Indian Company and Sumitomo Corporation Team Up to Solve Engineer Shortage in Automotive Industry

To begin, could you give us some background to Sumitomo Corporation’s decision to establish SCTM Engineering?

OgawaFor many years, development and manufacturing in Japan's automobile industry were driven by vertically integrated groups, known as "keiretsu," in which components manufacturers were linked under the umbrella of a major automobile manufacturer, and this was one of the industry's strengths. With the expansion of CASE(*1) in recent years, however, automotive design and development are becoming more complex and diverse. As a result, collaboration with external partners –crossing over borders of both “keiretsu” and nations – is becoming increasingly important for the Japanese automotive industry.

At the same time, Japan's unique corporate culture can make it difficult for foreign firms to enter the domestic automotive market. Sumitomo Corporation is therefore seeking to build a win-win relationship by acting as a bridge between the two. With this in mind, SCTM Engineering was established in 2020 as a joint venture with Tech Mahindra, an Indian tech company. There are other companies in Japan that provide engineering services within their industries, but we are the only one working with a foreign company to provide services to all manufacturers.

*1 CASE, which stands for "Connected, Autonomous, Shared & Services, and Electric," is a term coined to express the phenomena behind the big changes in the automotive industry.

What kind of company is Tech Mahindra?

OgawaIndia is now one of the world's leading IT powers with a huge pool of talented engineers. Due to lower labor costs relative to developed countries, Google and other tech giants outsource their systems development and engineering work to India. Tech Mahindra has been providing engineering services and IT solutions in India for almost 30 years, not only in the automotive industry, but also numerous other sectors. Its strength lies in world-leading knowledge and technological expertise in software and hardware.

I understand you both originally worked together on Sumitomo Corporation's automotive engineering team. Please tell us about Sumitomo Corporation’s automotive business.

OgawaSumitomo Corporation has long been involved in the automotive industry, with businesses covering the entire value chain, from upstream to downstream. Different units work together to handle a wide variety of tasks, from importing raw materials, exporting vehicles and parts, supporting overseas expansion, sales and distribution, through to finance and leasing operations. The automotive engineering team – one of these units – supports the development of automobiles for Japanese companies, and both Hiroaki and I were transferred to SCTM Engineering from there.

What kind of work has SCTM Engineering been involved in to date?

What does SCTM Engineering offer regarding the challenges the Japanese automotive industry faces today?

OgawaAs Japan's birth rate declines and the population ages, engineers are in short supply. Also, differences in strategies between Japanese and Western companies and the recent trend toward EVs are compounding the shortage of technical resources in Japan. While manufacturers in Europe and the U.S. tend to focus on specific vehicle types, Japanese manufacturers are unique in that they manufacture and develop a full lineup of vehicles, ranging from small to large cars and commercial vehicles. Until now, the development of a full lineup has been staggered over several years for different vehicle types. Yet the rapid global shift to EVs is forcing manufacturers to develop EVs with different components and structures from those of gasoline-powered vehicles within a short period of time.

Tech Mahindra employs approximately 6,000 automotive engineers. SCTM Engineering's "bridge engineers" are utilizing these engineering resources in India to serve as a bridge to Japanese companies.

What role do bridge engineers perform?

SatoDifferences in language, business practices and other factors are often barriers to utilizing overseas resources. Bridge engineers connect Indian engineers and Japanese companies by conveying Indian engineers' proposals to Japanese companies appropriately, and by following up with Indian engineers who are having trouble understanding the ideas and intentions of Japanese companies. Bridge engineers are not mere "interpreters." They do not simply convey words verbatim, but rather mediate communication based on their understanding of the technical and cultural aspects of each company. For example, because Japanese companies have always worked together symbiotically within their vertically integrated keiretsu groups, not only development methods, but even the names of parts differ by keiretsu. In other words, there is a "common language" within each. In this respect, SCTM Engineering has the advantage of members who understand the common language of various affiliated companies. Many of them, including myself, come from automobile manufacturers and can mediate as bridge engineers.

What are some of the things you bear in mind when collaborating with Indian engineers?

SatoJapan's culture is often said to be "high context." Not putting into words all that one wants to say, but reading between the lines and the ability to discern unspoken thoughts, emotions and intentions in a social context is seen as a virtue. By contrast, being a multi-ethnic country Indians use English for business creating a more "low-context" culture and the emphasis is on reaching a verbal consensus. This is always a consideration when working with Indian engineers. They are quite assertive, and discussions with them can sometimes feel like arguments. But that's because they are language oriented. It is important for us to assert ourselves firmly in English, and we must persevere in our discussions without compromising what is unacceptable from the Japanese customer's standpoint. With regard to Japanese companies, it is necessary to convey what the Indian engineers are proposing, taking into consideration the position and sensibilities of the Japanese customer.

Mr. Sato, I understand that you often accompany members of Japanese companies to India.

What is your outlook moving forward?