BENGALURU: Hitachi group company GlobalLogic has set its sights on becoming a $5 billion enterprise by 2028 that underscores the demand for digital engineering services. Its CEO Nitesh Banga said the company is close to a $2 billion revenue run rate, ahead of Hitachi’s forecast of $1.7 billion for the 2023-24 financial year, which is a 22% jump compared to the corresponding period last year.
“We stick to our lane and excel in our lane. We’ve moved from outsourced product development to design-led digital engineering and we’re now advancing toward intelligent engineering. Every enterprise will continue to need this kind of expertise,” he said. “I often say that software has evolved from being a third-class citizen in an enterprise 20 years ago to a second-class citizen in the last decade, and in the next decade, software will become the enterprise itself. In that sense, we have headroom to grow because we are very small, we are highly specialized, and the demand for our services will persist,” he said. However, Hitachi’s integrated report 2022 has estimated GlobalLogic’s revenue to touch $2.8 billion for the 2023-24 financial year.
Banga’s excitement in digital engineering is palpable. Combined with Hitachi’s advanced digital solutions Lumada, and GlobalLogic’s capabilities, it provides a range of services spanning solutions, design, system integration, connected products, and managed services. The Japanese conglomerate completed the $9.6-billion acquisition of GlobalLogic in 2021, one of the biggest acquisitions in the digital engineering services space.
GlobalLogic has closed its first $100 million account last year and it’s signing up another one soon. “The key focus for us is the supersizing of our top accounts.” GlobaLogic counts BMW, Volvo, and Continental as some of its key customers. Hitachi has a “sell together” approach with GlobalLogic where they co-create and collaborate to stitch solutions for clients unlocking cross-selling and upselling opportunities. GlobalLogic has over 30,000 employees and over 500 customers.
Piyush Jha, MD and head of India and APAC in GlobalLogic said the company is betting big on working alongside global capability centres (GCCs). “It’s a partnership of equals. We have grown our GCC business by 60% in the last one year. The game is transitioning from cost arbitrage to a value arbitrage model. Products are being designed, developed, and stored in the cloud end-to-end from here, and that is where we come into play. Removing the cost per dollar per developer from the equation, whether it is GCCs operating for the parents in the US, or we are doing the work for the GCCs, the cost per dollar per developer becomes irrelevant,” Jha said.
Banga said GlobalLogic’s value capture lies in GCCs having deep domain expertise in their own enterprise. “The GCC’s role is to be the holder of that core and the holder of that domain. We bring in capabilities where they have gaps, scale where they can’t scale, and flexibility where they might struggle because we are not just providing them with employees. We can work closely with them on people transformation, talent development, and process enhancement from project to product, as well as mindset evolution.”
Commenting on how the firm is navigating opportunities and solutions genAI has presented, Banga said one of the first things he did was to improve productivity on the home turf. He then focused on efficiency, specifically in back-office functions such as legal, HR, and finance. Doing a deep dive on enhancing productivity, the company analysed 60 cohorts experimenting with different scenarios. “These experiments highlighted unique observations. For instance, senior developers experienced a drop in productivity due to the time spent searching for the right prompt, while junior developers saw modest gains. The most significant spike was observed in the mid-tier of programmers. Further analysis revealed the importance of the nature of work in different stages, such as system integration, product engineering, testing, and requirements writing. Almost 80% of our developers have undergone prompt engineering training that has enhanced their ability to consume generated code effectively.”
“We stick to our lane and excel in our lane. We’ve moved from outsourced product development to design-led digital engineering and we’re now advancing toward intelligent engineering. Every enterprise will continue to need this kind of expertise,” he said. “I often say that software has evolved from being a third-class citizen in an enterprise 20 years ago to a second-class citizen in the last decade, and in the next decade, software will become the enterprise itself. In that sense, we have headroom to grow because we are very small, we are highly specialized, and the demand for our services will persist,” he said. However, Hitachi’s integrated report 2022 has estimated GlobalLogic’s revenue to touch $2.8 billion for the 2023-24 financial year.
Banga’s excitement in digital engineering is palpable. Combined with Hitachi’s advanced digital solutions Lumada, and GlobalLogic’s capabilities, it provides a range of services spanning solutions, design, system integration, connected products, and managed services. The Japanese conglomerate completed the $9.6-billion acquisition of GlobalLogic in 2021, one of the biggest acquisitions in the digital engineering services space.
GlobalLogic has closed its first $100 million account last year and it’s signing up another one soon. “The key focus for us is the supersizing of our top accounts.” GlobaLogic counts BMW, Volvo, and Continental as some of its key customers. Hitachi has a “sell together” approach with GlobalLogic where they co-create and collaborate to stitch solutions for clients unlocking cross-selling and upselling opportunities. GlobalLogic has over 30,000 employees and over 500 customers.
Piyush Jha, MD and head of India and APAC in GlobalLogic said the company is betting big on working alongside global capability centres (GCCs). “It’s a partnership of equals. We have grown our GCC business by 60% in the last one year. The game is transitioning from cost arbitrage to a value arbitrage model. Products are being designed, developed, and stored in the cloud end-to-end from here, and that is where we come into play. Removing the cost per dollar per developer from the equation, whether it is GCCs operating for the parents in the US, or we are doing the work for the GCCs, the cost per dollar per developer becomes irrelevant,” Jha said.
Banga said GlobalLogic’s value capture lies in GCCs having deep domain expertise in their own enterprise. “The GCC’s role is to be the holder of that core and the holder of that domain. We bring in capabilities where they have gaps, scale where they can’t scale, and flexibility where they might struggle because we are not just providing them with employees. We can work closely with them on people transformation, talent development, and process enhancement from project to product, as well as mindset evolution.”
Commenting on how the firm is navigating opportunities and solutions genAI has presented, Banga said one of the first things he did was to improve productivity on the home turf. He then focused on efficiency, specifically in back-office functions such as legal, HR, and finance. Doing a deep dive on enhancing productivity, the company analysed 60 cohorts experimenting with different scenarios. “These experiments highlighted unique observations. For instance, senior developers experienced a drop in productivity due to the time spent searching for the right prompt, while junior developers saw modest gains. The most significant spike was observed in the mid-tier of programmers. Further analysis revealed the importance of the nature of work in different stages, such as system integration, product engineering, testing, and requirements writing. Almost 80% of our developers have undergone prompt engineering training that has enhanced their ability to consume generated code effectively.”
