Once a test and measurement giant in India, NI has renewed its focus towards India, moving on from a market divided by geography to a market divided across main industry verticals – aerospace, defence, and government (ADG), semiconductors, and transportation, life sciences, energy, and wireless research. In a candid discussion with EFY’s Yashasvini Razdan, NI’s Baskar Ceri and Shitendra Bhattacharya reveal the company’s business strategy, which helped them stay afloat, and how they plan to grow NI’s second-largest centre in the world, in the Indian subcontinent.
EFY: Can you explain the significance of NI India’s organisational setup in the global markets?
Baskar: We are celebrating the 25th year of operations in India since our inception in 1998. Previously, NI India reported to a director and a vice president based in Europe as part of the broader EMEA (Europe, Middle East, and Africa) and India group. In 2000, a significant change occurred as India became part of the APAC (Asia-Pacific) geography region. In 2020, just before the COVID-19 pandemic, we adopted a new framework where our sales operations reported to the APAC vice president stationed in Singapore, who originally hails from our Indian operations, adding the valuable experience of over two decades in the Indian market, which we could leverage. In today’s context, India’s significance remains undiminished within the APAC framework. Despite prevailing market conditions, India has emerged as one of the fastest-growing markets and is projected to rival even China within the APAC region, with substantial investments and attention, elevating its status.
EFY: What attracts NI to India now?
Baskar: Considering the macro enrolment rate, we’ve organised ourselves into four distinct business units: aerospace and defence, automotive with a predominant focus on transportation and automotive technologies, semiconductors, and a diverse portfolio of smaller businesses, including healthcare and power-related endeavours. The aerospace and defence sector is displaying promising growth trends. Meanwhile, within the automotive segment, strategic investments are directed toward pivotal technologies such as battery testing and advancements in autonomous vehicles. India has committed to transition 100% of its automotive industry to electric vehicles (EVs) by 2040. India is the global hub for design validation within the semiconductor industry. Over the past decade, India’s role has evolved from merely providing services to actively driving innovation within these semiconductor companies. India is intricately involved in aligning its initiatives with other key markets where investments are being made. This strategic synchronisation ensures that India remains at the forefront of AI innovation, further amplifying its significance within the global business landscape.
The India strategy
EFY: How has NI changed its sales and marketing strategy in the past five years?
Shitendra: Predominantly, the most significant change we’ve made in the last five years is moving to an omnichannel strategy approach. We offer various channels through which customers can engage. It’s not multi-channel; it’s omnichannel, which means that customers can choose the channel that best suits their preferences: distributors, e-commerce platforms, or our partnerships with organisations such as Element 14. This omnichannel strategy enhances customer-centricity and flexibility. We’ve also initiated a significant change in our sales model. Before 2019, our sales model was geography-based. This country-specific approach to customer interaction resulted in different customer experiences based on location. In 2019, we transitioned from a country-based strategy to a business unit (BU) focused approach. We organised our company into different BUs, including aerospace, defence, semiconductor, and transportation. Each BU is responsible for specific portfolios and customer relationships. This structural shift allowed us to view customers more globally, rather than limiting our perspective to individual countries. Our omni-channel approach complements this customer-oriented model by effectively catering to the unique needs of each customer segment.
EFY: Has the remote-touch-sales model been completely replaced with your omni-channel strategy?
Shitendra: Our omni-channel approach allows customers to decide how to interact with us. Instead of dictating a single channel, we offer a range of choices, allowing customers to select the one that aligns with their comfort level and preferences, preserving their autonomy. The existing sales models, such as remote and field sales, remain intact and restructured to integrate with our omni-channel framework. We never shifted entirely towards being completely remote. Even before 2019, we maintained a blended approach that combined various channels. Post that, we provided clarity on the number of ways customers could engage with us. Our web platform offers a streamlined option to place orders directly for customers who are well-versed and confident in their purchasing decisions. On the other hand, we understand the value of personal interactions, so we have a robust field sales engineering team that engages with customers face-to-face, allowing us to establish a deeper connection with customers and address their requirements directly. We also utilise inside sales channels to cater to specific customer needs and preferences. Our distribution channels and partnerships ensure that we provide customers with a comprehensive suite of options. We have a dedicated team of field engineers who function as application engineers. These experts are deeply engaged with addressing customer needs and ensuring that our solutions align seamlessly with their requirements. Our enterprise and focus accounts are managed by expert account managers. We have an India-specific distribution channel, which is the VVDN. We’ve forged alliances with global purchasing agents such as Element 14. For customers, including SMBs (small to medium businesses), who have a clear idea of their requirements and are ready to make purchases, these platforms provide a convenient means.
EFY: Can you elaborate on the key focus accounts you have targeted for India?
Shitendra: When we dissect our engagement by industry, it becomes evident that we have a strategic foothold in each sector. The Indian market landscape is ripe for opportunities across various industries. We have partnered with the Ministry of Defence and the Department of Space in the aerospace and defence sectors. Our engagement extends to encompass private aerospace and defence firms, as well as space tech startups. Within the semiconductor sector, we have established connections with Qualcomm, Intel, Infineon, Analog Devices, and Broadcom. These companies have invested significantly in the Indian landscape, initially focusing on design and expanding to verification, validation, and production. We aim to be a vital partner across this spectrum, supporting these companies as they transition through various phases. Shifting our focus to the transportation industry, we recognise that while there might be a smaller number of original equipment manufacturers (OEMs) based in India, a substantial presence of tier-one companies actively supports these OEMs with their development. So all these companies become relevant for us because we support them, from design to production. So we can become their appropriate test partner whichever phase the company is in, or whichever phase they’re transitioning to.
EFY: How does NI contribute to the ‘Make in India’ initiative?
Shitendra: Different classifications are based on the percentage of content manufactured in India under the ‘Make in India’ initiative. If more than 50% of your content is made in India, you’re classified as a Class One vendor. If more than 20% of your content is made in India, you fall under Class Two. Given our organisational structure and the nature of our system development, we fall into the category of greater than 20% content being made in India, which places us in Class Two. As discussed earlier, our partners deliver a significant portion of our systems to customers. These partners perform various development activities, including hardware, software, and system development, all done locally. When an Indian entity teams up with our partner to deliver a solution, the combined contribution surpasses the 50% threshold, qualifying us as a ‘Make in India’ vendor according to the Government of India’s criteria.
Baskar: In our ADG business segment focused on aerospace and defence in India, approximately 90% of the solutions we deliver to our customers are channelled through partners who enable localisation of content, allowing us to qualify as a Class One supplier, meeting the criterion of having more than 50% of the solution’s content produced within India. Around 10% of our business is conducted directly with customers. This typically occurs when customers seek specific components or licenses, such as those required for licensing labs. In such cases, customers may already possess the necessary hardware, and their purchase directly from us involves servicing or replacements. When these transactions occur directly within India, we fall into the Class Two category due to our contribution exceeding 20%. This is facilitated by our calibration centre and CCS (customer centric solutions) presence, which elevates our contribution to the local content.
EFY: How does the India calibration facility aid in localising services?
NI: Earlier, customers had to send their hardware to our calibration centres outside India, involving complex export and import procedures. By offering local calibration capabilities, we’ve substantially reduced turnaround times for our customers, directly responding to their needs and demands. The major change we’ve implemented is the investment in the calibration centre, which enhances the customer experience significantly. Particularly for our aerospace and defence customers, navigating the complexities of export and import regulations can be challenging due to government policies. We’ve mitigated these issues by streamlining the process, substantially reducing turnaround time.
Previously, the calibration process would take anywhere from eight to twelve weeks for a product to be sent for calibration and returned, given the existing procedures. We’ve condensed this timeline to just four weeks through our calibration centre. With our local team now in place, we can schedule hardware calibration directly with our enterprise and strategic customers. For instance, our clients have numerous hardware units in their test facilities. Through our improved process, we can coordinate a one-week calibration session for all their units, which significantly streamlines the process.
In addition to our internal efforts, we’ve established local calibration partnerships such as the one with Micro-Precision Calibration, headquartered in Chennai, to leverage their local infrastructure for our customers. They have multiple centres across various cities. While manufacturing isn’t on our agenda, we’re actively exploring enhanced repair and replacement service options to provide a more comprehensive customer experience.
EFY: How has the localisation of services impacted your business financially?
NI: From a financial standpoint, the dynamics remain consistent. However, this initiative allows us to align with our customers’ preferences and compliance requirements. Our financial model hasn’t undergone any changes, as this practice was in place even before the introduction of this clause. We have consistently exceeded the 20% requirement, and our approach to R&D in India has only grown stronger over time. Our focus on local development has been an ongoing effort since the inception of our India operations. This declaration is essentially a public acknowledgment of our ongoing practices. It formalises the numbers and reinforces our Make-in-India initiative commitment. Our operating model remains unaffected, and we have not had to make any financial model changes in response.
In the aerospace defence sector, our approach has historically involved partnerships. About 80% to 90% of our solutions in this domain have been delivered through partners. These partners contribute to approximately 40% to 60% of additional content on top of our hardware and software offerings. This local integration, site-level testing, and customisation are integral to meeting customer needs. For semiconductor and transportation customers, the specific requirements related to Make in India may vary, and the approach remains adaptable based on customer needs.
Identifying the customers and partners
EFY: What is the profile of your customers? Are they related to R&D, testing, or purchase?
NI: Our customer base is tied to the phases companies traverse within their product development lifecycle. During the research and development (R&D) phase, our clientele extends to R&D and validation engineers seeking solutions to optimise their processes. Validation engineers find our offerings invaluable for refining their R&D efforts. The verification phase introduces us to verification engineers and test technology teams. These professionals rely on our solutions to facilitate robust testing protocols and ensure product quality. Production houses and engineering managers emerge as potential customers as products move into production. The importance of thoroughly testing a product before it enters the market is a shared understanding, making those involved in product design and its subsequent testing our primary customer base. Procurement teams, although essential, are not typically dedicated customers as their roles often span the entire organisational spectrum. When procurement teams in India handle activities that occur elsewhere, they might not be directly tied to our offerings.
EFY: How has your partner ecosystem evolved, and what are the significant partnerships you’ve established over this period?
NI: Our partner ecosystem has become a significant differentiator and a source of competitive advantage for us. We have more than 25 partners in India, each playing a specialised role within our ecosystem. The evolution of our partners mirrors our evolution as a company. Initially, we collaborated with general system integrators who could integrate our products into solutions. However, as NI’s focus and offerings expanded, our partners adapted and transformed as well. Today, our partners have become experts in specific domains and industries, aligning with our targeted business units. They’ve transitioned from general system integrators to specialised experts catering to sectors like aerospace and defence or electronic design and testing. This allows them to provide more value to customers by understanding their specific needs and delivering tailored solutions. As we continue onboarding new partners, we prioritise those with domain expertise and industry access. This ensures that we can tap into their specialised knowledge and offer complete solutions to our customers. Our partner ecosystem now consists of entities that can fill gaps in our offerings and provide customers with comprehensive solutions. When we engage with customers, the partnership between NI and our specialised partners is a significant value proposition that combines NI’s technological expertise with our partners’ domain knowledge.
EFY: Could you give an example of any particular partner who was earlier a system integrator and has now evolved into a domain expert?
NI: Technology partnerships:
Technology partnerships are essential to provide comprehensive solutions to our customers. ANSYS and MathWorks are two key partners in this realm. ANSYS helps us ensure that the data we collect during testing feeds back into the design stages, facilitating a seamless connection between testing and design. We run MathWorks’ Simulink models on our hardware and software directly, streamlining the validation process. These partnerships are crucial for our strategy of making testing a strategic differentiator by leveraging data to improve products and business processes.
Our partnerships with companies like Safran Group’s Captronic Systems illustrate the evolution of partners from general system integrators to specialised domain experts. Captronic Systems, once a general partner, has transformed into a dedicated aerospace and defence partner, aligning perfectly with their acquisition by Safran, a significant player in aerospace and defence. In India, we’ve forged partnerships with prestigious organisations like the Indian Institute of Science (IISc) and startups like Paninian, focusing on digital twin solutions for aircraft engine testing. These partnerships allow us to tap into a diverse range of expertise and resources, contributing to our innovation and reach in the aerospace and defence sectors. Additionally, we’ve invested in an Engineering Innovation Centre in India to foster partnerships with startups. This centre provides startups access to hardware and resources, enabling them to build and validate test systems and IPs. This investment not only supports the growth of the startup ecosystem but also contributes to the broader defence industry by fostering innovation and collaboration.
EFY: How do you support startups? Do you provide them with equipment at a subsidised rate or invest in them?
NI: Investment, in this context, can be perceived differently depending on the startup’s perspective. Our primary goal is to eliminate barriers, such as cost and a lack of expertise, that hinder engineers and scientists’ access to technology. To address this, we’ve created a framework that enables engineers and startups to design, prototype, and bring products to market more efficiently by leveraging our test and measurement capabilities.
Our Engineering Innovation Centre offers reduced-cost access to technology, making it more accessible for startups. This access includes physical tools and the expertise of our application engineers, who collaborate with startups to develop test routines, procedures, and architectural guidance, all contributing to faster prototyping and validation. In addition to providing access to hardware and testing infrastructure, we offer mentorship throughout the product development lifecycle. We also facilitate the utilisation of various government funding mechanisms, such as the Ministry of Defence’s IDEX program, to support startups in addressing specific challenges through our Innovation Centre as a testing ground.
EFY: Until what stage do you support a startup?
NI: Startups can engage with us at any stage of their journey, and this flexibility is one of the remarkable aspects of our technology. Whether a startup is in the nascent stages of ideation or further along with a product ready for refinement, our platform adapts to their needs.
In the case of Paninian, they initiated a partnership with a conceptual idea in mind. They had developed basic IP blocks as a foundation for their solution. Our collaboration with them commenced at this early stage, as we embarked on the journey of transforming their concept into a tangible product. Together, we first evaluated the feasibility of the concept through extensive simulations using our hardware. Subsequently, we refined and defined the idea to a greater extent and presented the evolving concept to potential customers, giving them a glimpse of the final product. This served a dual purpose – collecting customer feedback and allowing those who saw promise in the project to express their commitment to it. This collaborative feedback loop has allowed us to fine-tune our efforts based on the preferences and expectations of our customers.
Another case, such as Constelli, highlights a different scenario. They approached us at a more advanced stage, already equipped with a well-defined solution, seeking validation and access to global markets for their IPs. In this instance, our platform’s strength lay in its capability to validate and refine existing concepts, taking them closer to the final product.
EFY: Would you categorise yourself as an incubator or an accelerator?
NI: I would say accelerator more than an incubator. We identify startups whose solutions could complement our existing offerings, potentially leading to market collaboration. Additionally, we may explore collaboration or acquisition opportunities if startups are developing valuable IPs. An example of this is our partnership with Constelli, a company developing IPs that can be utilised and sold through the NI channel.
EFY: How does acceleration benefit you with respect to incubation?
NI: We are witnessing a growing emphasis by governmental bodies on local Indian companies, irrespective of their stage of development, to swiftly produce innovative products. To establish a successful relationship with these governmental bodies, we must align with startups working through various stages of development. Our focus on acceleration complements and expedites the ongoing efforts of these startups. We connect with these startups through our partner network, industry conferences, and academic institutions like IIT Madras. By doing so, we can effectively reach the market faster, establishing a competitive edge and gaining a larger market share.
Incubation remains a valuable avenue when generating new products. Incubation could be a viable strategy for fostering IPs or products that offer substantial value. This might lead to collaborative ventures, potential acquisitions, mergers, or partnerships. However, our immediate focus revolves around seizing existing market opportunities and solidifying our presence in the market.
We haven’t positioned ourselves as a dedicated incubator, accelerator, or investor. Instead, our primary objective is facilitating engineers, scientists, and enterprises to expedite product development and innovation processes.
EFY: With your enthusiasm towards supporting startups, do you plan to localise the access to your test and measurement equipment for startups not based in major metros?
Shitendra: We have identified two avenues to address this challenge. Initially, we plan to kick-start this initiative in Bangalore due to the city’s high concentration of startups. We are also in the process of setting up infrastructure that will enable startups not only in India but across the globe to remotely access our systems through the web. While we haven’t yet launched this service, it’s a strategic direction we’re pursuing.
We are exploring potential partnerships with other companies or universities with the necessary laboratory infrastructure. These partnerships could facilitate localised access for startup companies. However, executing these plans requires careful consideration and investment in manpower and collaboration. We are actively devising strategies to scale this initiative effectively.
We recognise that not all startups can physically come to Bangalore and spend extended periods there. Our solutions enable remote access, making it possible for someone in a different part of the world to interact with and program systems deployed in distant locations.
Baskar: Most of our test systems are now smart and connected. We’ve moved beyond the era where test systems were merely instruments. Many of our enterprise customers, particularly in the semiconductor industry, are adopting systems that allow them to conduct various tests, including burn-in tests, throughout their product development. Initially, a physical interface is required to set up the system, but once in place, they can modify test sequences, codes, and parameters. We’re keen on extending this adaptability and remote control capability to SMEs.
As for remote accessibility, we’re exploring different avenues. We’re developing infrastructure that enables remote access to our systems via the web. This way, SMEs from different locations can remotely control and manage their tests and experiments. We’re also considering scenarios where SMEs may ship their hardware to us, and we assist in connecting the required physical interfaces for their testing.
While our Bangalore-based facility has seen startups taking advantage of our resources, we’re also seeing successes from other regions, such as Hyderabad and Chennai, where we’ve even loaned our hardware for customer-site testing.
Expanding this initiative to other regions requires careful planning and partnerships. We’re engaged in discussions with entities like the Telangana government and T-Hub to set up similar facilities in different areas, potentially allowing us to scale further and lead to duplication of our hardware resources. However, if hardware duplication isn’t feasible, we need to balance our capacity based on the number of startups we’re opening up to while also ensuring that our regular business operations continue smoothly.
EFY: How do you juggle serving your primary customers and supporting startups?
NI: Our primary goal is to serve and continue growing alongside our existing customer base. Our focus is on creating long-term value with these customers. We’ve recognised that our long-term customers are often working on cutting-edge technologies. Similarly, we aim to accelerate the development of these advanced technologies and bring them to the market more quickly. This is where startup companies come into play. They can contribute to expediting the development process for our long-term customers. Therefore, we must partner with startups that align with this objective.
When we engage with startup companies, we evaluate different options and explore various possibilities. The decision is not based on allocating a fixed percentage of time between our existing customers and startups. It’s about what makes the most sense for our business at a given time. Startups can contribute to our long-term goals, and additional benefits come from working with them. We’re also open to exploring these fringe benefits because they can create additional impact and opportunities aligning with our objectives.