T&M Industry in India: Can a new initiative come from indigeneous Tablet?

One of the ideas which I have shared in my earlier blogs is to develop "just sufficient" hardware products out of the indigeneous T&M industry.We have in India many Electronics hardware companies (even a few listed companies) which are product driven catering to mass markets of Education and Railways & Process Control.These companies have done well in yesteryears and made mark in sales & production.Now they see effects of business getting globalised and due to Components, supply side economics and duty structure  etc are not so competitive.Availability of smart designers who have analog domain expertise and understanding of embedded system together seems to be a rare skillset. Result is the indigeneous hardware industry is practically non-existent!

I believe this very situation can be turned around if we think more broadly and create a combination of hardware and apps meant for Test & Measurement riding over the popular hardware platforms.Today web 2 and higher technologies and Tablet are penetrating the consumer wide market.Education sector is being highly supported by the Government and there lies the big opportunity to create "Instrument Panel" and develop virtual instrumentation largely indigeneously. Again the popular instruments,portables and used in large numbers can be thought off. Even though off the shelf products like a $129 Spectrum Analyser is available commercially, what Indian industry can do is more software,more apps and keeping an inexpensive tablet as the basic platform.By doing this we will achieve scale and volume (keeping hardware standard across group of instruments) and value intact (developing apps,services and software locally through local manpower) !

We will then be selling products to our customers which we dont have to buy! Isnt it a solid arbitrage which Indian IT industry is famous for ?  

T&M Industry in India: FY13 is not the end,it is merely a bend!

FY13 has really started with big challenges at hand. The macro-economic factors are not very encouraging,and fiscal and current account defecit are showing worse and worser trends with Currency showing continuous slide.What is causing big worry is that most of the T&M vendors who generally sell at least 50% stuff in foreign currency expect customers budget getting skewed unfavorably.As it is the Capex is being pushed back by the Finance mandarins at both manufacturing and Services industry.The justification of higher Capex (non-convertible to Opex) is just not tenable as the Expenses on interests cost as well as Higher Cost Dollar and Euro.What does all this mean to T&M sellers,in terms of Market Segments  and type of deals to be focussed?

T&M companies can convert this time of anxiety to opportunity by merely adjusting their course slightly.The major segments of traditional T&M are the Defence /Aerospace and Communications.Within these the emphasis should be selling at the back end-focussing on Global and Indian major Contractors as a part of Deployment contract,or the Offsetting Contract.The advantage will be that locking of T&M supplier will happen at the main contract itself and FE impact will be evened out.It is win-win situation to both the Customer and the T&M Supplier.Likewise the NEM supplier can be front-ending a package which may include T&M services( Acceptance,installation,commissioning,conformance/performance testing etc0 as a part of total solution) to neutralise the exchange impact!

Further, the fragmented sectors over the Geography needs to be focussed for locating newer clients in education, Homeland Security and State Industrial Parks etc.India continuously attracts Design Centre and Contract Engineering work from abroad.The last count suggests that as many as 800 plus companies have set up some sort of Design Contracting in Bangalore City itself .This will provide fodder to find next Intel or a John Welch Tech Center for selling T&M Capital Equipment.

All in all, it is tougher bit now but with a little perseverance and a bit more of diversification on Client side we can iron out the lean time now.I expect this to last for couple of Quarters before we see growth again logging Double Digit track.All the best
folks.