ZF deepens India footprint

When Dirk Adamczyk says he is ready to swap places from Germany to India, he is obviously kidding. Yet, there is no denying the fact that ZF’s Senior Vice President, Engineering Services and Solutions, Innovation & Technology, is completely bowled over by the recently inaugurated technology centre in Hyderabad.  

“The way of designing this tech centre changed from what was originally planned. This is a place for collaboration and a nice environment to exchange ideas,” says Adamczyk. The initial design was done before Covid-19 made its presence felt here in 2020 and the plans looked quite different then. 

“Thanks to the pandemic, it is now a nicer place and I need to move to India because the Hyderabad centre is now the best location for ZF,” he laughs. Adamczyk is dead serious though when he says this facility will now be the “role model for ZF” and the design ideas will be used for the German component maker’s other tech centres worldwide in the event there is a need for renovation or building new ones.

While Covid-19 ushered in the work from home (WFH) regimen for ZF employees in India, he believes the Hyderabad unit is an attractive reason for people to come to work more often. “WFH has its benefits for sure but it is even better to have an environment where people like to collaborate and exchange ideas,” says Adamczyk.

Domain knowledge
It is a view that is seconded by Krishnaswamy Jambunathan, VP and Head – Technology Centre India, ZF Group in India. “This facility will trigger positivity and help people feel good. While WFH has not impacted productivity, human connect is as critical,” he says. 

This is especially important when it comes to fresh hires who cannot work in isolation but need the touch-and-feel approach. As Jambunathan puts it, domain knowledge can come only from coming to the office and “this is the perfect environment” to make that happen.

The design changes after the pandemic have paved the way for more open spaces for people to talk. There are more common areas which means a lounge can double up both as a place or ideas as well as meeting casually over coffee. 

“We have reduced the layers of communication thanks to new technologies which are more digital and have changed the process of work allocation. The way you monitor work and measure productivity has changed,” he adds.

Suresh KV, President and Regional Head for ZF in India, who is also part of the video interview chips in to add that the new ZF corporate office in Pune has “exactly the same design” where any table is anybody’s workspace. 

“It is not the infrastructure alone that has changed but also rules and regulations,” he continues. Formerly, five days a week were mandatory as part of attendance protocol but “today when we design offices they are hybrid offices” with only 60 percent of the staff present.

The norm is three days in the office and two days at home though it is now understood that people will deliver on their goals as was evident during the pandemic. “We   have now moved from 100 percent attendance to zero during Covid-19 and now a 60;40 ratio of work and home is deemed healthy,” says Suresh.

Growth areas
From the business point of view, Adamczyk points out that the Hyderabad tech centre is critical to ZF worldwide. “All our businesses are supported in the most strongly growing area of software. This will continue here in Hyderabad and it has been fantastic to get experts working on the latest technology to make things happen.”

The ZF tech centre first kicked off operations in 2017 and was the backend for a lot of engineering work but over the years with more and more projects in its kitty, Hyderabad has taken the global lead for a host of new projects. 

“This is thanks to the talent here and all over India to be able to work on the latest technologies. The centre is supporting projects for all locations and customers worldwide. We have big projects in many areas and teams are put together from across the world…and important parts are with the lead here with the team in Hyderabad,” says a visibly elated Adamczyk.

The biggest growth area for ZF is in software which is needed for all the different technologies it is offering be it e-mobility, autonomous driving, active and passive safety, integrated safety as well as in other areas like design, simulation, electronics and so on.

The tech centre has also joined hands with the International Institute of Information Technology Hyderabad (IIITH) which is “reputed with top class courses” and Jambunathan says the idea is to use its expertise in solving problems in autonomous driving and fundamental research. “We are also trying to work with other leading institutions in Hyderabad and tap the talent in the city for the future,” he adds. 

There are nearly 3,000 engineers at the ZF tech centre and the idea is to drive more innovation and this is where collaboration with academia becomes critical. There is also work happening with startups “in a small way” to do some proof-of-concept ideas. As part of ZF Inspiration Day, Hyderabad was also the venue for the Asia-Pacific region recently and five startups were invited. “We identified some areas of collaboration,” says Jambunathan. 

Right now, there are only four unicorns in Telangana but places such as Khammam and Warangal are seeing a lot of traction for startups. “For a State that is barely eight years old, we have done very well and I am confident that a lot more can be done going forward,” he adds. 

It is at this juncture that Adamczyk points out that ZF does not solely focus on a single region/location for technology and would much rather spread its net wide across the market. “Hyderabad is a success story and we are pleased with what we see but that does not mean we will not look at new areas. If there are good technologies available, we will explore other locations too,” he says. 

Whilst on this topic, Suresh adds that it is important to first make the most of what is available in multiple locations. “We need to have talent and use it wherever it is available. One of the advantages of Covid has been that this working-from-anywhere has become the reality.” 

He makes it clear, though, that offices are important but these could be satellite offices which are rapidly emerging the order of the day. “Pretty soon, you will see these mushrooming in multiple cities like Belagavi (Belgaum), Kalaburagi (Gulbarga) and Vadodara because if there is talent available there and people do not wish to go to Hyderabad, why should we be deprived of that talent?” asks Suresh. 

As an organisation, ZF will “definitely look” pan-India for a talent perspective but “we cannot have a pan-India for buildings”. On the contrary, these will be focused workplaces which means testing centres and labs cannot be spread everywhere but need to be in specific locations. “However, software development can be done in multiple locations and as and when they need these labs, they can come here (to Hyderabad),” he says. 

Satellite centres
As Suresh puts it, if the company needs to increase its talent pool at the Hyderabad tech centre from the present level 2,900 to 3,500, “we cannot have 600 more people” coming from one city alone. “We will have to go pan-India. Multiple locations with multiple talents is the way forward,” he says. 

ZF also has tech centres in Chennai, Bengaluru and Pune though the biggest serving all its businesses is in Hyderabad which therefore has a leading position. “The infrastructure and environment allows us to further grow and we will do so but that does not mean we will do everything here either. It is a success story and we will continue to grow across India,” elaborates Adamczyk.

Suresh sums it up perfectly comparing the model to a main manufacturing facility in one location with assembly centres close to the customer. This would be a “much better and healthier mix” where the focus is on one location rather than “spread ourselves thin by having 20 across the country”. It is the picture he envisages for ZF 15 years down the line.

The topic quite naturally shifts to electric mobility which continues to make news and Adamczyk agrees that the use of the internal combustion engine will “reduce heavily in certain markets much earlier” and it is important for ZF to adapt to OEMs’ needs. “We have to drive this technology too and see this turning point happening quite soon. We have a clear focus on mobility and different technology areas,” he says.

The fast pace of change is “indeed a challenge” but from his point of view, ZF can look into different areas and push for diverse technologies comfortably by virtue of its sheer size. “Our main focus is e-mobility, autonomous driving and investing in software because that is serving all the technologies,” says Adamczyk.

The world is also turning topsy-turvy thanks to the geopolitical tension all around more so with the Ukrainian crisis where Russia is showing no signs of backing off. Suresh believes that volatility is acquiring “more definitions these days” where traditional and commonplace events are no longer resurfacing. The pandemic was followed by the chip crisis, the war in Ukraine, container shortage and what have you.

“We cannot be restricted to product innovation alone and I am of the view that manufacturing and logistics processes also have to innovate on a regular basis. Flexibility is getting more and more prominent in today’s world,” he says. 

According to Suresh, the present scenario is one where there is coexistence of inventory and premium freight, albeit for different reasons. Inventory is available because it is based on forecasts while the premium freight is coming in since semiconductors are for a different model and “hence I have to manufacture and airlift this material now”. 

In such a situation, “more and more flexibility” in terms of responsiveness has become even more critical. The world is “changing dramatically” along with changes in product and process designs while “last, but not the least, logistics are also changing big time”. 

In the case of ZF India, deliveries to the US for wind components saw a three-fold increase in logistics costs. Similarly, for shock absorbers launched in India, logistics costs are once again so high that the landed cost in Europe is becoming unattractive. 

“The equation of what is the best cost country is not merely in terms of manufacturing. When logistics costs go through the roof, the advantage of low labour cost is lost in these countries,” explains Suresh.

Keeping costs in check
According to him, the world will change a lot more and the need of the hour is to find a methodology of ensuring that the logistics costs are kept to a minimum so that India as a best cost country continues to have the edge. If this is not possible, there is really no point saying that the manufacturing footprint here needs to improve. 

“We need to be sure that we stay competitive to support local needs. The challenge for OEMs and suppliers is to keep vehicle costs at competitive levels because the customer cannot afford a price rise of 10-12 percent. To keep the middle-class dream of buying a car intact, we need to keep costs in check and that is not easy,” says Suresh. 

In a nutshell, the challenges are different; costing aspects will be looked at differently; and manufacturers will have to innovate to counter these cost increases. “Responding to the change is key and we need to find solutions. I would say cost optimisation is the highest priority today,” he adds. 

On a happier note, Adamczyk brings the subject back to the Hyderabad tech centre which has the “best people” on board and is taking the lead in software. “It is important to just not execute but lead. We will grow within the upcoming time to 5,000 engineers but besides this, it is even more vital to grow capabilities and that is more important to me,” he says.

Adamczyk also admits that it is not easy to get the right talent globally but ZF’s biggest plus is that it is at the “forefront of technology” which attracts people. Hence, Hyderabad and other centres are critical to the future and “we can make use of talent available globally”. The way forward is to have the ideal mix of working in a location to meet each other and yet offer flexibility on WFH or from any location. 

“This perfect mesh of experience from the pandemic is that it works well. If people meet, it is good and this is important in production, engineering etc. Right now the world is still facing a couple of crises and I hope there is light at the end of the tunnel. With technology accelerating, another crisis will make things tough for everyone,” signs off Adamczyk.