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Why did KPIT pivot to become 'a mile deep' in automotive software



 KPIT pivoted to become "a mile deep and inch wide" in automotive software because its leadership was committed to being a global leader rather than an "also-ran" in the general IT services market.

The decision was driven by the following strategic factors:

1. Lack of Leadership in General IT

When KPIT reached approximately $700 million in revenue with 14,000 employees, it was operating across multiple verticals, including banking, financial services, manufacturing, and logistics. Leadership realised that in most of these sectors, there were competitors whose single-sector revenues exceeded KPIT’s entire company revenue. They concluded they were not the leaders in those fields and were dissatisfied with being a generalist firm.

2. The Opportunity in Automotive Software

At the time of the pivot, KPIT’s automotive work accounted for about $200 million of its revenue. Leadership recognised that the automotive industry was undergoing a fundamental transformation where cars were becoming "computers with a mechanical shell around it" rather than mechanical machines with added electronics. This shift meant that software and connectivity were becoming the core of the vehicle, creating a massive opportunity for a specialised firm.

3. Strategic Focus on Global OEMs

The pivot allowed KPIT to focus exclusively on the top 25 automotive companies in the world. The goal was to ensure that KPIT was not just a vendor, but strategic to its customers, providing highly specialised automotive embedded software.

4. The Unique Execution of the Pivot

To achieve this specialization, KPIT executed a transaction that was unique in Indian corporate history:

  • Merger and Demerger: KPIT merged with Birlasoft, a general-purpose IT company.
  • Separation: They immediately split into two separate entities. All non-automotive business was moved to Birlasoft, while all automotive engineering work stayed with KPIT.
  • Outcome: Although the company initially became much smaller and faced the "pain" of parting with long-term team members on the business IT side, it became a sharply focused leader.

Within five years of this transformation, KPIT returned to its $700 million revenue level, but this time exclusively within the automotive sector, with significantly higher profitability, stock value, and global recognition as a leader in its field.

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