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Warren Harris in JV with BMW, hiring outlook for FY25 and beyond

Warren HarrisCEO and Managing Director, Tata Tech, says: “We have been working on this partnership with BMW for almost 12 months and certainly in the last six months we have put many details in place. The fact that we have announced today shows the preparation exercise that both organizations will undertake. We expect regulatory approval to be obtained within the next three to four months and therefore anticipate a start-up in the second half of this financial year.

Give us more details about the JV with BMW. What is its scope and purpose? What is the revenue potential?
Warren Harris: We were delighted to announce in the morning with BMW that we are committed to forming this JV. The joint venture is subject to regulatory approval in Europe and China. So I’m not able to share too many details other than to say that this represents a strategic commitment by both organizations. He will focus on automotive software and help BMW digitize or continue to digitize its entire business. It is therefore a material commitment. It’s a commitment that we hope to develop on a large scale in and around and something again that will be very important to the fortunes of BMW and Tata Technologies in the future.

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But generally speaking, when is the project expected to ramp up and how long will the joint venture last?
Warren Harris: We’ve been working on this partnership for almost 12 months and certainly over the last six months we’ve put together a lot of details. The fact that we have announced today shows the preparation exercise that both organizations will undertake. We expect regulatory approval to be obtained within the next three to four months and therefore anticipate a start-up in the second half of this financial year. There are already teams on both sides who have spent a lot of time together and we certainly believe that today’s announcement will be the catalyst for much more detailed planning and that we will be able, over the next few month, to respond specifically to the questions you have raised.

I’m sorry to dig deeper, but I wanted to understand again that the analysts are talking about these deals being at least $200 million to $300 million. Will this be the ballpark?
Warren Harris: I’m not going to comment on revenue forecasts or workforce projections. What I will say is that this is going to focus on automotive software and the digitalization of the BMW business. There are plans to achieve greater scale through the JV and, as I said before, this will be very strategic and very important for both organizations.

The last time you talked about acceleration of growth in the aviation segment and now it is automobile mobility moreover, these large transactions are observed. How do you see the contribution of the three major segments evolving over the coming quarters?
Warren Harris: When it comes to automotive and mobility, we continue to see very strong tailwinds in this sector as the industry moves towards alternative propulsion systems and connected services. So, despite the talk from some OEMs about slowing growth in the electric vehicle sector, we are not seeing this from a product engineering perspective. Certainly, we are very optimistic about aerospace. We are very excited, not only in terms of our relationship with Airbus, but also with other important aerospace companies that we partner with.

We are also very excited about the growing influence of the Tata Group in aerospace. Aerospace will or is expected to experience somewhat exponential growth, particularly in the commercial airline sector. The number of productively used aircraft is expected to double over the next 20 years. A lot of this demand will come from India and so there is an infrastructure problem here in India. There is also a need for organizations like Boeing and Airbus to increase their manufacturing capacity to be able to meet demand and we hope to provide services and value across this entire value chain.At the time of your IPO, you reiterated your focus on brand and talent retention. We understand that due to this JV you now need to significantly increase your workforce. So, would there be a change in the hiring outlook for FY25?
Warren Harris: Yes, last financial year we recruited over 4,000 people. We’re planning to do something similar in the next 12 months and you referenced the brand. The brand is extremely important in terms of its employee proposition that supports its position in the market and it is clear that things like the joint venture that we have announced today really strengthen the position of the Tata Technologies brand here in India and across the world. It is , I think, a tremendous testament to the organization that we’re growing.

You also mentioned how this deal was the result of 12 months of sweat and tears from your team. Is the team currently working on any other major contracts? Can you tell us what is in the works?
Warren Harris: Well, this activity is driven by large transactions. So, we are constantly looking to not only meet client requirements in and around significant transactions, but we are also looking to proactively shape significant transactions or significant propositions that we can offer to our clients. It is therefore an integral part of the DNA of our organization and forms the basis on which we plan to evolve in the future.

What impact will this JV have on your aspiration to improve your margins by 200 to 250 basis points? And I ask because sometimes deals this large are margin dilutive in the beginning.
Warren Harris: I am not going to comment on the financial impact of the joint venture for the reasons I cited previously. But what I will say is that last month we announced the appointment of Sukanya Sadasivan as chief operating officer. Sukanya comes to Tata Technologies after three decades at TCS. She was part of the TCS leadership team during the transformative growth that not only defined TCS, but also the IT services industry here in India and we certainly hope to capitalize on her experience and know-how as we go forward. measure of our development. the Tata Technologies organization. We are looking to replicate in many ways in our industry what TCS has done in the IT market.

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