Ind Project Engineering (Shanghai) Co has started brightly with its ‘quality services’ offerings in China and is now primed to go far
It’s probably the least-known constituent in the business spread of Tata Projects (TPL) but there is no discounting the value that quality services brings to one of India’s fastest-growing infrastructure enterprises. The low profile suits TPL’s fledgling subsidiary in China, Ind Project Engineering (Shanghai) Co, or IPEC, just fine, as it sets about finding a foothold in the country’s quality services segment.
TPL has had a representative office in China since 2007 for the quality services work it undertook. This approach had its limitations, restricting the scope and quantum of work the company could take on in a market, and a business, where being close to customers is vital. The quest for greater volumes and profitability was the spur for TPL to establish the Shanghai-based IPEC in June 2016.
“We had been thinking of having a subsidiary here for the past several years,” says Paresh Shah, the affable general manager of IPEC. “We researched China and found that, despite the difficulties involved in cracking this market, the opportunity for us was real and immediate. Prior to IPEC, we had to partner local entities to get business and, consequently, we were constrained. Now we have the chance to connect better with customers.”
Quality services is one of the strategic business units — the others include industrial infrastructure; construction and environment; urban infrastructure; and transportation — for TPL, a far-flung organisation with operations across the world, a workforce of 3,600 people, and revenues in FY 2016 of close to $1 billion. And it has a well-earned reputation for excellence in engineering, execution and technology.
Inside the quality services basket are a variety of functions. With more than 1,000 employees in 40-plus countries, this business unit delivers inspection, certification, repair and maintenance, and training services for the global industrial and infrastructure sectors in industries such as oil and gas, transportation, metals and minerals, chemicals and fertilisers, and energy. It is now expanded to take in asset integrity management, project quality management and drone inspection services.
TPL’s quality services arm had a turnover of nearly $26 million in 2016-17. The numbers posted by IPEC in its first year of operation are modest by comparison, but it has done projects for companies of the calibre of Bechtel, Petrofac and JGC Corporation. “China is a huge global player in the export of raw materials, equipment, etc,” says Mr Shah. “That gives us openings to do inspection, expedition and vendor-assessment work for international companies looking to import from China. It’s natural for those providing quality services to cement a presence here.”
IPEC has a large pool of talent and other resources from India to tap into, and that it does, but the subsidiary has of late stepped up efforts to recruit Chinese nationals. The reason is simple: while English is a help when dealing with global customers, knowledge of Chinese is a clear benefit, particularly in securing business from homegrown enterprises.
With staff strength at 25, the majority of them from India, IPEC has a fair bit of ground to cover in getting more Chinese nationals on board. “We had our share of problems with the language barrier in the early days but we have overcome them to a large extent,” says Mr Shah. “I’m happy with the people we have. The Indians in our team have made the necessary adjustments to understand China and its culture.”
The bigger challenge for IPEC in China relates to core of its work. “Quality issues are a constant bugbear for us,” explains Mr Shah, who has been with TPL from 2006. “If you’re not diligent about how you execute quality checks, you will take a hit. The international companies sourcing products from China are always watchful about what they are getting from vendors and that increases the pressure on us.”
The competition IPEC faces in China is formidable, and it is principally in the form of multinational organisations. “These multinationals have plenty of local hires and that places them at an advantage vis-à-vis IPEC,” says Mr Shah. “Also, being an India-based organisation is a weakness with respect to China; European and American customers prefer the multinationals. That aside, our future fortunes are dependent on China remaining a massive and growing market.”
IPEC expects to double its revenues in the current financial year and the prospects for achieving that look promising. “We were at $781,000 last year and we should get to $1.5 million this year,” says Mr Shah. “We are targeting year-on-year growth of 50-70% from there on. To that end, we are looking for Chinese expertise to enhance our sales and marketing muscle. In my view, in five years we will have about 100 employees and a turnover five times of what it is today.”