Thanks very much for the interest in our company and thank you very much for the recognition. We are excited about how 2023 has gone and the momentum that we continue to build upon. As we move into 2024, a little bit of caution is starting to permeate the sectors that we are operating in, specifically automotive.
But because of the existential challenge that most of our customers are grappling with as the industry transitions from a predominantly internal combustion engine focus to the move to alternative propulsion systems and electrification and the move to connected services. We continue to expect investment to be strong and we think that that will signal significant tailwinds and demand that we expect to intersect with.
Directionally speaking, would 2024 be better, worse or more of the same?
Warren Harris: Right now, based upon what we have seen towards the end of the calendar year I think there is a little bit more caution as we enter into 2024. But we will have full visibility in the sort of February-March time frame. So as of now, there will be more of the same although the sentiment is starting to decline a little bit and we will be able to quantify that in the early part of fiscal Q4.You had earlier indicated that the concerns around VinFast, your Vietnamese client, might impact growth for a quarter. What is the update on that client?
The situation in Vietnam is very consistent with what we see in terms of the life cycle of many new energy vehicle companies. They invest in products and then they pivot towards building recognition for the brand and building and selling products. We expect that to play out at VinFast. But I would say that they are investing in additional manufacturing capacity here in the United States. And we certainly expect that to be the catalyst for future investment in new products as we enter the new calendar year.
We see a downturn in the next couple of quarters, but we expect that to improve as we move through calendar year 2024. Outside of that, the traditional OEMs continue to be relatively consistent and predictable. We have been very deliberate in terms of the customers that we target and work with. And so we do not see any structural change or shift to the momentum that we have established. We are very bullish on this space.
I am sure you appreciate me saying this, but analysts have suggested recently that KPIT Tech has been bagging more market share due to the higher order win rate. Would you concur? Is that a concern?
The one thing that I would say is that I have got a great deal of respect for KPIT and certainly the leadership team. And they have done great things to really legitimise the Indian ER&D space and their growth and the type of business that they have won in the recent past, certainly something that we have studied and followed. But their value proposition is fundamentally different from ours.
One of the things that distinguishes Tata Technologies is our ability to be able to develop a complete product. You referenced VinFast before we have developed two electric vehicles for VinFast, an entire electrical architecture for the four vehicles that they are launching at the moment. We have done all of their connected services, all of their over-the-air services. It is the end-to-end proposition that we represent while companies like KPIT and Elxsi are far more focused on a discrete component of the product development, value chains and specifically software and embedded electronics. So we benchmark KPIT and Elxsi and others, but our value proposition brings us to the competition really with the European and the North American ESPs.
One of the reasons for going IPO was to improve employee retention. What is your hiring outlook then for 2024 and the likely onshore-offshore split?
We have made a big investment in our campus recruiting capabilities. We have stood up an internal university, TechVarsity, that leverages the e-learning platform that we are responsible for. We have an e-learning platform, myigetit.com. 50,000 engineers subscribe to that platform around the world. And not only do we sell it in a B2C context, we also sell it to companies like Tesla and SpaceX and Boeing and Stellantis.
So we are very proud of that platform and it provides us with a major source of advantage as it pertains to the development of talent inside of our organization. You referenced the onshore-offshore ratios. We continue to move up our contribution of services from offshore. You know, we are not an India out company. We are a very balanced global company. So the onshore-offshore balance is very important to us. But we do believe that the 50-50 ratio we support today will likely increase in the next three years to somewhere close to about 65-35. And we expect that to make a corresponding contribution to the margins that the company currently support.
In 2023, the biggest word was generative AI. How do you see this scaling up in 2024? What is the other trend for 2024, according to you?
Several of our customers have benefited from the platforms and the applications that we have built around AI. One particular example of that in the smart manufacturing space is the work that we have done to analyze the composition of steel before parts are cast in the foundry. And through the work that we have done in that area, we have really improved or brought down the rejection rates in the cast part area.
We have been leveraging AI technology for some time. As far as the move to generative AI is concerned, we are anticipating that there is going to be more opportunity for us to be able to develop applications and capability in the generative design and generative product development space. And we are investing not only ourselves, but with our partners at Dassault Systemes and Siemens and PTC to build the POCs that hopefully will give our customer base the confidence that this is not just a technology that is the same as this sort of incremental improvement that we have seen in our industry in the last 10, 20, 30 years. This is a fundamental shift.
