KPIT, which provides software-based solutions primarily for automobile firms, said it will look for acquisitions in areas like semiconductors and ecommerce to get better insights into how it can create value in those areas for its automobile customers.
“More and more software will get defined through the chipset, so this is one area where we want to do more acquisitions, which will give us more insights,” said Sachin Tikekar, president at KPIT.
The company is working on long-term monetisation solutions for customers, like ecommerce through connected cars, and this is another area where it may look at acquisitions in the future.
“Monetisation will not just be selling the car; they are also looking the potential for commerce and how connected vehicles can become avenues for revenue generation,” Tikekar said.
The changing dynamics in the auto industry worldwide will translate into higher growth for the company as demand for tech-driven solutions continues to increase.
“Most of the vehicles are becoming software-driven now. OEMs were used to buying software in bits and pieces and putting it together—that doesn’t work now,” said Tikekar.
With software emerging as a key differentiator, automakers are looking at doing their own software architecture in order to embrace the shift towards autonomous and electric vehicles.
Auto companies now find themselves competing with the likes of Tesla, who have been software driven from the very beginning, requiring these firms to overhaul their approach to software and technology in their cars.
Companies are also working at newer models of monetisation in the future beyond just selling vehicles, looking at possibilities through connected cars.
“High spends are going into electrification. If you look at the number of vehicles that are going to be electrified or going hybrid, about 18 new launches are expected in the US next year,” said Tikekar.
Within autonomous vehicles, most firms are not investing in full autonomy, but advanced-level assistance features, he said. These are features that improve driver safety, etc.
While the company is focusing on its top 25 clients who contribute almost 90% of its revenues, Tikekar said if it can get better access to a potential client through a strategic acquisition, then that is also something the company would be open to.
“KPIT has significant scale in the automotive vertical with a breadth of capabilities matched by few players,” said Nitin Padmanabhan and Hiral Shah of Investec Capital Services. “Automotive OEMs are taking over software development from tier-1s and at the same time are also seeing the need to rapidly create an EV portfolio along with AD-ADAS.”
Other than this, the company is keeping an eye out for the next big disruptors—companies like Tesla, which started with software and built a car around it.
“We are engaging with some of them because we don’t want to be blindsided by their success,” Tikekar said.
