Tata Tech CEO sees 'breakout year' on auto outsourcing shift

Harris said the company is confident it will hit its "strong double-digit growth guidance for the full year" despite those restructurings.

The CEO framed the shift as a permanent one. He predicted the engineering services market will split into two tiers. Companies that take on responsibility for full vehicle development and large work packages will do well. Those that just deliver services will remain dependent on OEM capital spending.

"We think we are on the right side of that divide," Harris said. The improvement in growth trajectory over the past nine months, he added, "is likely to sustain and quite probably expand in terms of growth and margins."

Harris also said uncertainty about the viability of electric vehicles has largely resolved. Policy changes in the U.S. and regulatory shifts in Europe created a period of caution. Automakers have now settled on more balanced portfolios of propulsion systems.

"They are clear now on their future product strategy. Investment decisions are being made," Harris said. That clarity is fueling the improvement in new orders, he added.

Tata Technologies' position as a full-service engineering partner for global automakers means it benefits when OEMs increase spending on product development, even if the underlying mix of powertrains shifts. The key variable is the pace at which outsourcing expands.

Harris cited super car company McLaren as an example of the trend. "Driving experience is what is core to their brand. Everything else we believe will increasingly be outsourced."

"We are doing well because of our value proposition," Harris said. "The industry from a product perspective is having the catch up from a period of under-investment and we are the beneficiaries of that because we won a number of full vehicle programmes in the first quarter. That is helping us."