04-07-2004, 08:20 PM
Subscription required - pasting in full:
Chicago Tribune, April 5th 2004
<b>From <span style='color:blue'>(Burton's <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/tongue.gif' border='0' style='vertical-align:middle' alt='tongue.gif' /><!--endemo--> )</span> Indiana to India: Why 1 firm leapt
Company found a pool of talent to help business--and overseas
town--blossom</b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->By Michael Oneal
Tribune staff reporter
Published April 5, 2004
PUNE, India -- When Cummins Inc., the diesel enginemaker based in
Columbus, Ind., opened a product research center here recently, a Hindu
priest set up a small shrine next to a new office cubicle and led employees
in prayer.
He lit sticks of incense and dipped flowers in water. He ran a smudge
of color along the foreheads of the assembled Cummins executives. As the
chanting built to a climax, one American turned to a Cummins vice
president, Bharat Vedak, and asked what this peaceful ceremony signified.
"He is saying `May you have all success in the new venture,'" Vedak
said with a smile, "`and may you conquer all your enemies.'"
Conquering enemies before they conquer you is what the rush to India is
all about. As companies such as Cummins struggle with stiff global
competition and chronic pressures to cut costs, access to India's army of
high-quality, low-cost engineers has become an essential weapon.
A close look at Cummins' decision to locate its technical center in
Pune (pronounced POON-uh) reveals outsourcing to India is not just about
call centers and low-level jobs. It's about the crucial
interrelationship building between India and places like Indiana.
The pitched debate about outsourcing being heard in the U.S.
presidential campaign may focus on the idea that India is somehow stealing jobs
with the complicity of greedy CEOs. But that misses the point. In a
global economy, India and companies like Cummins need each other to thrive.
That gives the trend strong momentum.
A little over a year ago, Cummins Chairman and CEO Tim Solso recognized
what countless other CEOs are discovering: India is blossoming into a
vital resource of world-class technical talent that companies ignore at
their peril. On an eye-opening trip to Bangalore in southern India,
Solso saw engineers drawing complex 3-D models of jet engines and
analyzing ways to make combustion systems more efficient.
"They were very productive, very well-educated people doing
sophisticated work in a high-quality way," Solso says. "It was a huge competitive
epiphany."
What he concluded is that India is disrupting the world's economy much
the way Japan did 30 years ago, when companies including Toyota
dramatically improved the quality of car manufacturing.
Now, Cummins is counting on Indian engineers to help write the software
that will make its engines perform more efficiently. It is hiring
Indians to do computer analysis of those engines so the company can do away
with costly prototypes. The stakes could not be higher. Cummins is in
an all-out race with archrival Caterpillar Inc. to meet stringent new
environmental standards.
For India, the stakes are high as well. The country's tech boom is
fueling a broader surge in its economy that began when India loosened its
suffocating economic controls in 1991. But the backlash in the U.S.
means the pressure is on to become all the more indispensable to American
companies.
Indians fear that U.S. protectionism could slow a movement that is
creating a new middle class with new expectations and buying habits. These
consumers are giving the nation's economic renaissance added momentum
by encouraging the restructuring of other industries. A quarter of
India's population suffers abject poverty. But there's evidence the
free-market reforms are slowly changing that too.
"The way I look at it is that the country has not even scratched the
surface in terms of economic growth," says Ravi Pandit, a local
businessman who runs a technology company in which Cummins has a small stake.
"There is phenomenal growth that lies ahead."
Where the past
meets the future
How far this city of 3.7 million has come in the past five years and
how far it has to go can be glimpsed on Pune's snarl of dusty, pocked
streets.
About 100 miles south of Bombay, Pune looks like most urban areas in
India. Rivers of bicycles, scooters and cars compete for the right of way
with gaunt cows and goats. Women balancing bundles on their heads walk
by in saris as teenage girls in T-shirts and jeans zip past on
motorcycles. Traffic is constant and wild; at least one person is said to die
on Pune's roads every day.
Storefronts sell scooters that once took years of waiting to obtain.
New cars--and low-interest loans--are plentiful. But poverty is never far
away. Slums of corrugated steel shacks line the banks of the city's
murky river. Half-naked children play in dirt piles while their parents
dig in trenches with hand tools. Smog hangs over the city in a brown,
sooty haze.
This collision of future and past is starkly visible on the outskirts
of Pune, in a village called Hinjewadi.
In one direction, villagers in bright, traditional clothing go about
their business at a row of squat, concrete buildings. Across a highway,
the view is straight out of Silicon Valley.
Tall, modern buildings stand emblazoned with the names of India's most
prominent information technology companies. Quiet streets and
landscaped lawns crisscross hundreds of acres that include a bank, a hotel and
two new universities. High-speed Internet connections tie Hinjewadi's
engineers to points around the world.
If there is any doubt about what these professionals are capable of,
numbers tell the story. Since 1996, the city's software exports have gone
from $25 million to about $1 billion.
"We've got [many thousands] of software engineers in the city and they
are very highly paid," says Sushil Gupta, director of Software
Technology Parks of India Ltd. "It is transforming Pune. It underscores our
country's coming of age."
Cummins has manufactured engines in Pune for 42 years. But last year
when Solso visited several other U.S. companies' Indian operations,
including General Electric's John F. Welch Technology Centre in Bangalore,
he said he was blown away by the depth and sophistication of what he
saw.
As soon as he got off the plane in Columbus, where his $6.3 billion
company is headquartered, Solso called a meeting of his top staff.
"I said, `I want every one of you to go to India and I want you to take
your key people,'" Solso recalls. "`And specifically, I want you to
look at sourcing software development, IT operations, business services
and a tech center. And I want to get going right now.'"
For Solso, a 33-year Cummins veteran, the meeting was reminiscent of
one he attended in 1983. Then, he was directing the company's operations
in Britain. His boss, James Henderson, who later became Cummins
chairman, had just returned from Japan, where he had toured a series of
diesel-engine plants operated by Yanmar, Hino and Komatsu.
Henderson had experienced a similar epiphany. He saw firsthand why the
Japanese were taking the manufacturing world by storm. To produce an
engine, they used less capital, one-third the number of employees and
one-half the hours Cummins required. Organized in flexible teams, workers
were boosting quality. They were also coming out with new products much
faster than Cummins.
"We clearly have a more urgent problem than I previously thought,"
Henderson told his staff, according to a company history titled "The Engine
that Could: Seventy-Five Years of Values-Driven Change at Cummins
Engine Company."
"We must make major progress in three years, not five years. Five years
is too long," Henderson said.
Solso recognized on his trip to India that the situation today is
similar. The difference is that technology, not steel, is the new coin of
the manufacturing realm.
For companies such as Cummins, the ability to use computers to
streamline operations, speed product design and improve internal communications
may spell the difference between success and failure in the information
age.
And after the bitter three years he had just been through, Solso
recognized that India presented a better way to compete.
Solso, 57, took over as chairman of Cummins in 2000, just before the
2001 recession. Faced with a 70 percent one-year decline in U.S.
heavy-duty engine sales, he cut 17 percent of his employees and closed or
consolidated 14 plants, including the flagship engine factory in Columbus.
But he also used the opportunity to rethink how Cummins did business.
He faced two unrelenting challenges. Global truck manufacturers such as
Volvo and DaimlerChrysler had consolidated into huge companies that
could squeeze Cummins for every last penny. And the U.S. Environmental
Protection Agency had instituted standards requiring drastic reductions in
diesel engine emissions over the next several years.
That set off an expensive technology and design race between Cummins
and Peoria-based Caterpillar. With the clock ticking, Solso was looking
for any advantage he could get.
"That made us look globally," Solso says. "We wouldn't have survived if
we didn't look globally."
Globalization
began years ago
The truth is, Cummins was already a global company. It had
manufacturing operations all over the world. But globalization today means using
the Internet and other communication technologies to take advantage of
assets--people, skills and supplies--around the world.
As a result of Solso's meeting, executives scrambled to beef up
existing buying offices in Pune, Shanghai and Prague, Czech Republic, to find
new, cheaper sources of supplies. They also rushed to send much of the
company's enterprise computing work and other administrative functions
to suppliers in India.
But the main focus for Cummins these days is the effort to develop
engine technology that can meet the EPA standards without sacrificing
performance.
"If we don't do it," says Tom Linebarger, president of Cummins' power
generation unit, "Cat wins."
Part of the effort involves writing sophisticated software that can be
embedded in engines to manage how they work. Much of that software is
designed in Columbus. But the code is written by KPIT Cummins
Infosystems Ltd., the company in Pune run by Pandit.
Embedded software is part of the control system that helps the hardware
do all sorts of crucial functions, including firing the ignition system
in the most precise, fuel-efficient way.
Pandit says he charges about $20 an hour for writing the embedded
software. In Columbus, the rate would run closer to $70.
That alone might justify the decision to outsource. But the logic is
more refined. By saving that much on programming costs, Cummins can throw
more people at the problem. That speeds development and gets Cummins
products to market faster.
"We could not deliver our products on time without them ," says John
Wall, the company's chief technical officer.
The same thinking applies to Cummins' most ambitious effort in India
yet. After seeing GE's jet-engine design efforts in Bangalore, Cummins in
late January launched a similar, though much smaller, technology center
in Pune--the one blessed by the Hindu ceremony.
The bulk of the engine design still will be done in Indiana and other
markets around the world, but a new team of Indian engineers will use
powerful workstations to analyze those designs for defects and
performance, which is a critical and expensive part of the development process.
This is no small matter. Wall explains that in a combustion system, for
example, there is a long list of parameters that can be manipulated to
try to increase efficiency. Fuel can be squirted into the combustion
chamber at this angle or that. Air can come in at a different angle or
volume. The piston head can be machined in any number of different bowl
shapes. All told, there can be hundreds of variations.
"So I'll make three fuel injectors, each with a different spray angle,"
Wall says. "And oh, by the way, what about the air flow through the
engine? A little swirl, or a lot of swirl? Then you've got the timing of
the fuel--when do you inject it?"
Traditionally, Cummins engineers would choose the most promising
concept and build a prototype. They would run the new engine and collect
streams of data on performance. The process is painfully slow and
expensive.
The goal now is to do it on the computer. Using sophisticated software
and 3-D modeling, Indian engineers can predict where an engine part
might break under extreme stress. They can "watch" as virtual exhaust
flows through a virtual filter to see how the design might be tweaked to
boost efficiency.
The process, called analysis-led design, can eliminate the need for
multiple $100,000 prototypes. It can also find mistakes before they
happen, which speeds development dramatically. Already, preliminary efforts
done in Columbus have boosted turnaround time from nine months to three
months. That alone took $3 million out of the development process, Wall
says.
So if they could do that much in Columbus, why can't all this work be
done in the United States? The obvious answer is that it's cheaper to do
it in India, which means Cummins can add more people faster.
But India also has a demographic advantage over the U.S. Not only does
the country produce a swarm of bright, young engineers every year, but
the engineers are hungry and enthusiastic, and more willing to tackle
work American programmers might scoff at.
"Doing this is cost-effective," Wall says. "But it is both--cost and
effective. If you only have the cost part, you're not getting it."
At the opening ceremony of the new Cummins technology center, Ritesh
Dungarwal proudly demonstrated how his 3-D computer models can simulate
the flow of air through a diesel piston chamber. As head of the center's
flow analysis group, the young engineer has several university degrees
and has already far surpassed in income and opportunity anything his
parents could have dreamed.
In the past, he says, people like his father aspired to go into
public-sector jobs. The big appeal was not the challenge in that work, but job
security.
"Now people don't worry about that," Dungarwal says. "With all these
companies coming here, you can decide your limits. Right from schooling,
people think they can do something. The whole younger generation is
looking to be a part of this growing industry."
It's also true that Indian companies are figuring out how to harness
this enthusiasm in ways that are highly efficient and productive.
Quality relies on
process, planning
KPIT's Pandit, a soft-spoken 54-year-old with a master's degree from
the Massachusetts Institute of Technology, explains that because Indian
companies work with clients thousands of miles away, the demands for
quality and accountability are especially high. If quality wasn't up to
snuff, he says, the cost advantage wouldn't be worth it.
As a result, companies like KPIT have been forced to use the latest
techniques to devise disciplined processes for planning projects and
implementing them. They have also had to build quality into the production
process, much like the Japanese did with automobiles.
One result is that Indian software companies tend to break software
development into discrete components that can be tested and perfected,
then replicated.
"The parallel to that in the automobile industry is to come out with
parts that are interchangeable so you can quickly take it and put it
where you need it," Pandit explains.
The emphasis is also on catching bugs early. If there is a mistake in
the software during the design stage that isn't caught until the testing
stage, "then you spend 10 times the effort to fix it," Pandit says.
"Again, it's the same challenge as for the automobile industry," he
adds. "You get a part and you make sure the part is faultless so that you
don't have to rip up the car later on after it has been more or less
manufactured."
Arvind Thakur, president of NIIT Technologies in New Delhi, takes the
theory another step. In America, he says, software engineers tend to be
older. They tend to ask for, and are given, a lot more responsibility
for designing the software. Creativity is a big part of their job.
NIIT does it differently. It has less-experienced engineers do the
"manufacturing" of the software out of those prefabricated components. The
designing is left to more-experienced programmers.
"We have taken the art of programming and turned it into a process,"
Thakur says. That way production is scalable, which means pools of young
engineers can be arranged into "factories," where together they can
produce large quantities of high-quality software.
All this talk about factories and cars is hardly coincidence. Indian
entrepreneurs like Pandit and Thakur have every intention of following
the Japanese example by building world-class businesses on the back of
India's early successes at lower-end work. Already, both firms have the
highest quality designation from Carnegie Mellon University's Software
Engineering Institute.
"There's no question that some Indian groups are doing pretty darn good
work compared to companies over here," says Watts Humphrey, a fellow at
the institute who helped develop its standards. "It took Detroit quite
a while to determine that they had to defend themselves on quality. I'm
convinced it's the same issue here."
Pandit acknowledges that Indian companies have a huge cost advantage.
But he says they would be sticking their head in the sand if they were
to assume they could compete forever on price. Wages in India are
rising--KPIT's spiked 15 percent last year--but political backlash in America
will continue until Indian companies prove they can compete on quality
and service above all else.
Consequently, Pandit's strategy is to begin putting software centers in
the U.S., following the Japanese transplant strategy. Thakur points out
that Toyota started with low-budget cars and received lasting respect
from U.S. consumers only when it started producing the Lexus in the
1980s.
"The endgame in our industry is that once we come out with systems and
processes that are more efficient than what most of our competitors
have, we can operate with any labor," Pandit says. "Did anybody ever
believe that Toyota could employ American labor in American states and still
come out with better cars than Ford and GM? Did anybody believe that?"
New corporate
model emerges
Whether you believe in Pandit's vision or not, the global model is here
to stay.
Ten years ago, a Pune entrepreneur, Anand Khandekar, was in Bangalore
running Motorola Inc.'s pioneering technology center. Now he is involved
in tech start-ups based in Pune and Silicon Valley.
Khandekar's two companies, a chipmaker called Cradle Technologies and
video compression firm, PACE Soft Silicon, were designed from the outset
to take advantage of the rich pool of talent in both places. The "front
end" of each firm is in California, where executives raise venture
capital and court customers such as Intel and Texas Instruments. The "back
end," or technical work, is done in India, where engineers develop
patented technology.
Of PACE, Khandekar says, "It's not an American company and it's not an
Indian company. It's a global company."
As far as he's concerned, this is the corporate model for the 21st
Century.
To one degree or another, few large U.S. or European companies believe
they can compete today without tapping the unique combination of price
and quality found in India.
Like Cummins, more industrial companies are setting up centers in
places like Pune. And technology firms including Texas Instruments and
Motorola have been there for years, augmenting their efforts with India's
enthusiasm and expertise.
That has created enormous momentum. Not only has the IT success started
to bleed over into India's old-line manufacturing sector, where firms
are starting to export, but an improving economy has contributed to a
rise in literacy rates and a drop in the poverty rate over the past
decade, according to the World Bank.
It is hard to overestimate the sense of exhilaration and confidence
bubbling up in India.
Ravi Venkatesan, who has a master's of business administration degree
from Harvard, ran Cummins' India operations until February, when he left
to become chairman and general manager of Microsoft India. He says the
energy comes from a historical sense of freedom: liberation at last
from the legacy of British colonialism.
Young people in India, he says, "are absolutely driven to succeed
because they've known want and poverty and they finally see an escape
hatch."
"Whereas their counterpart in France may be just as smart and just as
educated, he would be thrilled to take a break after 35 hours and kick
back a bit," he says. "Here you're willing to work 70 or 80 hours just
to make it. So the drive to succeed, the ambition, the passion is just
amazing."
<!--QuoteEnd--><!--QuoteEEnd-->
Chicago Tribune, April 5th 2004
<b>From <span style='color:blue'>(Burton's <!--emo&
--><img src='style_emoticons/<#EMO_DIR#>/tongue.gif' border='0' style='vertical-align:middle' alt='tongue.gif' /><!--endemo--> )</span> Indiana to India: Why 1 firm leaptCompany found a pool of talent to help business--and overseas
town--blossom</b>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->By Michael Oneal
Tribune staff reporter
Published April 5, 2004
PUNE, India -- When Cummins Inc., the diesel enginemaker based in
Columbus, Ind., opened a product research center here recently, a Hindu
priest set up a small shrine next to a new office cubicle and led employees
in prayer.
He lit sticks of incense and dipped flowers in water. He ran a smudge
of color along the foreheads of the assembled Cummins executives. As the
chanting built to a climax, one American turned to a Cummins vice
president, Bharat Vedak, and asked what this peaceful ceremony signified.
"He is saying `May you have all success in the new venture,'" Vedak
said with a smile, "`and may you conquer all your enemies.'"
Conquering enemies before they conquer you is what the rush to India is
all about. As companies such as Cummins struggle with stiff global
competition and chronic pressures to cut costs, access to India's army of
high-quality, low-cost engineers has become an essential weapon.
A close look at Cummins' decision to locate its technical center in
Pune (pronounced POON-uh) reveals outsourcing to India is not just about
call centers and low-level jobs. It's about the crucial
interrelationship building between India and places like Indiana.
The pitched debate about outsourcing being heard in the U.S.
presidential campaign may focus on the idea that India is somehow stealing jobs
with the complicity of greedy CEOs. But that misses the point. In a
global economy, India and companies like Cummins need each other to thrive.
That gives the trend strong momentum.
A little over a year ago, Cummins Chairman and CEO Tim Solso recognized
what countless other CEOs are discovering: India is blossoming into a
vital resource of world-class technical talent that companies ignore at
their peril. On an eye-opening trip to Bangalore in southern India,
Solso saw engineers drawing complex 3-D models of jet engines and
analyzing ways to make combustion systems more efficient.
"They were very productive, very well-educated people doing
sophisticated work in a high-quality way," Solso says. "It was a huge competitive
epiphany."
What he concluded is that India is disrupting the world's economy much
the way Japan did 30 years ago, when companies including Toyota
dramatically improved the quality of car manufacturing.
Now, Cummins is counting on Indian engineers to help write the software
that will make its engines perform more efficiently. It is hiring
Indians to do computer analysis of those engines so the company can do away
with costly prototypes. The stakes could not be higher. Cummins is in
an all-out race with archrival Caterpillar Inc. to meet stringent new
environmental standards.
For India, the stakes are high as well. The country's tech boom is
fueling a broader surge in its economy that began when India loosened its
suffocating economic controls in 1991. But the backlash in the U.S.
means the pressure is on to become all the more indispensable to American
companies.
Indians fear that U.S. protectionism could slow a movement that is
creating a new middle class with new expectations and buying habits. These
consumers are giving the nation's economic renaissance added momentum
by encouraging the restructuring of other industries. A quarter of
India's population suffers abject poverty. But there's evidence the
free-market reforms are slowly changing that too.
"The way I look at it is that the country has not even scratched the
surface in terms of economic growth," says Ravi Pandit, a local
businessman who runs a technology company in which Cummins has a small stake.
"There is phenomenal growth that lies ahead."
Where the past
meets the future
How far this city of 3.7 million has come in the past five years and
how far it has to go can be glimpsed on Pune's snarl of dusty, pocked
streets.
About 100 miles south of Bombay, Pune looks like most urban areas in
India. Rivers of bicycles, scooters and cars compete for the right of way
with gaunt cows and goats. Women balancing bundles on their heads walk
by in saris as teenage girls in T-shirts and jeans zip past on
motorcycles. Traffic is constant and wild; at least one person is said to die
on Pune's roads every day.
Storefronts sell scooters that once took years of waiting to obtain.
New cars--and low-interest loans--are plentiful. But poverty is never far
away. Slums of corrugated steel shacks line the banks of the city's
murky river. Half-naked children play in dirt piles while their parents
dig in trenches with hand tools. Smog hangs over the city in a brown,
sooty haze.
This collision of future and past is starkly visible on the outskirts
of Pune, in a village called Hinjewadi.
In one direction, villagers in bright, traditional clothing go about
their business at a row of squat, concrete buildings. Across a highway,
the view is straight out of Silicon Valley.
Tall, modern buildings stand emblazoned with the names of India's most
prominent information technology companies. Quiet streets and
landscaped lawns crisscross hundreds of acres that include a bank, a hotel and
two new universities. High-speed Internet connections tie Hinjewadi's
engineers to points around the world.
If there is any doubt about what these professionals are capable of,
numbers tell the story. Since 1996, the city's software exports have gone
from $25 million to about $1 billion.
"We've got [many thousands] of software engineers in the city and they
are very highly paid," says Sushil Gupta, director of Software
Technology Parks of India Ltd. "It is transforming Pune. It underscores our
country's coming of age."
Cummins has manufactured engines in Pune for 42 years. But last year
when Solso visited several other U.S. companies' Indian operations,
including General Electric's John F. Welch Technology Centre in Bangalore,
he said he was blown away by the depth and sophistication of what he
saw.
As soon as he got off the plane in Columbus, where his $6.3 billion
company is headquartered, Solso called a meeting of his top staff.
"I said, `I want every one of you to go to India and I want you to take
your key people,'" Solso recalls. "`And specifically, I want you to
look at sourcing software development, IT operations, business services
and a tech center. And I want to get going right now.'"
For Solso, a 33-year Cummins veteran, the meeting was reminiscent of
one he attended in 1983. Then, he was directing the company's operations
in Britain. His boss, James Henderson, who later became Cummins
chairman, had just returned from Japan, where he had toured a series of
diesel-engine plants operated by Yanmar, Hino and Komatsu.
Henderson had experienced a similar epiphany. He saw firsthand why the
Japanese were taking the manufacturing world by storm. To produce an
engine, they used less capital, one-third the number of employees and
one-half the hours Cummins required. Organized in flexible teams, workers
were boosting quality. They were also coming out with new products much
faster than Cummins.
"We clearly have a more urgent problem than I previously thought,"
Henderson told his staff, according to a company history titled "The Engine
that Could: Seventy-Five Years of Values-Driven Change at Cummins
Engine Company."
"We must make major progress in three years, not five years. Five years
is too long," Henderson said.
Solso recognized on his trip to India that the situation today is
similar. The difference is that technology, not steel, is the new coin of
the manufacturing realm.
For companies such as Cummins, the ability to use computers to
streamline operations, speed product design and improve internal communications
may spell the difference between success and failure in the information
age.
And after the bitter three years he had just been through, Solso
recognized that India presented a better way to compete.
Solso, 57, took over as chairman of Cummins in 2000, just before the
2001 recession. Faced with a 70 percent one-year decline in U.S.
heavy-duty engine sales, he cut 17 percent of his employees and closed or
consolidated 14 plants, including the flagship engine factory in Columbus.
But he also used the opportunity to rethink how Cummins did business.
He faced two unrelenting challenges. Global truck manufacturers such as
Volvo and DaimlerChrysler had consolidated into huge companies that
could squeeze Cummins for every last penny. And the U.S. Environmental
Protection Agency had instituted standards requiring drastic reductions in
diesel engine emissions over the next several years.
That set off an expensive technology and design race between Cummins
and Peoria-based Caterpillar. With the clock ticking, Solso was looking
for any advantage he could get.
"That made us look globally," Solso says. "We wouldn't have survived if
we didn't look globally."
Globalization
began years ago
The truth is, Cummins was already a global company. It had
manufacturing operations all over the world. But globalization today means using
the Internet and other communication technologies to take advantage of
assets--people, skills and supplies--around the world.
As a result of Solso's meeting, executives scrambled to beef up
existing buying offices in Pune, Shanghai and Prague, Czech Republic, to find
new, cheaper sources of supplies. They also rushed to send much of the
company's enterprise computing work and other administrative functions
to suppliers in India.
But the main focus for Cummins these days is the effort to develop
engine technology that can meet the EPA standards without sacrificing
performance.
"If we don't do it," says Tom Linebarger, president of Cummins' power
generation unit, "Cat wins."
Part of the effort involves writing sophisticated software that can be
embedded in engines to manage how they work. Much of that software is
designed in Columbus. But the code is written by KPIT Cummins
Infosystems Ltd., the company in Pune run by Pandit.
Embedded software is part of the control system that helps the hardware
do all sorts of crucial functions, including firing the ignition system
in the most precise, fuel-efficient way.
Pandit says he charges about $20 an hour for writing the embedded
software. In Columbus, the rate would run closer to $70.
That alone might justify the decision to outsource. But the logic is
more refined. By saving that much on programming costs, Cummins can throw
more people at the problem. That speeds development and gets Cummins
products to market faster.
"We could not deliver our products on time without them ," says John
Wall, the company's chief technical officer.
The same thinking applies to Cummins' most ambitious effort in India
yet. After seeing GE's jet-engine design efforts in Bangalore, Cummins in
late January launched a similar, though much smaller, technology center
in Pune--the one blessed by the Hindu ceremony.
The bulk of the engine design still will be done in Indiana and other
markets around the world, but a new team of Indian engineers will use
powerful workstations to analyze those designs for defects and
performance, which is a critical and expensive part of the development process.
This is no small matter. Wall explains that in a combustion system, for
example, there is a long list of parameters that can be manipulated to
try to increase efficiency. Fuel can be squirted into the combustion
chamber at this angle or that. Air can come in at a different angle or
volume. The piston head can be machined in any number of different bowl
shapes. All told, there can be hundreds of variations.
"So I'll make three fuel injectors, each with a different spray angle,"
Wall says. "And oh, by the way, what about the air flow through the
engine? A little swirl, or a lot of swirl? Then you've got the timing of
the fuel--when do you inject it?"
Traditionally, Cummins engineers would choose the most promising
concept and build a prototype. They would run the new engine and collect
streams of data on performance. The process is painfully slow and
expensive.
The goal now is to do it on the computer. Using sophisticated software
and 3-D modeling, Indian engineers can predict where an engine part
might break under extreme stress. They can "watch" as virtual exhaust
flows through a virtual filter to see how the design might be tweaked to
boost efficiency.
The process, called analysis-led design, can eliminate the need for
multiple $100,000 prototypes. It can also find mistakes before they
happen, which speeds development dramatically. Already, preliminary efforts
done in Columbus have boosted turnaround time from nine months to three
months. That alone took $3 million out of the development process, Wall
says.
So if they could do that much in Columbus, why can't all this work be
done in the United States? The obvious answer is that it's cheaper to do
it in India, which means Cummins can add more people faster.
But India also has a demographic advantage over the U.S. Not only does
the country produce a swarm of bright, young engineers every year, but
the engineers are hungry and enthusiastic, and more willing to tackle
work American programmers might scoff at.
"Doing this is cost-effective," Wall says. "But it is both--cost and
effective. If you only have the cost part, you're not getting it."
At the opening ceremony of the new Cummins technology center, Ritesh
Dungarwal proudly demonstrated how his 3-D computer models can simulate
the flow of air through a diesel piston chamber. As head of the center's
flow analysis group, the young engineer has several university degrees
and has already far surpassed in income and opportunity anything his
parents could have dreamed.
In the past, he says, people like his father aspired to go into
public-sector jobs. The big appeal was not the challenge in that work, but job
security.
"Now people don't worry about that," Dungarwal says. "With all these
companies coming here, you can decide your limits. Right from schooling,
people think they can do something. The whole younger generation is
looking to be a part of this growing industry."
It's also true that Indian companies are figuring out how to harness
this enthusiasm in ways that are highly efficient and productive.
Quality relies on
process, planning
KPIT's Pandit, a soft-spoken 54-year-old with a master's degree from
the Massachusetts Institute of Technology, explains that because Indian
companies work with clients thousands of miles away, the demands for
quality and accountability are especially high. If quality wasn't up to
snuff, he says, the cost advantage wouldn't be worth it.
As a result, companies like KPIT have been forced to use the latest
techniques to devise disciplined processes for planning projects and
implementing them. They have also had to build quality into the production
process, much like the Japanese did with automobiles.
One result is that Indian software companies tend to break software
development into discrete components that can be tested and perfected,
then replicated.
"The parallel to that in the automobile industry is to come out with
parts that are interchangeable so you can quickly take it and put it
where you need it," Pandit explains.
The emphasis is also on catching bugs early. If there is a mistake in
the software during the design stage that isn't caught until the testing
stage, "then you spend 10 times the effort to fix it," Pandit says.
"Again, it's the same challenge as for the automobile industry," he
adds. "You get a part and you make sure the part is faultless so that you
don't have to rip up the car later on after it has been more or less
manufactured."
Arvind Thakur, president of NIIT Technologies in New Delhi, takes the
theory another step. In America, he says, software engineers tend to be
older. They tend to ask for, and are given, a lot more responsibility
for designing the software. Creativity is a big part of their job.
NIIT does it differently. It has less-experienced engineers do the
"manufacturing" of the software out of those prefabricated components. The
designing is left to more-experienced programmers.
"We have taken the art of programming and turned it into a process,"
Thakur says. That way production is scalable, which means pools of young
engineers can be arranged into "factories," where together they can
produce large quantities of high-quality software.
All this talk about factories and cars is hardly coincidence. Indian
entrepreneurs like Pandit and Thakur have every intention of following
the Japanese example by building world-class businesses on the back of
India's early successes at lower-end work. Already, both firms have the
highest quality designation from Carnegie Mellon University's Software
Engineering Institute.
"There's no question that some Indian groups are doing pretty darn good
work compared to companies over here," says Watts Humphrey, a fellow at
the institute who helped develop its standards. "It took Detroit quite
a while to determine that they had to defend themselves on quality. I'm
convinced it's the same issue here."
Pandit acknowledges that Indian companies have a huge cost advantage.
But he says they would be sticking their head in the sand if they were
to assume they could compete forever on price. Wages in India are
rising--KPIT's spiked 15 percent last year--but political backlash in America
will continue until Indian companies prove they can compete on quality
and service above all else.
Consequently, Pandit's strategy is to begin putting software centers in
the U.S., following the Japanese transplant strategy. Thakur points out
that Toyota started with low-budget cars and received lasting respect
from U.S. consumers only when it started producing the Lexus in the
1980s.
"The endgame in our industry is that once we come out with systems and
processes that are more efficient than what most of our competitors
have, we can operate with any labor," Pandit says. "Did anybody ever
believe that Toyota could employ American labor in American states and still
come out with better cars than Ford and GM? Did anybody believe that?"
New corporate
model emerges
Whether you believe in Pandit's vision or not, the global model is here
to stay.
Ten years ago, a Pune entrepreneur, Anand Khandekar, was in Bangalore
running Motorola Inc.'s pioneering technology center. Now he is involved
in tech start-ups based in Pune and Silicon Valley.
Khandekar's two companies, a chipmaker called Cradle Technologies and
video compression firm, PACE Soft Silicon, were designed from the outset
to take advantage of the rich pool of talent in both places. The "front
end" of each firm is in California, where executives raise venture
capital and court customers such as Intel and Texas Instruments. The "back
end," or technical work, is done in India, where engineers develop
patented technology.
Of PACE, Khandekar says, "It's not an American company and it's not an
Indian company. It's a global company."
As far as he's concerned, this is the corporate model for the 21st
Century.
To one degree or another, few large U.S. or European companies believe
they can compete today without tapping the unique combination of price
and quality found in India.
Like Cummins, more industrial companies are setting up centers in
places like Pune. And technology firms including Texas Instruments and
Motorola have been there for years, augmenting their efforts with India's
enthusiasm and expertise.
That has created enormous momentum. Not only has the IT success started
to bleed over into India's old-line manufacturing sector, where firms
are starting to export, but an improving economy has contributed to a
rise in literacy rates and a drop in the poverty rate over the past
decade, according to the World Bank.
It is hard to overestimate the sense of exhilaration and confidence
bubbling up in India.
Ravi Venkatesan, who has a master's of business administration degree
from Harvard, ran Cummins' India operations until February, when he left
to become chairman and general manager of Microsoft India. He says the
energy comes from a historical sense of freedom: liberation at last
from the legacy of British colonialism.
Young people in India, he says, "are absolutely driven to succeed
because they've known want and poverty and they finally see an escape
hatch."
"Whereas their counterpart in France may be just as smart and just as
educated, he would be thrilled to take a break after 35 hours and kick
back a bit," he says. "Here you're willing to work 70 or 80 hours just
to make it. So the drive to succeed, the ambition, the passion is just
amazing."
<!--QuoteEnd--><!--QuoteEEnd-->