Over the last few months, I have seen a few high-quality, India-based startups going after the industrial robotics segment. Essentially, delivering robotics hardware and/or software solutions for automation on the manufacturing shop floor.

There seems to be an interesting “why now?” for this segment. Manufacturing globally is seeing a shortage of blue-collar workers with specialized skill sets. With the rise of freelance service models like becoming an Uber/ Ola driver or a Doordash/ Swiggy delivery person, fewer people in both developed and developing countries are inclined to put in the hard yards and learn vocational skills like welding.

So clearly, industrial automation will see massive tailwinds in the next decade. Robotics, in particular, seems to be well-poised to see enormous adoption in this movement. It’s massively benefiting from AI-driven chips & compute investments that the cloud infra players and hyperscalers are doing. This is leading to more computing power being packed in smaller form factors. Vinod Khosla recently said (clip below) – “Robotics will soon have its ChatGPT moment. Robots aren’t programmed anymore, they are learning systems”.

The Western industrial robotics opportunity definitely looks interesting for India-based startups. We have already seen the likes of GreyOrange successfully scaling in the US warehousing robotics market, while Cynlr is targeting the higher-end, more sophisticated robotics segment.

Regular readers of An Operator’s Blog would already be familiar with my obsession with “right-to-win” and having clear differentiation. I have been brainstorming with Indian robotics founders regarding what’s a sustainable right to win for India-based, offshore startups in the global industrial robotics opportunity. Here are some admittedly disconnected ramblings, trying to also draw comparisons with the earlier software services➡products➡SaaS eras:

1/ Availability of Talent

The IT services players of the 90s (Infosys, TCS, Wipro) literally created mini software universities on their office campuses, tapped into a large pool of young Indian engineering graduates, and trained them to become software developers. The later software products and eventually SaaS waves benefited from this ready base of talent created by the services companies.

Is there a similar dynamic at play right now in the hardware engineering talent pool (disciplines like Electrical, Electronics, Mechanical, Industrial, Aerospace)? Am not so sure.

Over the last 10 years, a majority of Indian engineering graduates have, irrespective of their passions or innate strengths, trained themselves to become software developers. The engineering university apparatus too, has molded itself in this direction – software engineering intakes are exponentially larger than electrical, electronics, or mechanical branches.

However, one positive signal of hardware talent is how ISRO, India’s government-owned space agency, has been able to assemble large engineering teams that have gone on to build world-class space tech products on the global stage.

As I see it, there are three potential feeders of latent talent in manufacturing and hardware engineering for Indian startups:

• Govt-owned research universities and labs (IISc, IIT Chennai, IIT Bombay, TIFR, etc.).
• Public sector companies in areas like defense (DRDO), energy (BHEL, NTPC, etc.), oil & gas (IOCL, GAIL, etc.), railways, fertilizers, and chemicals.
• Domestic manufacturers & OEMs in areas like automotive, chemicals, textiles, pharma, and agriculture.

Therefore, given just the sheer numbers of young Indians graduating in non-software verticals from various engineering schools as well as then getting trained by the above feeders, the supply of hardware skill sets might still be enough to serve the needs of industrial robotics startups.

There will surely be gaps in the quality and job readiness of this talent. However, Indian entrepreneurs are known to be ingenious. Similar to the IT services companies of the yesteryears, we might see these new-age hardware startups create their own training programs for electrical, electronics, and hardware-centric software skills.

So overall, I feel reasonably good about the availability of talent to build industrial robotics companies out of India. However, it might still need some push and creative thinking from the ‘hardware Murthy’s and Premji’s’ of the current generation.

2/ Cost of Talent

One of the core pillars of Indian IT services was cost arbitrage. In fact, even the later software products and SaaS companies have continued to benefit from it, reflecting in them pricing their products very aggressively compared to Western competitors and winning deals in the price-sensitive segment (Zoho and Wingify have done this really well over the last 2 decades).

Does this cost-arbitrage advantage apply to hardware engineering startups too? In general, the broad-based cost of talent in India has steadily gone up over the last decade. In fact, on the pure manufacturing front, India is no longer a cheap place to produce stuff and one of the reasons why the likes of Bangladesh have taken share away from India in areas like textiles.

Same with software, where high-quality developer talent in Bangalore is now only marginally cheaper than in the West (adjusted for quality, output, and time zone challenges, it might even be more expensive in certain cases). This is one of the reasons why Eastern Europe and LatAm have taken a share away from India in IT offshoring too.

Using these trends as signals, it’s reasonable to assume that though Indian skilled hardware talent will definitely be cheaper than say the US, the magnitude of arbitrage is not as large as say, in the 90s and early 2000s, especially when adjusted for quality and output.

However, a positive signal on this front is again, the likes of ISRO and IISc that have built world-class products at a fraction of the cost compared to the developed world. As an example, ISRO had a budget of just ~$75Mn for its successful lunar mission Chandrayaan-3, while NASA is on track to spend roughly ~$93Bn on its Artemis moon program through 2025.

There is also a large domestic base of SMB-type OEMs and manufacturers that can provide relatively low-cost early iteration and prototyping capabilities. As the Indian govt. increasingly focuses on developing domestic manufacturing and indigenization of technology, this base will only grow from here.

So overall, I feel reasonably good about Indian startups being able to build industrial robotics products at a relatively lower cost compared to Western counterparts. However, the key will be matching the quality and performance of comparable global products while keeping the operating costs (and therefore, pricing) lower than these competitors.

3/ Superior Customer Support

One of the key reasons Indian software companies are able to compete and win against global competitors is the ability to provide superior customer support while maintaining cheaper price points.

Leveraging large workforces at lower costs, the likes of Freshworks have been able to provide white-glove service to even mid-market customers in the US. Combine this with the willingness to do services and provide customization wrappers on top of their products, and you have a unique offering that Western enterprise customers just love.

I have observed that providing superior customer service & support has now become an integral part of the Indian founders’ DNA and has been socialized a lot within the startup ecosystem playbook by communities like SaaSBoomi.

Therefore, I believe this customer support DNA can translate into a right-to-win for Indian startups even on the robotics and hardware side, where most global customers tend to be large and often legacy manufacturing companies that really value this ability to provide a white-glove service as well as offer customization for their needs.

4/ Differentiated IP

Now this is where the situation gets a little tricky. Traditionally, Indian higher education hasn’t focused on fostering original research and development at scale. That’s one of the reasons why even on the software/ SaaS side, most Indian startup success stories have tended to be “fast-followers”, creating a product with feature parity against US competitors and then beating them via aggressive pricing and superior customer service.

Barring a few islands of excellence like IISc, IIT Chennai (Research Park), and IIT Bombay (SINE), students largely aren’t taught to think originally during high school and university.

However, there is a nuance here. At the risk of generalizing, it’s fair to say that while local Indian talent at large may not be the best original thinkers & IP creators, they are definitely strong engineers, operators, and executors.

Combine this with the raw entrepreneurial hustle that the Indian way of life teaches you, as well as first-principles business acumen that’s part of the grassroots culture in states like Gujarat, Rajasthan, Punjab, and Tamil Nadu, and you potentially get a unique combination of engineering and GTM skills amongst many Indian founders. I call this the “engineering dhandho” persona [inspired by the successful public markets investor Mohnish Pabrai; “dhandho” is the Gujarati word for “business”].

Now, not every robotics & hardware problem statement requires IP creation. Many of them can be solved by engineering creativity and ingenuity, or what I call ‘contextual-innovation’. This approach can actually be used to create new categories in relatively untapped verticals like agriculture, automotive, space, defense, energy, B2B commerce, and even consumer hardware.

We already have a few scaled examples of this contextual-innovation from India-based startups:

• GreyOrange has become an emerging category leader in the US warehousing robotics market, crossing $100Mn in ARR.
• ideaForge manufactures drones for defense, and went from idea to IPO over the last 8 years. While China-based DJI corners ~70% of the global drone manufacturing market, ideaForge has still been able to create & dominate the indigenous defense drones category in India.
• Agnikul (launch vehicles), Pixxel (constellation of satellites), and Skyroot (launch vehicles) are making giant strides in the commercialization of space from India.
• Ather (electric scooters) and Ultraviolette (electric superbikes) are capitalizing on the global movement towards EVs and rapidly emerging as the Hero’s and Bajaj’s of today’s India.
• Atomberg (ceiling fans), boAt (headphones), and Ultrahuman (fitness trackers) have created differentiated consumer hardware with specific features for their respective personas, and have also built successful brands despite the presence of large incumbents.

A few contextual-innovation greenshoots from my own portfolio:

• Flytbase has created the global autonomous drone software category, unlocking massive enterprise use cases. HQ in Pune, 100% of its revenue is global.
• Playto has developed a proprietary robotics kit that supports 1,000+ builds for kids from Grades 2-8 to learn STEM skills. HQ in Bangalore, a majority of revenue is global.
• Sharang Shakti is building an anti-drone & airborne threat mitigation system for defense. It will start with India but I expect countries in the Global South to be major markets in the future.
• Astrophel is building ground-up sub-orbital launch capabilities for commercial space payloads. Astrophel and other Indian space tech companies will cater to global customers, especially those from price-sensitive developing countries.
• Yulu has designed and built EV micro 2-wheelers from the ground up, keeping specific Indian urban micro-mobility needs and contexts such as hyperlocal deliveries, logistics, and last-mile daily passenger commuting.

Looking at all these examples, I believe Indian startups can utilize the contextual-innovation approach to make a dent in several industrial robotics use cases, especially those that require smartly stitching together hardware + software solutions for legacy enterprise customers.

Closing thoughts…

Summarizing my observations across 4 key axes – Availability of Talent, Cost of Talent, Superior Customer Support, and Differentiated IP, I feel reasonably good about the right-to-win of Indian startups in industrial robotics, and would even extend this conviction to many other verticals of hardware.

I believe many of the advantages that Indian startups have enjoyed in the previous IT services, software products, and SaaS waves, will also extend in some shape or form to the oncoming global deeptech and hardware wave.

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