''GSS is positioned to tap ESO space''

Besides the top-tier players, Mumbai-based Geometric Software Solutions (GSS) is also gunning for a slice of this service pie. To this end, the company recently announced its intention to buy-out Detroit-headquartered Modern Engineering’s engineering division

Geometric clocked $50 million in revenues the last fiscal and following the merger, its revenues will cross the $100 million mark. Ravi Gopinath, MD and CEO, Geometric Software Solutions and Ron Woods, president and CEO of Modern Engineering, spoke to Priya Padmanabhan of CyberMedia News about the deal and the ESO opportunity.

What were the synergies between GSS and Modern Engineering that led to the merger?

Ravi Gopinath: Geometric Software Solutions has been strong in PLM, CAD, CAM and CAE technologies. Engineering processes are becoming globalized and many companies are interesting in outsourcing engineering services. We wanted to capitalize on this opportunity. We have sufficient domain knowledge in the space, since we create PLM products for partners. We have an engineering services division, but that was small.

With software development services alone, it is not possible to have high organic growth. Which is why we started having discussions with Modern Engineering with whom we have a three-year partnership. Modern Engineering has a high degree of engineering competency in ESO. With the acquisition, we are clearly positioned as one of the very few service providers dedicated to engineering and services with global scale and capacity.

Ron Wood: We have a globalized spread with centers in Romania, Shanghai and soon in France. We have been in existence for the last 60 years and we are taking the next step forward with this merger. Together, with our synergies in the PLM products and engineering services space, we are in the best in class in engineering services. The integration of the two companies would be smooth because we are known entities.

How big was GSS’s play so far in engineering services?

Ravi Gopinath: Before the Modern buy-out, we had a small division with around 175 engineers. Now after the consolidation, which will occur starting November, we would have 60 per cent of employees into PLM technologies and software development and 40 per cent into engineering services.

What is the extent of your geographical spread now?

Ron Wood: We have eight centers in the US and two in Romania and Shanghai and a new one which will come up in France in November. Most of our engineering base-around 70 per cent is based in the US while the rest is spread elsewhere. Post-merger, we want the ratio to be 55:45.

We want to increase the efficiency of our employees and also help with load balancing. This is not about loss of jobs but to make use of offshoring to drive profitability into the business.

While GSS has over 2000 engineers spread across Bangalore, Pune and Mumbai, Modern Engineering has 700 engineers.

What are the competencies that you would offer to customers?

Ron Wood: Our competencies are in product concept, design and manufacturing solutions, reclassing lines and deeper engineering competencies. We have major clients in many verticals including automotive, industrial machinery and consumer goods. Some of them include GM, Chrysler, Ford, Whirlpool, John Deer and Caterpillar. GSS’s strength is in PLM technologies and being familiar with the tools of the trade would be helpful in the global engineering services arena.

Ravi Gopinath: One of the important things that would look at after the integration is to drive cross-selling and sell our native competencies to the Modern Electronics customer base.

Is it difficult for GSS to achieve scale with software development services alone? Was this also factored in while going in for the buy?

Ravi Gopinath: Yes. It is difficult to achieve scale in software product development alone. There is not much scope for rapid growth. So the way out was to diversify into engineering services. The merger is a confluence of technology spaces including Enterprise asset management, product engineering and manufacturing systems.

How would you position yourself in the highly competitive ESO space that has attracted a lot of Indian service providers?

Ravi Gopinath:Yes. A lot of companies like Wipro, TCS, HCL and Satyam are looking at the engineering and technology services segment as a growth engine. However, these companies are into all kinds of services, where as in our case, this is all that we do.

Customers feel a sense of comfort, assurance since we are a company dedicated to this space. Time will tell who has the better advantage.

© CyberMedia News