Ravindra Nuguri - ecco-offset.eu...Indian Market Focus ($1.8b) • Hardware & Systems Integration • Networking Solutions • Homeland Security • ICT Distribution • Education

Copyright © 2013 HCL Technologies Limited | www.hcltech.com 1

Ravindra Nuguri Vice President Engineering - Aerospace & Defense, Automotive June 20th 2013


1. HCL overview • Overview • Partnering Culture

2. Experience in Generating Offset Credits

• Civil Offset • Defense Offset • Sample Offset Programmes Delivered from India

3. Do’s and Don’ts for Managing Offset

• Engagement Models for Offset

Proposed Agenda (25’)

HCL Overview


HCL Enterprise

Fastest growing Indian IT & Engg services

provider in India Won the prestigious Asia-Pacific Enterprise

Leadership Awards (APELA) 2013 for Corporate Social Responsibility (CSR).

The only Indian Company on the Honor Roll of the UN-WEP (Women Empowerment) Leadership Awards 2013

Ranked first amongst the major Indian IT & Engineering service providers in Customer & Employee satisfaction

HCL Technologies highlights

$6.3

31 85000 B I L L I O N

C O U N T R I E S P E O P L E

HCL Infosystems

Indian Market Focus ($1.8b)

• Hardware & Systems Integration • Networking Solutions • Homeland Security • ICT Distribution • Education & Learning

HCL Technologies

Global Market Focus ($4.5b)

• Product Engineering and R&D Services • Enterprise & Custom Applications • Enterprise Transformation Services • Infrastructure Management • BPO Services

90000 P E O P L E

Consolidated Revenues Growth

in U

SD M

n


Recognizing the business value of EFCS

Celebrating employees A film that captures the essence of Employees First - viewed 2.25 mn times within 2 months of going viral

AWARDS & RECOGNITIONS: EFCS book rated as a best seller in UK, France and India

www.youtube.com/hcltechtube

ENDORSED by Thought Leaders like Ram Charan, Gary Hamel, Tom Peters and Late C.K Prahlad

Nurturing Employees Through A Leadership Model

100000 + in market, translated in 7 languages

Exclusive report on EFCS recognizes that this philosophy empowers HCL’s frontline employees to make decisions and take actions for the benefit of customers

Analysts Gartner and Forrester publish reports: Business value of HCL

August 22, 2011 Case Study: HCL Technologies Puts Employees First, Customers Second Empowering high-performance teams re-ignites growth and prosperity

Exclusive case study around EFCS being published by Frost & Sullivan as an “Example for Business Model Transformation”.

Business Model Transformation: Empowering Employees to focus on the Customer

The report discusses how HCL remains devoted to building a company its employees can be proud of and an organization with whom clients want to be involved with.

Won two prestigious management book prizes in France – ‘The Olivier Lecerf Award’ and ‘The Foundation Manpower - HEC prize’

Présentateur

Commentaires de présentation

The EFCS book, authored by Vineet Nayar, Vice Chairman, HCL Technologies recently bagged two prestigious management book prizes in France – ‘The Olivier Lecerf Award’ and ‘The Foundation Manpower - HEC prize’. ‘The Olivier Lecerf Award’ named after the former CEO and Chairman of Lafarge, recognizes CEOs who have contributed to innovative management through books they have written themselves. ‘The Foundation Manpower- HEC Prize’ recognizes authors who have contributed to innovative management practices. Foreword by Late C.K Prahlad, world renowned thought leader : “It is not very often we get a firsthand account from a CEO about how he transformed his organization from a slow decline to an engine of vitality and growth… Vineet’s story shows how a company can focus on its value creators—the frontline employees—to achieve remarkable growth and profits… A CEO’s practical narrative of organizational transformation. I recommend it wholeheartedly.” Ram Charan, co-author, Execution: The Discipline of Getting Things Done : “Vineet Nayar’s new book describes his innovative and practical approach to kindling a fire in employees and moving the social energy of an organization forward. With the methods described in this book, Nayar enabled his Generation Y “transformers” to realize their potential faster, increased the capacity of the organization to create value for its customers, and built his company into a world leader.” Gary Hamel, author The Future of Management : “By putting employees first and leveraging the power of social technology, Nayar and his colleagues created an organization that encourages extraordinary contribution from everyone, every day. If you doubt that it’s possible to turn the pyramid upside down, or wonder whether it’s really necessary, I urge you to read this thoughtful and timely book!” Tom Peters, author, In Search of Excellence : "Rumor is that Vineet Nayar has invented a whole new way of configuring and managing an enterprise. I think there's more than a grain of truth to that. I'm on the verge of the verge of declaring that Mr. Nayar could be the next Peter Drucker.”


HCL Today

Balanced Portfolio of Services across Industries, Service Lines and Geographies


HCL’s Global Operations across 31 countries

Mexico City

Chicago

Sunnyvale

Stamford

Columbia Irvine

Germany France

U.K.

Sweden

Switzerland

Belgium Netherlands

Hong Kong

Japan

Melbourne

Sydney Auckland

Wellington

New Jersey

Field Operations Offshore & Near shore Development Centers

Corporate Headquarters

India Los Angeles

Fairfax

Dallas

Canada

Ireland

Singapore

Malaysia

Italy

Utah

Perth

Poland

London

Gurgaon Delhi

Chennai

Bangalore

Noida

Kolkata

Mumbai

Brazil South Africa

Hyderabad Pune

ITAR center


• 100+ employees working at HCL Technologies France • 25 large customers acquired in 4 years, most of them are CAC

40 or SBF 120 listed companies • Finance Services • Manufacturing, Aerospace & Defence • Life Sciences • Retail & CPG

• Ongoing projects or live projects in :

• Infrastructure outsourcing • Engineering services and maintenance • BPO • SAP • Custom developments

• 2 strategic partnerships with :

• GFI Informatique – IT Applications • Eurogiciel – SW Engineering

HCL Technologies in France

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http://www.zodiacaerospace.com/content/group-fr/index.php

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Partnering Culture


Engineering and R&D Services Ae

rosp

ace

& D

efen

se

Auto

mot

ive

Med

ical

Dev

ices

Soft

war

e

Onl

ine

Indu

stria

l

Sem

icon

duct

or

Serv

er &

Sto

rage

Tele

com

& W

irele

ss

Cons

umer

Ele

ctro

nics

Software / Embedded SW

Mechanical

Product sTesting, Prototyping, Certification & LVM

Manufacturing IT (PLM, MES)

• 18,500+ Engineers • 300+ Global Marquee Customers • $1bn Revenues • 40+ ODCs and 80+ Customer specific labs • 1250 Patents filed on behalf of our customers

INDUSTRY vs SERVICE LINES

THE ORGANIZATION CLIENTELE

Million+ vehicles with HCL designed products

7 of the top 10 A&D companies

3 top 5 consumer electronic companies

7 of the top 10 Medical Device Companies

4 of the top 6 Storage Companies

5 of the top 10 Semiconductor companies

7 of the top 10 Telecom Companies

15% market share of Outsourced Engineering and R&D services spend from India

HCL ERS Rated as the # 1 in ESO

by Zinnov

Leadership Position in the Industry

Hardware / Electronics

Experience in Generating Offset Credits


HCL Understands Indian Offset Landscape

The Indian Defence Procurement Organization have the following bodies - 1. Defence Acquisition Council (DAC) 2. Defence Procurement Board (DPB) 3. Defence R&D Board.

HCL is fully familiar with Indian Offset Landscape in terms of Organization, People, Processes and Policies

• Strong connections within • DOMW for Defense Offsets • STC for Commercial Offsets

• Thorough Understanding of civil Offset Documentation Process & Approval Process/familiarity with DO

DOMW

Defence PSUs

ISRO

DRDO Labs

STC

Organization for Offset

India Delivery Center

India Delivery Team (Rajeev Dutta, GM)

India Sales Team (Rangarajan, DGM)

Project Support & Management (Team for offset realization)


OEM-Tier1 Contract (Intention to outsource to meet offset obligations to be mentioned in MSA)

Tier 1s to communicate Information on the nature of work packages to OEM

OEMs to obtain Approval Number from STC on submitting the above information

OEM to pass on Approval No to Tier1 . OEM/Tier1 to Issue RFP/SOW to HCL with Offset intent and Approval No

HCL to provide necessary offset documentation to Tier1/ OEM on a periodic basis

Tier1/HCL to jointly review and approve offset document ation and covering letter

OEM to submit the documen tation to STI

HCL to support STC during the audit and approval stages

Civil Offset Management Process at HCL


1 Correlation between PO, Invoice, Softex and FIRC

HCL expertise in handling offset documentation


2 3 STPI approved Softex FIRC acknowledged by FIRC

HCL expertise in handling offset documentation


Example of HCL’s Contribution to Civil Offset (Boeing 787)


Tier1 Player

•Software development/V&V- Remote Power Distribution System •Average of 30 full-time engineers •Peak of over 40 •Approximately $5M offset credit delivered •Duration of 5 years

Tier1 Player

•Software development/V&V - APU Controller •Average of 70 full-time engineers •Peak of over 110 •More than $10M offset credit delivered •Duration of 5 years

Snapshot - Sample Offset projects for B787 handled by HCL

Aerospace OEM

•Software Application Development –Flight Test Support System •Average of 350 full-time engineers •Peak of over 400 •More than $20M offset credit delivered •Duration of 4 years


Be a Common Development Partner across Tier-1s

Aerospace Experience & Airworthy Work products

NRE Cost Savings

Help meet Commercial Obligation

Willingness to put skin in the Game

• Servicing 11 Sub Tier partners & Boeing • Providing development, verification, certification

and integration support for both airborne & ground systems in software, electronics and test rigs design

• Worked on 20+ systems on the aircraft • Built systems to test, evaluate & certify avionics & the aircraft • Successfully faced multiple Stages of Involvement (SOI) audits • ~40% of the Software is either developed / verified by HCL

• Effective offshoring (80%)

• Provided documentation to OEM and Tier 1 to claim over USD 50 million of offset credit with STC–first for any Indian service provider.

• Demonstrated willingness by executing a large portion of engineering effort with RC

• Risk-Reward Model

Global Delivery

Effective Offshoring

Ability to Scale

Mature Governance

Summary of contributions (Boeing 787)

HCL Services Spread

Offset Credits


Jointly develop Scope & Value of

offset project and

Contract

Guidance & Feedback for Amendment

Project approved

by Partners

Scope and Value approved by TOEC, CNC & Acquisition

Wing

Submit Offset report to DOMW

Report Approved

Feedback

Record Keeping

DO

MW

/ Ac

quis

ition

W

ing

Indi

an

Offs

et

Part

ner

OEM

/Tie

r1

Grant Offset report

Yes

No

Submit Offset Project and

Contract

Independent Project

Identification

Yes

No

No

Yes

Planning Scope & Value Evaluation Offset Management

Defence Offset Credit Process

Offs

et O

blig

atio

n C

omm

itmen

t / IO

P M

oU


Planning

Scope and Value Approval Valuation Considerations

All projects will meet driving DPP guidelines and align with Indian MoD objectives

OEM and HCL will jointly develop project scope and value

Offset submission forms include: Project statement of work Valuation summary Project Valuation

Agreement form

Obtain agreement on value and scope of project MoD OEM/Tier1-2 implementer with

Indian offset partners

DOMW Grant approval to proceed with project

Improvement of In-country Infrastructure Facilities Job creation Personnel investment and development Availability of technology/new capabilities

Future Business Potential Decreased time to market Enhanced market position

Company Capability Improvement Risk mitigation Improved processes

Project Recipient Company A

Purchase Order Value

Direct Purchase Value of PO $

Total Purchase Order Value $

Foreign Direct Investment

Replacement, Development or Acquisition Value

$

Total Intellectual Property Value $

Benefits to Customer

Banking Offset possibility $

Future Business Potential $

In-Country Infrastructure $

Subtotal Benefits to Customer $

Total Value of Offset Project $

+

+

=

Defence Offset approval process


Six Monthly Report format

Do’s and Don’ts


Offset Management - Do’s & Don’ts

Offset Program Office to be set up within the IOP premises with the following responsibilities

•Establish and institutionalize best practices and internal processes for efficient offset execution •Information collation - financials, contracts, work executed •Coordination with clients and Indian authorities involved •Track valuations to closure with relevant govt. depts

PO to be issued from foreign company to Indian Company ; not to foreign branches of the Indian Company; PO to mention Approval Number obtained from STC e.g. : PO issue on HCL Technologies India and not on HCL France , HCL America etc

Offset planning in advance •Scope definition •Year wise offset obligation definition •Detailed Contract Formulation


Offset Management - Do’s & Don’ts

Local knowledge •Deep expertise in MoD/Civil Aviation policies •Expertise in forms , procedures and various regulatory documentation

Create a repository of Best \ Practices and learning from Current offset projects.

Build relationships with Key Govt. Stakeholders- STC, DOMW, STPI et al


3rd party outsourcing Virtual JV Traditional

JV Assisted Captive

Pure Captive

Compliance

Offset Credit

Cash Flow

Talent Management

Control

Cost Reduction

Hybrid 2 Floor Model

Execution

Benefits to CUSTOMER

HCL can support Offset Credits with Various Engagement Models …

Transition/ Set up

Low

High

High

High

High

High

High

High

Medium

High

High

High

High

High

High

High

High

High

High

Medium

Medium

High

High

Low

Medium

Low

Medium

Medium

Medium

Medium

Medium

High

Medium

Medium

Medium

High

Medium

Medium

Medium

High

High

Low

Low

Low

Medium

Medium

High

High

Structured JV

High

High

High

Medium

Medium

High

High

Low

Asset on Books High High High

Lead Time

Flexibility High

Medium

Medium

High

Low

Medium

Medium

Medium High

Medium

High

Low

Low

High

Not Applicable

Monetization Low Low High High Low Low

HCL experience Various State Street DB, BT, HP Large Global Investment

Bank

Global Custodian NA

High

Medium

High

High

Various


HCL Contacts

David Zarka Sales Director, Manufacturing HCL Technologies France 13-15 Rue Taitbout 75009 Paris Mob: +33 6 11 84 29 48 Email: [email protected]

Ravindra Nuguri Vice President, Engineering Aerospace, Defense & Automotive HCL Technologies Ltd Surya Sapphire, Electronics City Phase 1 Bangalore -560100 Mob: +91 9845 53 9232 Email: [email protected]

Nicolas Mauget Sales Director, Engineering and R&D Services HCL Technologies France 13-15 Rue Taitbout 75009 Paris Mob: +33 6 30 50 10 51 Email: [email protected]



We strive to maintain the highest standards of ethics and integrity in our professional and personal lives. We also strive to demonstrate this trustworthiness in all our dealings, as we believe that everyone we deal with -- be it clients, partners or colleagues -- are equally committed to mutual success and behave accordingly.

We focus on creating value for our customers through innovative ways of applying technology, which generates growth and competitive advantage for them. Our promise of value does not restrict itself to business gains; we also desire the creation of sustainable community value through socially responsible business models that give back to local communities.

We operate with a leadership model that in many ways inverts the pyramid of organizational hierarchy, recognizing that the true role of management is to enable, enthuse and encourage front-line employees working in the “value zone,” the place where they interact with our customers. The responsibility for change and value creation is transferred from senior management to these employees. Because of these employees’ key role in value creation, our managers are as accountable to them as they are to their bosses.

TRUST TRANSPARENCY

& FLEXIBILITY

VALUE CENTRICITY

EMPLOYEES

FIRST

We believe that innovation is not an ivory-tower phenomenon. At HCL, it occurs in real-time, in the “value zone,” driven by employees working directly with customers to create solutions to customer problems. When you combine the employee empowerment of the “Employees First” philosophy and HCL’s longstanding entrepreneurial culture, the result is 85,000 HCLites who are able to create maximum value for our customers, as well as reach their own true potential.

IDEAPRENEURSHIP


Indian Defence Acquisition Process Request for Proposal (RFP)

Technical Evaluation Committee (TEC)

Field Evaluations (Trials)

Staff Evaluation

Technical Oversight Committee (TOC)

Contract Negotiation Committee (CNC)

Competent Financial Authority (CFA)

Signing of Main & Offset Contracts

Verification of the proposal by CNC. L1 can amend

commercial offer

Review of main technical offer

Technical Proposal

Commercial Proposal

Determine

L1

Technical Offset Offer

Commercial Offset Offer

Evaluation Committee

Examine compliance of mandatory requirements –

qualification for opening Commercial Offer

Response Offset Proposal Response Main Contract


Offset Banking

Offset banking implies generation and accumulation of offset credits prior to the award of the main contract.

Bankable offsets can be created either by generating surplus credits through programmes or by undertaking fresh offset programmes prior permission of the host country

Banking is allowed up to seven years from the date of acceptance by DOMW

Pre-approved banked offset credits will be considered for discharge of offset obligations subject to a maximum of 50 percent of the total offset obligation under each procurement contract

Banked offset credits will be transferable between the main vendor and his Tier-1 subvendors within the same procurement contract


Sample Offset projects for B787 handled by HCL -1

Customer: U.S Aerospace Tier1 Company Aircraft: B787 Scope and Activities:

Requirements Design and Coding Verification & Validation

Number of Engineers and Respective Seniority: (

Average of 30 full-time engineers A peak of over 40

Project Characteristics:

6 CSCI Development ( 5 Hosted Application and 1 Federated Application)

Co-Development & ownership of V&V SPI of 0.96 (2008 – 2011) despite 787-8 schedule demand Enhanced V&V Platform ( Simulated Test Environment Creation) Ownership of SPIF Lab (24 x 7) Enhanced CR burn for 787-8 various block point releases Cleared SOI2, SOI3, SOI4 ( 7 Audits) & Reviews (PDR, CDR , TRR ) Distributed Team (Remote Connectivity of Common tools

between Client & HCL.)

Deliverables: All Software Development and Verification artifacts (i.e. Planning Documents, Standards, Requirements, Reviews, Code, Test Station development and Tool Qualifications, Results, etc.)

Work Period: Apr 2005 – Jan 2011

Expertise and Software:

CM SYNERGY, DOORS, Artisan Real Time Studio, Teleology Rule Checker.

AFDX CTG. BITE Engine Tool(BET), PPDN / RPDN Tool. PDSD Tool, Pathfinder, Test RT,Flex IO, CDN-Verify, BITE-

Verify. P300,Thomahawk Test Stand, SPIF.

Duration: Approximately 5.5 years

Level of responsibility: Tier-2

Level of performance

Software Requirements Coding Software verification

Remote Power Distribution System



Customer: U.S Aerospace OEM Aircraft: B787 Scope:

Rehosting and Re engineering of legacy application

Deliverables: All Software Development and Verification artifacts (i.e. Planning Documents, Standards, Requirements, Reviews)

Number of Engineers and Respective Seniority: Average of 350 full-time engineers A peak of over 400


Reengineered more than 230 application modules Java - 4 Million SLOC, C - ~260 KLOC, DB – 719 Tables 3000 Screens, 700 Transactions, 300 Reports Migration of 15Gb Data from IDMS to Oracle 30,000 pages Technical Specification Documents Migration of all existing ‘binary’ Data stores to HDF5 data

stores Extensive use of COTS tools & Open source APIs Extensive Batch Processing in RIP & DRQ

Duration: Approx 4 years Expertise:

Re-host phase Re-engineer entire Flight Test System from IBM

Mainframe to a Distributed Open System Architecture (J2EE) including Test Support Systems & Business Support Applications

Re-engineer Final Data system from Fortran to ANSI C

Data migration from IDMS to Oracle Database Enhance Phase

Enhance FTCS to meet functional testing needs of 787

Support cycle time reduction in Flight test schedules

Software:

MatLab/Simulink Real Time Workshop GNU compiler Code Composer DOORS

Level of responsibility: Tier-1

Level of performance:

Coding Software verification Tool Rehosting

Flight Test Support System



Customer: U.S Aerospace Tier1 Company Aircraft: B787 Scope and Activities performed:

Requirements, Update of Rhapsody UML requirements model Design Coding ( Automatic and manual) Verification & Validation

Requirement , Design and Code Reviews Requirement based testing (HSIT), Structural coverage

analysis

Deliverables: All Software Development and Verification artifacts (i.e. Planning Documents, Standards, Requirements, Reviews, Code, Test Station development and Tool Qualifications, Results, etc.)

Number of Engineers and Respective Seniority: (Seniority - Junior Level: from 1 to 3 years / Intermediate Level: from 4 to 10 years / Senior Level: over 10 years)

Average of 70 full-time engineers A peak of over 113


Successful completion of all the SOI audits without any major findings

The first of the products in Boeing 787 from HS, certified by FAA

Work Period: Jul 2005 – Mar’2011

Expertise:

DO-178B Embedded development

Software:

DOORS, Rhapsody, Diab, PC Lint, Vector Cast MPC5554 , Ashling Pathfinder, XDS510 Class

Emulators, AGE 70077ATE,ITA System Simulator, CAN GUI, Testlink, Ethernet

Manager

Level of responsibility: Tier-2 Level of performance:

Requirements Design Software development Software verification

APU Controller