Indian ERD rainmakers win several USD 100 million deals

Indian pure-play engineering R&D (ERD) players have outshone their IT peers aided by strong demand tailwinds by growing their digital engineering and embedded capabilities.Engineering services span software, embedded, mechanical and manufacturing engineering functions that support the design, development, testing and management of products, both hardware and software. US-based IT advisory Everest Group said the global ERD sector increased 11.5% to $73 billion in 2022 from $65 billion in 2021.For Indian ERD firms, large deals in the space have increased over the last two years -- deals over $100 million was a rarity in the past. But the momentum has picked up pace for themes including connectivity, convergence of IT-OT (operational technology) to turbocharge growth, industry 4.0 and connected, autonomous, shared, electric (CASE).And the rainmakers in the space who've won such large deals, upwards of $100 million, have not necessarily won these deals when a request-for-proposal (RFP) is floated. But on many occasions, it calls for proactive efforts from the ERD teams to upsell these services to its customers. “Most of these large engineering deals are not RFP-driven, but they happened because of the proactive outreach of service providers to their existing customers. Engineering service providers have to prove their mettle in existing projects for their customers to sign them up for large deals. Hence, the role of rainmakers is very important to explore possibilities of large deals with their existing customers and show a win-win value proposition,” said Pareekh Jain, CEO of EIRTrends and Pareekh Consulting.Pune-based KPIT Technologies, for instance, has won a $250 million deal from Honda for working on the latter’s software-defined mobility (SDM) roadmap. Their CEO Kishore Patil is the rainmaker in this deal having worked with Honda for eight years. KPIT has also won a $100 million deal from Renault for scaling its next generation software-defined vehicle (SDV) programme.Last year, L&T Technology Services (LTTS) CEO Amit Chadha snagged a $100 million deal from US aerospace company Jaunt Air Mobility. As part of the contract, LTTS will open an engineering and R&D centre in Québec Province for the electric aircraft manufacturer to provide engineering services for the Jaunt eVTOL (electric vertical takeoff and landing) air taxi. Vijay Guntur, president of engineering and R&D Services (ERS) at HCLTech, was instrumental in clinching the over $100 million deal from Tibco to modernize and provide services for all its products for enterprise customers globally.Jain said the service level agreements (SLAs) between the engineering service providers and customers are also focusing on cost savings in engineering offshoring. “In many of these deals either current engineering work is offshored from onshore or nearshore or the capacity is being planned for future work in newer technologies. Service providers are giving enterprises committment on cost savings while ensuring the availability of specialized talent,” he said.Kotak Institutional Equities said the technology transition underway in the automotive industry has led to elevated spends by automotive clients. And this is good news for Indian ERD players. “Currently, clients are spending on multiple areas maintenance and upgrades of existing ICE platforms and launch of new models on these platforms, building new architectures to launch BEVs (battery electric vehicles) and continued progress towards SDVs and exploratory investments in fuel-cell technologies,” the report said.