“I Am Grateful That We Have Been Able To Create An End-To-End ODM Story In India”
Original design manufacturing, referred to as ODM, gets fierce competition from countries like China and Taiwan in Asia. However, VVDN Technologies, an ODM headquartered in Gurugram, has proved that nothing is impossible when approached with the right mindset. Puneet Agarwal, CEO and Co-founder, VVDN Technologies in a discussion with Mukul Yudhveer Singh sheds light on how VVDN overcame the obstacles.
Q. How has been the journey of VVDN Technologies in India?
A. VVDN was started in 2007. Me and all the other founders of VVDN were in California when we started thinking of starting the organisation. It was clear to all of us that we would make VVDN a company that offered complete product engineering services. We knew what we had envisaged was not usual as India had been a software-centric country.
Our experience of working in the United States made executing VVDN a little easy for all of us. Initially, we developed video, 2G, 3G, and telecom products. The market response during those days encouraged us to stay on the product engineering side. By the time we developed these products, we realised that the Indian ecosystem, when it comes to hardware supply chain, mechanicals, and embedded software chain, was very weak.
So that is where we focused on and started on the journey to do design and manufacturing of electronic products in India. In the process, we realised that to be successful we would have to make sure that we are not dependent on external supply chains or countries like China and Taiwan. The supply chain had to be created in India. To control the timeline and components availability we started working on building an ecosystem here in India itself.
The last eight years have all been about significant vertical integration for VVDN. We are now manufacturing complete electronics via multiple SMT lines, product assembly lines in our factories. We have also got rid of the mechanical dependence by starting our own moulding and die-cast facilities, among others.
The key to our success has been identifying and addressing areas where we were dependent on others. The thought process has always been to do everything in-house. We have been creating products and solutions that can attract local as well as international consumers, which has enabled us to create a global ecosystem for our customers.
The complex products we are working on today involve Wi-Fi access products, network switches, 5G base stations, IoT products, products for electric vehicles, sensors, and more. I am grateful that we have been able to create an end-to-end ODM story in India.
Q. What’s the secret of VVDN’s success?
A. There are at least three points that have helped us.
First, we began with creating a right pool of talent that should be able to believe that a lot of core innovation and IP could happen in India. In simpler words, we knew from the beginning that we will have to innovate ourselves. For example, we started investing in innovating 5G products four years ago. We had the IPs for the same long time ago, but we didn’t have any customers for them.
We just invested in creating a team that could work on creating the IPs, and once the IPs were created in about two years’ time, these behaved like magnets to attract customers. Mind it, it’s not easy putting together an excellent product engineering team in India.
The second thing is the prowess to create prototypes and working samples quickly so that you can deliver these for validation to your potential customers and existing customers.
How much you can do in-house is also a factor that plays a major role. The vertical integration that we have done during the last few years has enabled us to deliver working samples within weeks.
The third thing is talking about manufacture of products irrespective of their size (a small Bluetooth headband or a 5G base station). The kind of machinery and equipment we have invested in has allowed us to manufacture these products from the same factory.
The last one is our strategic tie-ups with universities. We have done it really well. In Coimbatore we have a complete VVDN campus inside a university. We have a team of 500 people there and the University is hosting us for the entire R&D. We also hire from that University. Most of the people hired from such universities are given roles in the innovation and IP teams.
We are in the process of replicating that model in tier II and tier III cities as we believe that the focus on R&D and innovation is more in such cities. Please note that we offer jobs to students of such universities while they are completing their PhD or MTech. We strive to keep ourselves ahead of time.
Q. How many IPs are owned by VVDN for design and manufacture?
A. The products are always tied to a brand; that is what an ODM is about. ODMs are never about owning a brand. When you talk about a product, it has many components, it has software and many other things. What matters to our customers is time to market.
For example, if an organisation wants to launch a product in the market, its first ask will be how soon can we give them the product and get into manufacturing from concept stage. That is where we use the tons of IPs that we have created at VVDN. To answer your question, every product that VVDN develops has some IP and knowledge that is created in-house by the VVDN team.
We give our customers the right to own the product IP, but within that product there are certain other IPs that are owned by the VVDN team. These IPs are used to manufacture and engineer products at VVDN.
Q. How do you create IPs? What’s the overall market research approach of VVDN?
A. IPs help you stay ahead of time, and we do it in two ways.
One is our partnership with silicon companies like Intel and Qualcomm. It is a simple fact that if a new silicon is coming up then these companies have put in a lot of effort to develop that. By working closely with such companies, we get access to a lot of information, which is an indicator of where the market is headed.
The second area is the work done by in-house marketing research teams. These teams are clubbed with technical evangelists. Every marketing research team at VVDN has at least one technical evangelist. Their responsibility is to find synergies between what the customers are looking for and what we are developing. It is their responsibility to find gaps between what has been asked for and what we can deliver.
Q. How much of your revenue do you dedicate towards research?
A. Right now, about 25 percent of our revenue is going into research on an annual basis.
Q. How do you attract brands to do business with you? Does branding help?
A. Yes of course, branding always helps. However, converting any opportunity from a brand to real business is a different thing; it is a complete lifecycle. You have to take it through several steps of working on the product. Then comes understanding their needs and their time to market. Finally, making sure that the relationship is long-lasting.
We have dedicated business development teams in different regions. We also invite CXOs of our customers to our facilities and show them around. I cannot recall a single invitation which has not landed us any contract. The way we have set it up makes it easier for customers to compare what we offer. Let me tell you clearly that what we present in the media is not even ten percent of the actual abilities we possess.
Q. How do these invitations work?
A. Our research teams start identifying and working on what a potential customer is looking for before we actually send out invites to that customer. Within business units like 5G, IoT, and Vision we make roadmaps that are intended to keep us at least five years ahead of time.
We don’t create just marketing research documents, we create IPs that are looked upon by big brands as futuristic technologies. If you are able to understand what a brand wants in advance, you can easily create an invitation that they will not say no to.
These invitations are general meetups and not big events. We prefer one-to-one invitations because that helps us keep up with the confidentiality levels required by our customers.
Most of these meetings are scheduled at our facilities because that is how we can show our customers what we are capable of doing.
Then there is an experience room where customers can get to see most of the products and solutions we have worked on in the past. I think that also helps customers to be confident about us. In short, we prefer physical meets over phone calls with our customers.
Q. Do you also participate in events?
A. Yes, we have been participating in a lot of events, and we are also a part of various organisations run by the government of India. VVDN actively participates in various panel discussions and seminars conducted by these organisations.
Q. India vs global revenue, what’s it like? Is there any change in strategy for acquiring global clients?
A. Presently, India contributes around 40 percent of our revenue whereas the rest 60 percent is from other countries. However, the India growth, owing to Make in India, is high at the moment. The growth in India, and outside India, is increasing at a phenomenal rate.
There is a slight change in strategy for international markets. Costs as well as the product sets for India and for international markets are different. We also see a difference between the Indian and international customers from a mindset perspective. We have hired local teams in countries like the USA and South Korea, and that has made our tuning work for all the regions of the world.
In one sentence, Indian customers are always going to compare you with products coming from countries like Taiwan and China. At VVDN we have learned to create products which meet the cost criteria of customers.
Q. How did you create a local ecosystem when others have been struggling to do so for decades?
A. Let me be honest and give a lot of credit to what the government of the country has done in the last five years. We have seen a huge growth not just from a manufacturing perspective but also from the business perspective during the last five to seven years. We have had customers who are more willing to do local R&D and manufacturing in India.
To be very frank, it is just the mindset that one needs to establish an ecosystem. Once you have the mindset you will automatically find ways to make that happen. Today, when we meet different government departments like NITI Ayog or MeitY, I find that they are equally interested to take the manufacturing capabilities of India to the next level. I do not see any lack of intention.
Why we were able to do so was because we depended on ourselves from the very beginning. We were able to identify which products or categories would be the best to start with in order to build a local ecosystem. Applying for PLI schemes was never a strategy for us but bringing the right products and right customers to India was always on our mind.
We never got influenced by short-term factors and focused on the long term, and hence made the right investments. Now, automatically, we have not only become eligible for government schemes but also for unstoppable growth. How much you are dependent on others and how you can reduce that dependency is the key to growth. Rather than focusing on extracting benefits from government schemes, one should focus on building your capabilities first.
Q. What has enabled you to compete against global ODMs?
A. It all starts with our deep product engineering capabilities. Brands look at us as a single window to get their problems solved and products manufactured. They do not have to go to different places to get different parts of a product done.
Second is creating facilities where infrastructure to develop products are all under one roof. In terms of shipping time, we are today competing with ODMs from China, Taiwan, and the USA.
Q. Could you elaborate on your collaboration with universities?
A. We have a concept of hiring people when they are in their third or fourth year. We hire them well in advance and bring them to our core offices for R&D. I believe that R&D does not have space for pressure. The lesser the pressure, the better the innovation and the product gets.
We hire people before they even complete their studies. Similarly, we also support PhD students who work for at least one or two years with us before they have completed their studies. This is only possible when you go to them, as travelling for students is difficult. Hence, we are establishing R&D labs inside universities. Students from these and nearby universities are given access to such labs.
By the time they complete their studies, they get acclimatised with how we work and our product engineering culture. This has helped us file more IPs. There is mutual benefit for us as well as the universities.
Q. How does collaboration with silicon companies help?
A. Our relations with silicon companies are quite unique. As we buy silicon from them, we are customers for them. This relationship gets extended in the form of R&D work we do with these silicon companies in terms of hardware and software. We get access to solutions that haven’t even entered mass manufacturing stages. That way our team gets familiar with silicon that is yet to be launched in the market.
The use-cases found in the process are taken to our customers by our teams and, as I said earlier, this is one more step which helps us keep ahead of the time. Customers benefit because they know where the market is headed and what products they might need. In short, we complete the loop between companies, technologies, and products that they will need.
Q. What’s the plan ahead?
A. We have applied for multiple PLIs on offer by the government of India. I think we have just touched the tip of the ice. The customers have started looking at India as a blue-eyed country. We want to make sure that we create an infrastructure that enables us to grab these opportunities—whether it is electronics assembly lines, or mechanical facilities like moulding and injection, or R&D labs. VVDN is committed towards its goal of being a premier product engineering and manufacturing company in India dedicated to creating opportunities and transforming lives.