Outsourcing: Ravi Pandit, Chairman And Group CEO, KPIT Cummins (Part 1)

About KPIT Cummins
A public company listed on the BSE and NSE, KPIT Cummins helps clients to develop domain-based intensive technology solutions for manufacturing corporations with special focus on automotive, transportation & manufacturing, energy & utilities, and defense & government.

About Ravi Pandit
After studying at MIT’s Sloan School of Management, Ravi Pandit began his career as an accountant. He has spent more than three decades in information technology and, with his team, has built KPIT Cummins.

Sramana Mitra: Hi, Ravi, and welcome to the Outsourcing series. If you would, please set some context for our readers and me about KPIT Cummins. We don’t know that much about the company, so we need to understand first what you do, what your business is, where you are, what size you are, the scale of your operations, and so on.

Ravi Pandit: Sure. We focus on two main verticals: automotive and discreet manufacturing companies. Those two constitute almost 80% of our revenue. We also work with energy and utility companies, which constitute almost 10% of our revenue. These are the major areas in which we operate. In terms of strategy, this focus has serious implications. What that means is that for a multi-vertical company, IT services are horizontal. It is comparable to an infrastructure to manage all the IT inside the company; therefore, the entire focus is on making sure that this service becomes strong as a technology of the service. When, however, you are looking at a horizontal and vertical combination, you are looking down to far greater depths in the vertical that you are working in.

So, essentially, you are not just a provider of a platform or infrastructure, but you also are a provider of technology-intensive solutions as they are applicable to a vertical. Let me illustrate what I mean by that. When we are working in the automotive industry, and if we are the generalist provider, we would provide a client with similar kinds of services as we would provide for, say, three or four or five other verticals. When we are focused on the automotive vertical, we understand that vertical much better. We can deliver solutions that are tailored to that industry’s need. For example, our services are a better design for power train, are a better design of infotainment solutions, and are a better design of supply chains solutions for the automotive industry.

SM: Do you do design services?

RP: Supply chain services or power train?

SM: Both, I would say.

RP: Yes, yes, the entire lot.

SM: OK, so you do design services, supply chain services, and other IT services?

RP: That’s right. Then you are really looking at the variables. Whether it is in the execution industry, in the after market in that industry, you are essentially providing an industry with technology-intensive services. What that means is the potential for innovation is much higher because you are part of the industry ecosystem. That, to us, is a major differentiator in the way we do business. Then you are a part of the whole ecosystem. For example, when it comes to automotives, we are part of the global standard-making bodies that decide how software in an automobile should be done. We are a part of the ecosystem that defines how infotainment devices shall work in an automotive company. Further, we are a part of an ecosystem that decides how clean manufacturing should be done in automotive companies and most of the materials will be reused. You are no longer peripheral, you are no longer horizontal; rather, you are very sharply focused on the problems to be solved for that industry. What that also means is that you are an innovation partner, and you are not an infrastructure partner. We are hearing more and more from our customers who are looking at us as innovation partners. When I say innovation partners, they would typically be their saying, Tell us how we can come out with an infotainment solution that is far more upgradeable and more cost effective than the ones that are generally available in the market.

This segment is part 1 in the series : Outsourcing: Ravi Pandit, Chairman And Group CEO, KPIT Cummins
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