QuEST: Growth Ambitions in Germany

/ November 7, 2018/ AI, Analytics, Automotive, BMW, Embedded Systems, Germany, India, IoT, Mercedes Benz, News, QuEST, Unknown, VW

QuESTGlobal Services has big ambitions in Germany, where it intends to double its headcount in the country by 2020. The company has not provided any scale information, but based on its recent acquisitions, we are guessing that QuEST has approximately 700 FTEs in Germany, most of them in ER&D services, serving automotive OEMs and tier-one suppliers. This does not include an estimated 150 FTEs of Six IT Global Services, a vendor headquartered in Romania, active in IT services and embedded software that QuEST acquired in 2017.

Also, QuEST still has inorganic ambitions, always focusing on the automotive sector, around AR, AI, connected vehicle analytics and cloud, autonomous cars, e-mobility and shared services.

The German market ER&D services market is a crucial market in Europe, and there is no question that Indian ER&D services need to have a local presence there. The problem, however, is how to build a presence there. Automotive obviously is the largest market there, and there is no question that any vendor serious about the country needs to be addressing Daimler, VW, and BMW. The German automotive market has been difficult for years, and we still hear mixed signals, with one side again a focus on increased spending on autonomous cars, electric engines and connected cars, as well as new consumption models. On the other hand, OEMs are under pressure to realign their costs: today VW announced that the R&D investment in new technology accounted for EUR 1bn this quarter and is looking at ways to reduce costs. We think offshoring is a logical step. With this mind, the strategy of QuEST to acquire specific digital capabilities makes sense. What is unclear is whether doubling its headcount in the country is a wise move. We would have thought that QuEST would be focusing on its Romania-nearshore value proposition.

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