Despite chip shortages, our clients haven't cut tech spend: KPIT Tech chief

In a Q&A, Kishor Patil, CEO and MD of the firm, also dwells on attrition and his company's initiatives to arrest it

KPIT Technologies, which provides software to automotive companies, on Monday reported a consolidated net profit that more than doubled to Rs 65.1 crore for the quarter ended September 2021. Its revenue from operations stood at Rs 590.8 crore for the quarter under review, as compared to Rs 485.4 crore in the July-September 2020 period. In an interaction with Neha Alawadhi post earnings, Kishor Patil, CEO and Managing Director spoke about the chip shortage, impact on the and the way forward. Edited excerpts:

How do you see the demand environment?

The revenue on a year-on-year basis has grown 23 per cent. The EBITDA percentage, as compared to last year, there is 2.6 per cent increase from last quarter. In spite of increments, special incentives which we have rolled out, profitability has still gone up 17.6 per cent. We have also announced some strategic engagements, which shows the demand environment.

In automotive, because of the new technologies being introduced and the new architectures coming in the next five years, we see a very good demand environment. That's why we have increased the revenue and profit outlook for the year.

What are the areas you are seeing greater demand from?

The sentiment we see is very positive, because now, while we are aware that chip shortages are affecting production models, none of the OEMs, irrespective of the environment in the last two years, have reduced any tech spending.

In fact, they're accelerating because otherwise, they will lose on the models to come by 2025 and they lose the market share in the new set of vehicle models, specifically driven by electrification.

The chip shortage will remain for about 18-24 months. But the programmes we are working for are for 2024-25, and clients are not compromising on those.

How is the situation on the supply side, in terms of talent?

Everyone is having this challenge, irrespective of the size of the company. For us also it has been at the higher end and it has gone up a couple of percentage points, its certainly over 20 per cent.

We are fortunate in the sense that employees who are passionate about automotive want to work with companies that are focused. So our ability to hire the right talent is very good.

We needed to make substantial changes and we changed certain compensation structure both in terms of increment and multi-year incentives. What we are doing is we have set up what we call a competency management roadmap, so people know that if they gain skills and expertise, they can go up the ladder.

How are you thinking about return-to-work post the pandemic as vaccination picks up and the world normalises a bit?

What we are trying to do is creating a hybrid work plan. the first is the client, depending on what they want. We have planned certain workshops, for more engagement and teamwork. We have started (opening up) to some extent, but we plan to work in a hybrid model as well as multiple centers in the city as well as outside the cities, in second tier cities. We will come up with a very concrete plan by early next year, maybe by January. And then then we will basically roll it out.