The spin-off was meant to give the company more opportunities to secure business with other automakers and over the years both Delphi and Visteon have been increasing their share of revenues from non-parent projects.
“Cost and time-to-market became important factors in competing with other automotive suppliers (like Visteon) to stay ahead of competition,” says Prakash Kulkarni, who steers Delphi’s Technical Center at Bangalore.
Evidently, the decision to set up software facilities in India seems to have paid off for both firms.
Smart Moves
Prior to setting up its Indian unit, Delphi attempted partnerships with a few vendors. But these were not exactly hassle-free. Says Kulkarni, “While subcontracting work to vendors, we had issues relating to intellectual property and technology transfer.”
Worse, the company had invested considerable amount of time in training these vendors, besides providing resources for this (automotive) domain-intensive area. It required long learning cycles. Over time ‘knowledge retention’ became a serious problem. The management was quick to learn that in-house engineers were best suited to address changing needs. Hence the decision not to outsource high-end application work.
However, Visteon’s foray into India differed. “Setting up a software center in India began when we were still part of the Ford Motor Company,” elaborates David Avery, director of Visteon Software operations at Chennai. In 1998, Visteon reluctantly began its operations in Bangalore, not withstanding infrastructure hurdles. A year later, the firm relocated to Chennai, fearing poaching in Bangalore.
The Delphi Technical Center in Bangalore was established in May 2000. Web-enabled design and development tools have kept projects moving forward round-the-clock across all 32 technical centers.
Cruising Ahead
As the demand for software content increases within the automobile, both Delphi and Visteon seem to be in the ‘expansion mode.’ And rightly so.
Earlier this year, Delphi pumped in a whopping $25 million to expand its technical center in Bangalore. The company is keen on upgrading its Bangalore facility to a full-fledged vehicle engineering and development center despite the fact that the Asian region has three other product development centers. “There certainly are cost savings in the short run. But equally important right now is that we are not getting enough resources in Singapore. In India we can scale up. There is enough talent both in terms of numbers and skills,” says Kulkarni.
Clearly, the leader in this space is out to make India the global hub for automotive electronics development. “We will now be doubling our existing, 125-strong manpower over the next two years. Almost all the work we do here are for global applications. None of it is earmarked for Indian applications yet, since Indian automakers do not use such high-technology products,” explains Kulkarni.
Visteon too is in expansion mode: the firm is hiring and increasing its office space. In fact, its software center in Chennai, now a CMM Level 4 division, is targeting Level 5 by end 2003.
Last year, Visteon partnered with HCL, Wipro and CG Smith. “We like the degree of flexibility that such partnerships give us. There are certain capabilities that those suppliers have that we can leverage,” says Avery.
Although Avery prefers to keep mum on the company’s future plans for India, he does not deny the possibility of Visteon metamorphosing into a complete ‘product design facility.’
Interestingly, Delphi entered India thinking cost was contributing in its favor, but eventually found itself in the midst of intellectual property and technology transfer issues. In Visteon’s case, it was just the opposite. Both companies are eyeing the Indian and subsequently the Asian markets. It remains to be seen which of the two effectively steer their business models to their destination.
