but again there is a cost of safety that you would like to better. The other four elements are reliability, overall cost, time to market and variability or customisation. A product strategy is a trade-off between these five. So we make sure that we get the right trade-off between these five for our customers because sometimes one is more important than the other to a customer.

What is the technology differentiator that Cyient brings to the table

Our strategy has been that we have focussed on few industries and catered to these sectors very well. Today we have built a reasonable amount of scale in these industries based on our strong domain expertise. We have really built a good skill set in these industries. We have 3,000 aerospace engineers who work on aerospace projects. About 1,500 of them are domain experts and another 1,500 are being trained to become aerospace experts. This makes us one of the top 10 to 12 aerospace companies in the world from an engineering perspective. You have two of the worlds leading aircraft manufacturers with about 20,000 aerospace engineers but we would be one of the top 10-12 aerospace companies in the world. That is the level of sophistication that we have built.

What will be your strategy for the aerospace business

There are two elements to our strategy. Till now what we have been focussed on designing new products. But there are two things happening in this industrywhile design is important, keeping that product running is equally important. It is called maintenance, repair and overhaul (MRO). Application of social media, mobility, analytics and cloud (SMAC) is an example for MRO and we are focussing on building our aftermarket MRO capability. The second thing is how we move from just doing design to bringing design to product realisation.

What are the growth plans for the company

There are two dimensions to it. One is from a geography perspective; India has become an important market for us. We are looking at how we can be more successful here, both from a demand and a supply stand point. From a supply standpoint obviously we have been doing engineering from India. We also want to do more than just engineering. We want to get into product realisation.

Second is we want to cater to the growing demand within India. We have opportunity in aerospace and even in our old GIS business. It again means application of a technology.