Tata Elxsi, one of the least known companies of the Tata group, happens to be one of the few companies in India focused on product design. Srikanth R P profiles the strategies of this innovative company, which continues to draw inspiration from design

With India being a significant consumer of products and services in the global marketplace, there is a continuous need for advanced products and services, says Ramakrishnan S

What are the options before most mid-sized companies to distinguish themselves from the crowd? Not much. One is to get into the already crowded space of outsourcing and compete with the ‘Big Names.’ Another is to find a niche where there is little competition. But niche areas too are getting filled up and commoditised. Take areas like chip design and embedded software, for instance, which are getting increasingly crowded. But one area, which remains relatively untouched, is the product design space.

And this is the area, which the Bangalore-based Tata Elxsi, the lesser-known infotech company of the Tata group, is betting on. The business model of the company is unusual for an Indian enterprise since it focuses extensively on design at all levels—right from specialised product design services to system design and silicon design. This is the competitive advantage Tata Elxsi is betting on. The company delivers services and complete development projects to a variety of industries, right from consumer appliances and FMCG packaging to automotive and aerospace design.

Says Ramakrishnan S, Tata Elxsi’s worldwide general manager for sales and marketing, “Design is what sets us apart from the competition and also plays a key role in bringing our core practices together. For instance, in product design services, design highlights our hardware and software design expertise. For the design engineering services, it emphasises our capabilities in providing customised design engineering and industrial design solutions.

For our systems integration services, it represents the unique products and solutions across different divisions and the seamless integration services that we offer. And for Mediaworks, design comes into play on a purely aesthetic sense for 2D/3D animation and game development.” And while every SBU looks different, it is the design element that connects them together.

For example, in product design services the company’s expertise ranges from automotive, consumer products, semiconductors, media, storage and scientific applications. Can you think of any similar Indian company which has these capabilities? In system integration too, besides offering solutions in the CAD/CAM domain, the company offers solutions in niche and highly specialised areas like high performance computing, virtual reality and bio-informatics. But, being in a highly specialised domain has its pitfalls. For instance, Tata Elxsi does not do traditional work done by the majority in the Indian IT industry, like say, customised module development, implementation of ERP or BPO. Hence, it does not have the cushion of low-end commodity services, which are one of the major sources of revenue for other companies. But the business model of the company makes sense if you
take a long term view of the industry. The company believes that in the future design will form a core part of every company’s strategy across every domain. But as companies look at decreasing the products time-to-market for products it would make sense for them to outsource their design requirements or look at adopting existing designs developed by specialist companies like Tata Elxsi. This is what Tata Elxsi is betting on. In line with the long term vision the company has been strategically trying to position itself in niche areas with the objective of acquiring competitive domain knowledge. This would mean that in any area, if a particular company wants to deploy products in a short time frame, Tata Elxsi can meet the requirement by providing specialised design services with the technology at a lesser cost or license its Intellectual Property.

Though the number of verticals have changed and some businesses have been restructured, the one core area that has not changed is the focus on design. This is seen from the evolution of the company in 1982 to the company as it is today. In the year 1982, the Tata group gave seed funding to Elxsi, a mainframe computer company based in San Jose, California. Elxsi folded up in 1989. As the company had gathered expertise while distributing mainframes in the Indian market, it acquired the technology from the defunct parent company. The same year, Tata Elxsi was incorporated to support the mainframes that Tata had distributed. And right from that time onwards, it has been an innovative climb for Tata Elxsi using design as the base.

Adds Ramakrishnan, “From designing mainframes in 1989 to designing SGI graphic machines and servers for industrial markets in 1991, which led to the launch of our design & development centre and the realignment of our businesses to offer vertical expertise in the 1994-95, we have indeed come a long way.” Not surprisingly, today Tata Elxsi is called the technical computing arm of the Tata group.

The strategy of the company to stay focused on design is also paying off. For instance, in the early 90s, the system integration division was contributing in a major way to the revenues of the company. But during the late 90s to 2000, the revenues from product design services have been growing constantly along with design engineering services. This can be seen by the fact that design and development services, which are largely targeted at the export market, accounts for nearly 50 percent of the company’s revenues today.

Future outlook
With little competition in the space of product design services, the company is well positioned to tap the market for outsourced R&D, which is increasingly becoming a big market. While the market for outsourced R&D is tougher in other sectors, when it comes to design, the company has a edge over other players as it has the advantage of cost. And while the company has already made a mark in the global market, it is now looking to increasingly play a big role in the domestic market too.

Explains Ramakrishnan, “With India being a significant consumer of products and services in the global marketplace, there is a continuous need for advanced products and services. With such a structure, design becomes a high priority and that’s where Tata Elxsi comes in. On the other side, India is a potential destination as a design centre given the rich talent and cost-effective manpower available. With design being the heart of Tata Elxsi, we are looking at being a dominant design company in both the national and the international markets.” One more factor which points to company’s value proposition over the others is its SEI CMM Level 5 certification. What’s unique is the fact that Tata Elxsi is the first SEI CMM Level 5 company in the world that has processes and methodologies which are exclusively designed keeping product design in mind. Not many Indian companies can boast of a differentiator like this!