Cover story: GE's Global Gameplan for India [Pg. 2]

GE's Global Gameplan for India
(Contn.)

The Sourcing End of Globalisation

PRODUCTS STRATEGY

Increase emphasis on manufacturing in global products businesses like medical systems, lighting systems, and industrial systems

Use distribution economics to decide which products can and can't be manufactured in India for the rest of the world

SOURCING STRATEGY

Develop vendors who can cater to GE's global business requirements of direct and indirect materials

Use India as a source of software, design, and engineering solutions that can be used across GE business elsewhere

SERVICES STRATEGY

Use cost- and skill-advantages resident in Indian operations to improve the quality of service processes outsourced from the country

Commercialise services like e-biz enablement rendered to GE's global businesses and offer them to external customers

Champak Panda's is a strange job: he is a GE employee whose efforts are targeted at increasing the revenues of other companies. Panda is based in Bangalore and attached to GE's Transportation Systems business, but he works for GE Global Sourcing India, a company which, as the name suggests, identifies and develops suppliers for GE's global operations. In Phase 1, India, GE decided, would be a source for castings, forgings, and other indirect material. Although this effort started in early 1999, it was only in October, 1999, when GE unveiled its e-auction strategy that things took off. An Indian supplier won an e-auction for the first time in January, 2000. Since then, several Indian suppliers have won orders. N. Venkatakrishnan, Manager, Business Development, GE, who co-ordinates all hardware sourcing activities expects the volume of materials sourced from Indian suppliers to grow at around 40 per cent a year for the next few years: ''It started off with indirect materials, it's now expanded to include direct materials as well.''

Software, expectedly, is a big sourcing opportunity for GE in India. The company has six GDCs: offshore centres set up with six partners like Patni Computer Systems (in which it acquired a strategic stake around the time this article went to press), TCS, and Satyam. Together these centres will account for $250 million in software projects this year. GE India's GDC operations also boast engineering design and development centres (ED & DC) attached to specific businesses. Says Pradipta Sen, Director (ED & DC), who heads the GE Transportation Systems design centre: ''We started by sourcing it five, six years back. But as we realised India's capability in embedded software, the automatic extension was to a design centre. And once that worked our leadership felt we could extend it the whole nine yards into engineering. In September, 1999, we started to work on 'engineering' here, and have delivered nine projects to gets. And whatever we're establishing here we're bringing it down in headquarters.''

Predictably, 80 per cent of the software outsourced by GE originates in India. And the partners GE's chosen for its GDCs claim that the nature of work they do for GE businesses in other parts of the world has moved from low-end contract programming delivered on-site to high-end e-biz and business process solutions developed offshore. ''We are moving to a classic outsourcing relationship. GE businesses expect us to take entire wing-to-wing ownership of business processes,'' says Sunil Chitale, Manager, Patni Computer Systems, who heads the GE-Patni GDC (Patni has around 1,000 software engineers working exclusively for GE). Adds N. Chandrashekaran, Vice President, Tata Consulting Services, who heads the GE-TCS GDC: ''The advantage for TCS is that we're able to work on the latest technologies, which we then leverage. The other thing about GE is that their management is world class. So we learn how they go about doing business.''

GE's John F.Welch Tech Centre in Bangalore and engineering JVS GE has set up with companies like TCS (for transportation systems) are also part of the company's plan to make India a sourcing point for intellectual capital. As Jean Heuschen, the Head of the tech centre, puts it: ''Our mission is to be innovating new technologies that will be implemented to better serve our global customers and markets with new products and services and not research for the sake of research.'' The tech centre already has 40 patents to its credit and will have a staff strength of 465 when it is fully operational in late 2000. And 20 per cent of these people, Heuschen is particular to point out, are Indians he's lured back from research jobs in the first world.

Bayman reels off a list of initiatives that will ensure GE's Indian operations do not lose out on the edge they have acquired: a three-stage expansion to the tech centre taking its strength to 2,600 people; migration of services in areas like legal services, financial planning, and analysis; and the option to commercialise some of the services the Indian ops now offer to other parts of GE, and cater to external customers. GE's Indian operations will leverage the strengths India possesses in a range of business processes: from high-end design to routine call centre services; from sourcing commodities like castings to it services. In effect, the company will borrow a leaf from the diversified conglomerate strategy that has worked so well for it elsewhere and try and look for growth and globalisation opportunities in a range of businesses.

And Bayman (who insists that one of the things Jack Welch expects him to do is to push India as a major source of globalisation opportunities to the businesses within GE) manages this growing conglomerate by fostering, in India, the Type A culture that has made GE no place for the weak-kneed. ''India,'' sums up Bayman, ''is clearly number one in terms of globally competitive costs with better quality and value. We will continue to move into higher value-added work.'' And become a true globo-corp.

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