Warren Harris on JV with BMW, FY25 hiring & more

Warren Harris, CEO & MD, Tata Tech, says: “We have been working on this partnership with BMW for the best part of 12 months and certainly over the last six months, we have been putting together a lot of detail. The fact that we have announced today shows the exercise of readiness that both organisations will undertake. We expect regulatory approval to be secured in the next three or four months and so we are anticipating a start in the second half of this fiscal year.”

Give us more details about the JV with BMW. What is the scope and the purpose? What is the revenue potential?

Warren Harris: We were delighted to make the announcement with BMW in the morning that we are committed to forming this JV. The joint venture is subject to regulatory approval in Europe and in China. So, I am not in a position to be able to share too many details other than to say that it represents a strategic commitment from both organisations. It is going to be focused on automotive software and helping BMW to digitise or continue to digitise their entire enterprise. So, it is a material commitment. It is a commitment that we expect to build scale in and around and something again that will be very important for the fortunes of both BMW and Tata Technologies in the future.


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But broadly speaking, when is the scale up of the project expected and what is the duration of the joint venture?

Warren Harris: We have been working on this partnership for the best part of 12 months and certainly over the last six months, we have been putting together a lot of detail. The fact that we have announced today shows the exercise of readiness that both organisations will undertake. We expect regulatory approval to be secured in the next three or four months and so we are anticipating a start in the second half of this fiscal year. There are already teams on both sides that have spent a lot of time together and we certainly think that today’s announcement will be the catalyst of a lot more detailed planning that we will over the next couple of months be able to answer specifically the questions that you have raised.

I am sorry to probe further, but I wanted to understand again, analysts are talking about how these deals are at least $200 to $300 million in size. Will this be the ballpark?

Warren Harris: I am not going to comment on the revenue projections or headcount projections. What I will say is that this is going to be focused upon automotive software and that it is going to be focused upon the digitisation of the BMW enterprise. There are plans to deliver scale through the JV and as I said before, it is going to be very strategic and very important to both organisations.

Last time you had spoken about the growth acceleration in the aviation segment and now it is automotive mobility also, these large deals are being seen. How do you see the contribution of the three major segments changing in the coming quarters?

Warren Harris: As far as automotive and mobility are concerned,, we continue to see very strong tailwinds in that sector as the industry pivots towards alternative propulsion systems and connected services. And so, despite the rhetoric that is coming from some OEMs about the slowdown of growth in the EV sector, we are not seeing that from a product engineering perspective. Certainly, we are very bullish about aerospace. We are very excited, not just in terms of our relationship with Airbus, but with other significant aerospace companies that we are partnered with.

We are also very excited about the growing influence that the Tata Group has on aerospace. Aerospace is going to or is projected to grow somewhat exponentially, particularly in the commercial airline space. The number of aircraft that are in productive use is set to double in the next 20 years. Much of that demand will come from India and so there is an infrastructure play here in India. There is also a requirement for organisations like Boeing and Airbus to ramp up their manufacturing capacity to be able to satisfy the demand and we expect to provide services and value across that entire value chain.

At the time of IPO, you had reiterated your focus on brand and talent retention. We understand that because of this JV, you need to now significantly scale up your headcount. So, would there be a change in FY25 hiring outlook?

Warren Harris: Yes, in the previous fiscal year, we recruited over 4,000 people. We expect to do something similar in the next 12 months and you referenced the brand. Brand is incredibly important in terms of the employee proposition that underpins that brand position in the market and clearly things like the joint venture that we have announced today really enhance the position of the Tata Technologies brand here in India and around the world.

The fact that BMW have undertaken an exhaustive search of engineering service provider partners over the last 12 months and have selected Tata Technologies based upon capability, based upon our values and the underlying culture in the business, I think is a tremendous testament to the organisation that we are growing.

You have also mentioned how this deal was a result of 12 months of sweat and tears on behalf of your team. Is the team now working on any other large deals? Can you tell us what is in the pipeline?

Warren Harris: Well, this business is driven by large deals. So, we consistently look to not only respond to customer requirements in and around large deals, but we are also looking to shape proactively large deals or large propositions that we can take to our customers. So, it is very much part of the DNA of our organisation and the basis on which we expect to scale in the future.

How will this JV impact your aspiration of improving margins by 200 to 250 bps? And I ask because sometimes deals this large are margin dilutive at the start.

Warren Harris: I am not going to comment on the financial impact of the joint venture for the reasons that I cited before. But what I will say is that last month we announced the appointment of Sukanya Sadasivan as our chief operating officer. Sukanya comes to Tata Technologies after three decades at TCS. She was part of the leadership team at TCS when they went through the transformative growth that has really not only defined TCS but has defined the IT services industry here in India and we certainly expect to capitalise upon her experience and know-how as we build out the Tata Technologies organisation. We look to replicate in many respects in our sector what TCS has done in the IT market.

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