Digi-Key Electronics, one of the giants in the distribution of electronics components, recently opened a distribution centre in Bengaluru. Yashasvini Razdan from Electronics For You had a free-wheeling discussion with Ramesh Babu, Chief Information Officer, Digi-Key, and got to know about the plans for this centre. Here are the key excerpts.
Q. Digi-Key had been planning a setup in India for quite some time, but some legal issues were acting as a deterrent. What has changed for you to take the leap now?
A. Digi-Key has been in India for a long time, irrespective of whether we physically had a building or not. This year alone, we directly sold around $70 million worth of products from India through the US website. We do have offices (already) in India. For example, in Delhi and Gurgaon we have an order entry support team. So, I see the new centre as an extension of what we already have.
Q. What are the key drivers that prompted Digi-Key to set up a larger presence in India?
A. First, our sales have grown in India (even) with limited marketing efforts at our end. We had been thinking about how to support the growth, and it reached a point where we needed to have a local presence. We have also seen a shift in our supply chain. Some of our product suppliers are shifting their manufacturing from China to India. The most famous example is that of Apple shifting some of their production to India. There is a whole ecosystem around Apple and other electronics players where they are covering customers. So, we are looking at a very explosive growth and we cannot afford not to have boots on the ground to support as well as fuel the growth and have the infrastructure available readily to support our current customer growth. So those are some of the tipping points for us—sales growth and future potential.
Q. Can you shed some light on the new centre that Digi-Key is setting up in India? Will it be a global support centre?
A. We are purposely calling it the Global Capability Centre. I hate using the word support because it’s what other people use India for—that is, just support. Our centre in India will be an extension of Digi-Key Inc. We’ll have sales roles, IT roles, design-engineering-support roles, and all of the supply-chain roles. Almost every role you can imagine will be there. So, we don’t think of this as a support function at all. And that is because maybe other companies do not have sales in India, but we do have sales, that too explosive sales. So, it’s not without reason why we are doing it. We have customers, we source products from India, and we write code from India; so it’s real. This is the best time for us to bring it all together into one global capability centre.
Q. How will your customers benefit from your local presence and what are the prospects that we can see concerning delivery, billing in the rupee, the GST input, etc?
A. Yeah, I think you already are touching on it. So, sometimes, when we don’t have a legal entity in India, some of the logistics become hard for our customers. So, currently, the customers are importers on record today, but by having a legal entity we will become the importers on record, remove the customs pain for our customers, and have a unified tax structure, instead of just buying in the US dollar, and be able to write whatever code we need to seamlessly on the invoices.
In addition to the sales and the logistic improvement experience angle, we are reaching out to universities in India. We are hiring university ambassadors, and we are catching engineers at the source in the engineering colleges. We are planning to provide content, such as how to do a particular design along with reference designs. We are also thinking of providing new product samples. These are the latest and greatest semiconductor designs that are coming into the market.
To fuel these designs for new products, we are reaching out to universities. The HoDs of these universities are super interested because we aren’t just giving out products, we are giving them designs for the products so that students can use them to learn, and our relationship with our customers starts right there. We don’t monetize the books, but they will come to know of Digi-Key and the resources we have so that when they go to the job market and start working for companies, we are a prospective destination for them. So those are some of the key advantages of being here and having boots on the ground.
Q. Any change expected in the way you deliver products, or will it continue to happen directly from the US?
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