Why Deep-Tech Fascinates Corporate Leaders

“BREAKTHROUGH TECHNOLOGIES and innovation have always been the greatest wealth creators for nations, as well as for corporates,” Reliance Industries (RIL) chairman Mukesh Ambani said at the recent annual general meeting (AGM) of shareholders.

In another instance, Larsen & Toubro (L&T) chairman and MD S.N. Subrahmanyan was surprised when in 2015, he was directed by the then CMD A.M. Naik to go to the U.S. and Europe to learn ‘IT’. By that time, Naik had identified Subrahmanyan as a potential future leader for the conglomerate. SNS, a civil engineer, was focusing only on the infra and construction business since the start of his career with L&T. He toured the U.S. and Europe for two years, met IT CEOs and CTOs and came back to implement Internet of Things (IoT) and automation across the flagship engineering & construction (E&C) business. Now more than 14,000 devices and machines are connected to L&T’s command centre in Mumbai and SNS can monitor real-time project-wise execution at any location. Normally L&T executes about 1,000 projects at a time.

“Margins are thin in the construction business globally. Higher efficiency and better utilisation of machines and manpower with automation can result in better margins, monitoring, and faster project execution,” Subrahmanyan said in an earlier interaction with Fortune India. In FY24 alone, L&T’s EBITDA margin in the infrastructure business was 6.2%, much better than the global industry average of 2-3%.

As the world moves towards a new tech-driven future, top-tier Indian CEOs across sectors are paying greater attention to implementing new technologies to better the performance of their businesses and for a sustainable future. CEOs now realise the world is undergoing an energy transition, geo-political dynamics are changing the nature of business cycles and new technologies such as AI, digital twin, data analytics and computing robotics processes are transforming businesses. According to Deloitte India’s Pre Budget Survey 2024, more than 90% of businesses are adopting technologies such as AI, ML, and IoT (the most widely used include chatbots and virtual assistants, followed by ML algorithms). Challenges before CEOs are to stay tuned to the next level of deep-tech transformation, without disrupting short-term revenue and profit trajectory of businesses, and bring in a tech-driven future.

Deep-tech And Challenges

The NASSCOM Annual Enterprise & Tech Services CXO Survey 2024 says BFSI, telecom, media and entertainment, and hi-tech sectors will lead digital spending this year. According to Gartner, technology spending by Indian companies is expected to grow 11% in 2024. Indian businesses are looking to collaborate with external providers in AI, industry Cloud and data analytics, resulting in increased IT spending in 2024, according to the Deloitte Technology Trends 2024-India Perspective report.

Many frontline Indian companies in engineering and manufacturing now use technologies such as AI-driven and robotic process automation (RPA) for project management, building information modelling (BIM) for design, digital twins for real-time monitoring, and enhanced image processing and data analytics for informed decision-making across projects. Leveraging such technologies leads to creating smart, connected infrastructure solutions, streamlined operations and better design and execution capabilities. Spatial computing and metaverse represent convergence of digital and physical realities, offering interactive experiences that redefine human-computer interaction. These technologies have emerged as groundbreaking, with the potential to reshape industries globally, says Deloitte.

At the micro level, the integration of AI and RPA helps significantly improve operational efficiency. Companies can reduce downtime and enhance productivity on large-scale projects by deploying AI-powered systems for predictive maintenance and project monitoring. By deploying an LLM (large language model) based search engine, they can reduce the time to search for relevant documents and ensure effective, agile and specific knowledge management and its reuse. Data analytics-driven decision making gives them a competitive edge, as they can analyse vast amounts of data to better understand client needs, optimise resource allocation, and forecast trends more effectively.

“In one of our major infrastructure projects, the use of BIM technology helped us reduce the design time by over 30% and also aided real-time monitoring of construction progress and proactive identification of potential issues, saving both time and resources,” says Amit Sharma, MD & CEO, Tata Consulting Engineers.

Technological advancements also help improve teamwork. It empowers teams to collaborate more effectively, especially across remote and hybrid work set-ups. The use of Cloud-based platforms and digital tools has also enhanced transparency, improved coordination, and streamlined communication between stakeholders.

But the challenges before CEOs are many, in adopting and implementing the new technologies, say experts. One of the primary hurdles is managing the transition for both the workforce and the business. According to the Deloitte Pre Budget Survey, 62% CEOs surveyed underscore the need for clear regulations for using these technologies and suitable training for the workforce. Introducing new technology requires not just financial investment, but also a cultural shift within the organisation. Upskilling employees, driving digital literacy and ensuring smooth change management are critical to ensure that technology adoption does not disrupt ongoing operations.

In parallel, aligning business with carbon reduction goals adds another layer of complexity. It requires balancing short-term business objectives with long-term sustainability goals. This requires continuous investment and collaboration with clients, suppliers, and regulators. Moreover, regulatory frameworks and market readiness can often pose challenges. While Cloud computing and technological advancements such as metaverse, AI, quantum computing, and supercomputing are on the rise, they also pose challenges of data privacy, security, and trust.

“The key challenge for the CEO is to ensure new tech solutions are scalable and economically viable for widespread adoption across projects,” says Sharma.

Corporates Lead The Way

RIL, Tata and Adani are leading from the front in this transformation. RIL has become a “net producer of technology and is transforming into a deep-tech company with advanced manufacturing capabilities,” says Ambani. The group is embedding innovative technologies in every single business, incubating several critical technological innovations in-house and building an AI-native digital infrastructure for all Reliance businesses with their software stack, integrating end-to-end workflows and real-time dashboards.

RIL spent over ₹11,000 crore in the last four years alone on R&D, driven by over 1,000 scientists who generated more than 1,000 patents in new technologies. The ongoing tech-driven transformation will propel RIL into a new orbit of hyper-growth and multiply its value for years to come, says Ambani.

The Adani Group, which has launched SuperApp ‘Adani One’, is building 350MW data centres in the short term and 1GW in the medium term — the largest order book in India. Adani Infrastructure Management Services (AIMSL) manages the entire operations & maintenance (O&M) of its energy assets across renewable power plants, transmission systems, and thermal plants. The Energy Network Operation Center (ENOC) in Ahmedabad does a centralised real-time monitoring of operational renewable assets across 12 states. ENOC works on a single Cloud-based platform in partnership with Google for ML, which helps in analytics driven O&M with AI-based technology. The ‘Edge Box’ at the plant helps in extracting deep data points and gives granular performance insights. The technologies help in predictive maintenance, thereby optimising mean time between failure (MTBF) and suggest corrective actions in real-time, reducing mean time to repair (MTTR).

Thanks to technologies, Adani Green Energy has been able to achieve high solar plant availability of 100% in the last five years, with solar capacity utilisation factor increasing to 25% plus in FY24 from 22% in FY19, clocking 90% plus EBITDA margins from power supply revenues, according to company sources. In fact, Adani Green Energy has operationalised 2,250MW of the 30,000MW renewable energy park coming up on 530-plus sq km at Khavda in Gujarat. Adani Group companies involved in its development and O&M include Adani Infra India, AIMSL and Jash Energy, a leading manufacturer of solar trackers, a device installed in a solar panel which moves in the direction of the sun to capture maximum energy for electricity generation.

Meanwhile, Adani Ports and Special Economic Zone (APSEZ) started operations in July for the first phase of the country’s first deep-water international seaport and container transhipment terminal at Vizhinjam near Thiruvananthapuram. The port has installed South Asia’s most advanced container handling technology. After completing the automation and the vessel traffic management system (VTMS) in the first phase, Vizhinjam will be in a class of its own as one of the most technologically sophisticated transhipment ports in the world, says Karan Adani, MD, APSEZ. The company has incorporated automation in cargo handling and yard management, and ports operate with the latest terminal operating systems (TOS) and port community systems (PCS), which help in enabling real-time data exchanges and ensure seamless operations with reduced human intervention. “Technology is central to our growth strategy, but we are not focused on technology for its own sake. Our investments in tech are aimed at improving efficiency and providing value to our customers and stakeholders,” says Karan. The technologies and digitally controlled centralised operations have helped in cargo volume growth and improved EBITDA margins for APSEZ’s logistics business, from 16% in FY19 to 26% in FY24 through optimal asset utilisation.

With technology deeply pervading businesses and lives, Indian CEOs are also quick to imbibe and implement them for the future.