Bosch India, the local unit of the German technology firm, is expanding focus in India beyond automobiles to offer connected solutions for homes, factories, mining and agriculture. As it expands, the Bengaluru-based firm also shifting its business model of being a manufacturer to one that offer solutions and services.
"In India, we're in a relatively good position because about 50 per cent of our people are in the service business already doing engineering and software services in addition to administrative services," says Bosch India President and Managing Director Steffen Berns in an interview with Anita Babu & Raghu Krishnan. Edited excerpts:
Bosch going beyond mobility has been there globally. What's new in India?
If we look at it in a ten-year horizon, most of this is new. If you look at a two-year horizon, nothing is new. It's not that now there's a big bang and everything is changing, but it is a gradual process of saying that we want to have all the decisions across business sectors available in India as well.
We are looking at applications now. So what's new is that we're looking at solutions to provide connected or smart everything, from smart cities to homes, mining, packaging and even agriculture. That's the change we're seeing. The solution business and the connected business also means that we're not looking at products only, but also hardware, sensors (an essential part of the Internet of Things), software and services. The target of Bosch is that all our services will be connected, for which we're offering solutions. This changes the business models.
How do you transform Bosch into a services company, because earlier you were a product company?
The changes in the world are quite evident and hence the awareness part is not the most difficult. And in India, we're in a relatively good position because about 50 per cent of our people are in the service business already. They are doing engineering and software services in addition to administrative services.
The second strong point of our engineering is that it happens to be our largest R&D centre outside Germany. So it is under one roof cross-divisional and we can very easily look at new solutions and be innovative, find solutions to the Indian market which can then be exported.
Have you identified some of the solutions for the local market?
For example, in the security technology in the communications part. We have systems for the local market which have specific local requirements. We have just launched a new range of power tools which are not only for India, but specifically for markets like India.
Is Bosch geared for the timeline that the government has set to meet BS VI norms?
There are many players. First of all, the timeline is clear and from this you can work backwards. Bosch is geared up because one, we have technology available and two, we have the competencies available — partly in India and partly in other locations around the world. Because of the international engineering network, we can act quite flexibly and do the applications. I think everybody has to prioritise and the number of variants on the road must be reduced because you can't do all these applications at once.
I think the most important ones should be doable and there's a close interaction with our customers including the original equipment manufacturers to the suppliers. This is still relatively early in the process. So at the moment, there are lots of discussions and work phases are going on. We'll have to see how this is going to work through.
What would be the challenges (to implement BS VI)?
There are many challenges from new technologies that has to be introduced to new designs or some design modifications. Looking also at the overall validation cycles because there's always new technology and this has to be validated properly. In India, you have to do this under thriving conditions and different climatic conditions and hence, we can't carry over the American or Japanese systems. Lastly, the fuel is critical. The timely availability of BS-VI fuel because it is low sulphur fuel and to make sure there's sufficient lubrication, you've additives and this has to be tested.
So basically, it is a matter of timing and workload rather than in-principle do-ability. The question is are we going to find specific Indian solutions which are affordable to meet the market requirements. Hence, it is more difficult in a short time-frame than it would have been in a longer time-frame.
Do you think the (auto) industry is gearing up for that?
Industry is definitely gearing up. How far it's going to work out is something that we have to see in the future.
We saw India leap frogging from landlines to mobile phones. Where does India's automobile sector leapfrog to?
The opportunity for India is strongly differentiated in the small cars segment and in the affordable mobility. We see many small and lighter vehicles in India than you see in the other countries. It's a specific Indian segment, also with specific challenges in BS-VI because these are going to get expensive. On the automotive side, I don't see India leapfrogging at the moment. On the smart manufacturing side, I think, there's good scope.
The world is moving towards electric and driverless cars. Are you working in India towards this?
We are working on this because we are part of the global network. The question is when is this going to come in India. On the autonomous, probably slightly later than the other countries because the traffic situation is a bit different here. But we do not have to talk about fully automated. But there's valet parking, the first step. There will also be lot of support functionalities, too.
Can you speak about Bosch's start-up engagements?
We have a programme for startups — DNA (discover, nurture and accelerate). We support the selected startups in the programme with space and mentors. It also leads to more involvement from our side. The challenge is to identify the best ideas among the many. The speed at which these start-ups operate are also very helpful for Bosch. In India, we see many start-ups in the areas relevant for us.
We have seen labour issues with Bosch. Is it a concern?
We are currently in a peaceful phase. It is not the union that is protesting. There has been an overall transition from the mechanical to the electronic system, as a result of which we had surplus manpower. We had to discontinue the contracts of 260 employees. This we did a year ago within the legal framework and with the union agreement. Nevertheless, they continue to protest. But we take the position of fair and firm. We did provide them fair compensation on humanitarian grounds but they expect more.