Opinion
Global capability centres in India: GE is showing the way
Summary
- While software exports may face an existential challenge from GenAI, India’s engineering skills can turn it into a powerhouse for other sophisticated services. GE’s Jack Welch technology centre in Bengaluru has clues of the potential waiting to be exploited.
In the early 2000s, Alok Nanda’s new colleagues called him the “bumper guy." His new job at General Electric back then was putting some plastic between the bumper and the beam of a Suzuki Swift. The plastics division had hired the young engineer from India’s state-run DRDO, placed him at a GE facility near Bengaluru, and asked him to find a cost-efficient way to reduce the impact on pedestrians in auto accidents.
Two decades later, the former bumper guy and the John F. Welch Technology Centre he now heads in Bengaluru are executing far more complex projects. In the process, they’re writing a template for MNCs on how to use India’s engineering talent to create intellectual property, not just cut costs.
This is different from the code-writing work that gave India global recognition. While software outsourcing will face an existential challenge from GenAI, India’s engineering prowess, if harnessed well, will launch the next wave of productive and lucrative jobs.
Policymakers have their sights on China’s factory-to-the-world crown, and are spending $24 billion over five years on production-linked incentives. Trouble is, the rivalry is not limited to other Asian countries like Vietnam that are ahead in the game. The US, too, is running a very generous industrial policy to revive its manufacturing.
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While India’s factory ambitions are hobbled by its stifling bureaucracy and protectionist attitude to trade, it’s still possible for it to make a play as a global engineering workshop and research lab. The knowhow it exports will be embedded in products made elsewhere.
As Frederic Neumann, HSBC’s chief Asia economist, says: “India’s services connectivity to the world economy is so large nowadays that it ‘compensates’ for the lack of goods trade connectivity." It’s time to use those links to target commercial services, whose cross-border demand grew 9% to $7.5 trillion last year. World goods trade is three times larger, but it shrank by 5%.
Take Nanda’s next big mission. As CTO for India at GE Aerospace, he and his team are working with colleagues in Niskayuna, New York, on a novel platform that would offer 20% efficiency gains in future jet engines. “I feel really privileged," Nanda told me. “For an engineer, it’s like being a kid in a candy store."
When CEO Larry Culp rang the opening bell on the New York Stock Exchange on 2 April, launching GE Aerospace as an independent public company, joining the party on the podium was Ravindra Shankar Ganiger. With 100-plus patents, Ganiger has one of the richest hauls of all scientists and engineers at the Bengaluru centre. The team’s intellectual inputs, already at the heart of newer jet engines like GE9X, is crucial to Culp’s vision of “defining the future of flight."
GE woke up to India’s potential early. Others are doing it now. Nearly 1,600 MNCs have set up captive units, employing 1.7 million professionals. By lifting the quantity and quality of the graduates and Ph.Ds India mints in science, technology, engineering and medicine, it can conceivably expand its relevant talent pool. A little less red tape and some improvement in civic amenities will keep more of them at home with good jobs.
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As these highly paid individuals will support other Indians, and not just as drivers and housemaids but by generating tax resources for publicly funded employment in urban infrastructure, the narrow top of the employment pyramid would start filling its own middle. Stronger mass consumption will create demand for locally manufactured factory goods.
Consider the 360 Foam Wash. Vidya Venkataramani and her team wanted to test a portable washer to clean jet engines between flights. To simulate Middle East conditions, she created her own dust in the lab. The wash is already in use, saving global airlines fuel. Sanjeev Jha, meanwhile, uses machine-learning models to predict a maintenance schedule so carriers get the most out of engines.
In September 2000, I was present when GE’s then-boss Jack Welch came to open the Bengaluru centre. At the time, the global behemoth had 12,000 employees in a market that barely generated $1 billion in sales, not even 1% of its global revenue. “Market growth will come," he told us. “The real opportunity in India is its incredibly skilled workforce. We have used the software generated by our India business to change the company. That’s great."
In the past 25 years, the appeal of India’s talent has transformed. One idea for GE’s upcoming engine platform is a hybrid-powered jet: a Toyota Prius of the skies. Suma MN is trying to crack that puzzle. I asked her if she is the first woman PhD from her village in Kerala. “I’m the first human," she corrected me. ©bloomberg
