If reshoring – or the trend whereby manufacturing work lost overseas comes back to Britain – was the buzzword last year, the opposite phenomenon, in which UK companies outsource engineering work to other countries, is still very much in evidence.

This was made clear last month when Rolls-Royce was criticised by unions for offshoring engineering jobs to India after it revealed plans to open an aerospace design centre in Bangalore. Five hundred CAD specialists will be recruited in the Indian city to handle both domestic and international projects, said the Unite union.

The news follows cuts at the engineering giant’s British divisions – despite a booming aerospace order book. Rolls-Royce’s UK workforce was told last November that 2,600 jobs had to go in its aerospace division over an 18-month period as part of a global restructuring exercise.  

For global engineering companies, India continues to be popular because of its manufacturing expertise. Bosch recently announced that of 9,000 engineering graduates to be recruited worldwide this year, almost half would be coming from India and China – and just 77 from Britain. This reflects the Asian countries’ rapidly growing markets, says the company.

Airbus is another European manufacturer expanding in India. It has more than 350 Indian engineers specialising in high-tech aeronautical engineering. Last month, during a visit by Indian prime minister Narendra Modi to its headquarters in Toulouse, France, the company said it intended to increase its Indian outsourcing to $2 billion, according to The Telegraph of India. In addition, following the launch of the BizLab business accelerator scheme in Toulouse, Airbus plans to open a further such centre in India. The aim of BizLabs is to allow start-ups and Airbus’s internal entrepreneurs to work together to speed up the transformation of innovative ideas into businesses. 

It’s no surprise that engineering in India is in demand by British and global firms, says a British engineer who works for an Indian manufacturer. Dr Tim Leverton is head of advanced and product engineering at Tata Motors. Most of Tata’s engineers are based in Pune, Maharashtra, at its principal research and development centre. The multinational’s products include cars, trucks, vans, coaches, buses, construction equipment and military vehicles. 

Innovation is common among the Indian workforce, says Leverton. “The engineers are creative. The ability to be innovative is established in the culture here. In other global markets, such as China, that is less the case. That is one of the advantages that India brings. There is a readiness to find solutions to difficult problems.” For example, a cataract operation in India costs one-tenth of what it does in the US, he says.

Such solutions may involve making products simpler and cheaper. “For us, simplification is key: you can’t paste what you’ve put into a B-segment car in Europe into a B-segment car in India. We can’t afford it. We have in our markets lower price points than markets in the developed world. Most of the cars in India are priced at less than £5,000.”

This approach leads to a combination of different attributes at Tata Motors, whose capabilities include 5,000 engineers, designers and technicians. More than 80% of these staff are based at Pune, but the firm also has operations in Turin, Italy, and in South Korea – and chose to locate its European technical centre, which has 250 staff, in Warwick. The facilities available to the company in India are sophisticated, and include those for full climatic testing, road, fatigue and crash testing, anechoic and semi-anechoic chambers, as well as modest test track facilities. “We are pretty much self-sufficient, because we were pioneers in the industry here,” he says.

Despite its international centres, Tata Motors does the lion’s share of its design and development activity in India, “as opposed to other companies, which are adapting designs that have been made for Europe or elsewhere”, says Leverton.

He adds: “Our orientation is toward rapid growth in export markets. Therefore we are engineering for both emerging and developed market demands. If you look at our latest commercial vehicle platforms for our trucks – medium, heavy and light commercial – they are world standard technologies, in terms of engines, transmissions, chassis, refinement and CAD design.”

Has the Indian R&D operation always been sophisticated enough to serve a global automotive marketplace? Leverton says that Indian consumer demand is starting to match the standard of global demand. “The Indian market is growing rapidly, and the customers are just as demanding as in other markets. So there is a general convergence of what the customer wants here with global designs. We have to build our capabilities to match that.” 

The European base is useful in this regard, he says. “Part of the reason we have our European base is that, particularly in the area of styling, and access to international design input, we need to be able to tap into a talent pool. The other issue is that we are working with global suppliers and new technologies, and the challenges that everybody in the industry is facing, particularly in terms of low-carbon vehicle technology.”

Here, too, there is a convergence: in terms of emissions standards, which are tightening in India but still behind Europe. Leverton believes that in 15 years’ time, they will be broadly the same. “We are just about to move to Euro IV [for trucks], and then the Euro V equivalent – probably at the end of this decade. Euro VI will be on the horizon in the middle of the 2020s. That is driven by the availability of low-sulphur fuel. But we need to acquire these technologies. If we are playing in the export markets, we have to have them.

“By the end of the 2020s, we will also have convergence for CO₂ emissions, which at the beginning of the decade will be in the range of 110g/km to 133g/km. That’s above the European level. By 2030, I think it will be close to the European level.”

Most of the engineers working in Pune are Indian, although there are several expatriates, too. They are bolstered by the predominantly British team at the European technical centre. 

Tata Motors has gained a massive amount of experience of new product development and launches in the past decade, he says. “We are not world-class in every area, and we aspire to be better – but we are very much on the right path.” The aptitude of Indian engineers is “very good” although there is work to be done in terms of development of postgraduate qualifications, he says. “We are able to tap into some outstanding resources.”

He adds that Tata Motors has been through a period in which the macro-economic situation “has been fairly dire” but is now improving. “We saw a collapse in our commercial vehicle market. Over the past two years, it has started to recover. During that period, we have actually increased our R&D expenditure.” This focus on R&D investment remains important, he says. “We have to have new products in order to compete with international competitors and be globally distinctive. The only way we can do that is with a strong commitment to R&D. That is reflected in the number of people we have in the space, and the capabilities we have built up.”

Most India-based engineering services companies have grown as recent add-on businesses to an IT services core, but engineering consultancy Tata Technologies was created to serve product development and manufacturing, says its chief strategy officer Richard Welford. The company has a 25-year engineering pedigree and, as with Tata Motors, is based in Pune. It provides design and engineering services, and product development and lifecycle efficiency resources, and applies IT to product development.

Tata Technologies’ design, engineering and innovation capacity consists of more than 8,000 professionals with experience across the automotive, aerospace and industrial heavy machinery sectors, with resources in North America and Europe as well as India. “The scale of our Indian operations has enabled Tata Technologies to push the boundaries of distributed engineering, opening access to global talent for the world’s leading OEMs and passing the resulting benefits back to customers,” says Welford.

Meanwhile, Rolls-Royce says that its decision to outsource CAD work to Bangalore was not taken lightly. A spokeswoman says: “We employ 9,000 engineers in the UK – out of a global engineering population of 15,500. We are a global company that makes almost 90% of its revenues outside the UK and we need to attract and invest in engineering talent from around the world, so we have the right people in the right place to deliver to customers.”

Rolls-Royce says it has been working with Indian industry for more than 80 years and already has engineering capability in the country, as well as partnerships with local suppliers. “We are looking to increase our capability in the country to strategically position ourselves for new business opportunities and be closer to customers in the region. We are looking to build up our capability in Bangalore over the next three years, and anticipate that we will employ about 500 engineers there by the end of 2017. 

“The work done there will include work for customers in the region, and the development of new tools and technologies that make the best use of the capabilities in India.”

Rolls-Royce’s move to outsource CAD work illustrates that British firms will continue to be attracted to countries that have outstanding engineering resources but lower cost bases – even though the evidence suggests that reshoring is taking place too.

German giant ready to make the most of economic growth in India

Bosch is forecasting further strong growth in India, with the economy expected to expand by 6% this year, says the German engineering giant. “The new Indian government is addressing key issues such as infrastructure, education, and reducing bureaucracy. We are confident that this will positively impact the country’s development,” says Dr Steffen Berns, president of Bosch Group in India. “Especially in the areas of mobility, infrastructure, industry, energy, security, packaging, and healthcare, there are many opportunities for our products. The field of connected production also opens up possibilities for Bosch in India,” he says.

With IT companies Tech Mahindra in India and Cisco in the US, Bosch is working on a project to develop connectivity between industrial tools as part of the Industrial Internet Consortium. Bosch’s largest development centre outside Germany is in Bangalore and Coimbatore in southern India, and employs 15,000. Its engineers have developed software that links all the machinery in a factory and enables the collection and analysis of data in real time. This allows monitoring of production status and quick resolution of material shortages and machine failures.

Since 2014, the development centre in Bangalore has also been focusing on analysis of big data. A software model developed there can be employed in factories to reduce throughput times, enable predictive maintenance, and optimise resource use. It can also improve the management of capacity, inventory and logistics. 

Worldwide, 20 of the more than 250 plants the company runs are already equipped with radio frequency identification (RFID) logistics solutions. These are used in Bosch’s diesel plant in Nashik, Satpur, India, where RFID tags monitor components’ progress through the factory. The tags provide precise details about the process steps that each piece undergoes, and about when diesel injectors will be ready.