Business Weekly

Owing to a massive slowdown in the number of graduates emerging into the UK workforce equipped to provide the skills it needs to develop its high performance computer products, Concurrent Technologies has set up a new design facility in Bangalore to tap into the massive pool of engineers the city offers.

"Universities in the UK just don't teach the degree programmes we need any more," said Concurrent's MD, Glen Fawcett. "The Marconis and GEs have gone and there is just no demand any more.

"India turns out more graduates in the field that we require than both the UK and the US combined."

So the Colchester-based company has created a new 9,000 sq ft facility in Bangalore, investing £1.1m in the building and new staff, which it intends to operate in tandem with its existing facility in the UK, effectively doubling its design capacity.

"With the addition of the design capacity that all of our new staff will offer, we are looking to double both our product line and revenues within the next three to four years," Fawcett said.

Concurrent's move to the subcontinent is part of a growing trend among the region's high tech businesses - including CSR and more recently, ARM - in moving East to tap India's deep well of electronic engineering skills.

He was quick to point out that the new facility was not a move away from its continued operations in the region, stressing the company's commitment to retain its existing design department here.

"We are still very much pushing ahead with design in the UK, we have 27 staff here and are always recruiting new engineers.

"But we have struggled - most of our newest staff in the Colch ester facility have been recruited from outside the UK, outside the EU even. But people don't always want to leave their home country," said Fawcett.

He also said that the expansion was solely a solution to the growing gap in the skills market, and not a move to reduce overheads, adding that it could be three to four years before any financial benefits are realised.

"In the next 12-18 months, we will see no benefits - as the building is completed and staff are trained, realising only cost benefits a further 6-12 months after that as design time is increased," Fawcett said.

"Then it could be another 6-18 months before we see returns as customers write the specific software they require for the equipment we've supplied."

"We have some current designs which have been available for three years and still not shown a profit. We have to spend a fair bit up-front in our industry, but then it comes back within a few years."

The company is in good financial standing to shoulder the additional burden however, with the company recently posting increased pre-tax profits for the year to December 2007, up over six per cent to £2.4m.

It reported increased sales demands, most notably in India and the US, resulting in new sales channels being established, and a cash balance of £4.8m with no borrowings.

Concurrent has not neglected the region during its spate of investment, however, and Fawcett also told Business Weekly of a substantial input of cash into manufacturing within the EoE.

"In our specialised industry, it is far more cost effective to keep the manufacturing close to the headquarters in the UK, so we have invested £600k in expanding our existing facility," he said.

"We feel that it's best to keep the manufacturing close to HQ, too, so we have no plans to take it abroad."

Back in Bangalore, Concurrent's Indian operation already has three staff on its books, growing to six by the end of next month and eventually aiming at 24 before the close of 2009, almost matching the staff in its UK design base.

It has invested £1.1m in the move to date, which Fawcett said will increase by a further 40 or 50 per cent next year.

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