India is a factory for the future: Dassault Systèmes CEO Pascal Daloz

Pascal Daloz, CEO, Dassault Systèmes holding a 3D-printed heart. About seven years back, the life sciences sector was only 5 percent of the company's total revenue, today it is 25 percent. Image: Nishant Ratnakar for Forbes India

Pascal Daloz takes pride in calling Dassault Systèmes a “catalyst for human progress”. Daloz took over as chief executive officer of Dassault Systèmes in January after Bernard Charlès stepped down. The company creates virtual twin experiences of the real world with their our 3DEXPERIENCE platform and application. 

Virtual twins are digital representations or twins of a real-world product, process or system in structure, context and behaviour. These can generatively design and manage entire product lifecycles, from past to future, enabling data and decision continuity. According to a recent report released by Dassault Systèmes and Nasscom, India is likely to see a 2x growth in virtual twin adoption. 

Dassault Systèmes has been present in India since 2007. “When we launched our India operations, it was a way for us to access qualified talent at a lower cost. That is not the case anymore. We are now looking at India as an innovation hub,” says Daloz. In India, it has clients such as Havells, L&T Energy-Hydrocarbon, Dixon Technologies, Tata Consultancy Services and many more.

With a focus on manufacturing, life sciences and infrastructure, the company is present in over 150 countries, with more than 350,000 customers. Globally, the company’s annual revenue for 2023 was $6.44 billion. Going forward, Dassault Systèmes is hoping to continue development across industries. But life sciences has been a growth driver for them. “About seven years back, the sector was only 5 percent of our total revenue. Today it is 25 percent, almost equal to the auto sector,” says Daloz. The reason for doubling down on life sciences, he says was, “serving the industry that is willing to innovate, and spend the most on research and development”. For life sciences, it serves customers such as Sanofi Vaccines and Lambda Therapeutics, among others.  

During his first visit to India, Daloz spoke exclusively with Forbes India about the country becoming a major revenue contributor to the global business, focus on generative AI and more. Edited excerpts: 

Q. You recently took over as CEO. What are some strategic changes that you are looking to bring about?

I have defined the next vision for the company, up until 2040. The idea is to create an equivalent of three Dassault Systèmes universes: Manufacturing industries; Life sciences and City and Infrastructure.  

Now to do so, the virtual twin concept isn’t enough. In the next 20 years, the concept would have evolved to how these different twins are connecting with each other. For instance, a manufacturing company will be connecting the twin of the product with the twin of the plant.

Going forward, our vision is to connect these three universes. Now to make this happen, from a strategic standpoint, we will need to move to the cloud. Currently, the cloud is underserved, and is less than two-thirds of our total revenue. I’m hoping to move a vast majority of the business to the cloud in the next 10 years. This will help connect the virtual and real, hence not only deliver services in a different way, but also collect the data. 

Also listen: Bernard Charlès on how companies are taking software services back in-house, and Dassault's plans in India

Q. How significant is the Indian market for Dassault Systèmes? And what is the potential for growth here? 

India is one of our growing markets, and it's aligned to what we are witnessing within the country itself. In India, we are growing double digit year-on-year, and that momentum is going to continue for some time. The target for the India business is to touch $1 billion in revenue by 2030. Currently, we are a $6 billion company, so if India contributes $1 billion… that would mean they are a large part of the business. 

We are expecting to see this growth, not just from our existing customers but also a large amount of penetration into newer areas such as infrastructure and life sciences, among others.  

It is also extremely strategic for us from a capacity standpoint, since we have almost 25 percent of our workforce sitting out of India, and we operate in close to 140 countries. So that means something. 

While India has the right talent, the infrastructure is not there yet. We can contribute in transforming the Indian economy by investing in the right infrastructure that will not only serve the Indian market but also the world. 

Even from a geopolitical perspective, it is becoming a little tricky as a global company to serve the US and China. In that, to an extent, we do not have this constraint with India. So keeping these in mind, we believe India has a lot more potential for growth, and we will continue to invest deeply in this market. 

Q. What are some of the largest revenue drivers for the India business? 

The transportation and mobility sector is leading the pack, followed by industrial equipment. But we feel there is a lot of potential to grow in life sciences. We have a massive footprint outside India already. All energy sectors, including renewable energy, can be scaled up immensely. 

Q. And to what extent are you working with governments? 

We are working with governments in three areas. 

The first is skill development. The state governments are looking to build a strong workforce for the future. They are looking at how we can bring in the virtual world in giving certain domain expertise. For instance, to train an aerospace engineer, it is not practical to have an aircraft hangar in ever college. In that case, students can build an aircraft virtually and learn all the relevant practical skills involved. 

Second, we are helping various state governments with project management systems. There is a lot of activity happening around infrastructure development. There is a need on how they can access a single dashboard to look at the project’s process—integration of all vendors, timeline etc. 

Lastly, building on virtual twins of cities. This helps in the engineering element to understand the impact of building a certain flyover or how much energy can be generated by adding solar panels on each house. Building a virtual twin of a city can help in designing the city better.  

Q. What are some new sectors you are hoping to foray into? 

Consumer packaged goods is a big opportunity for us. 

Q. What kind of innovation is being done with generative AI? 

Currently, we are seeing a lot of generative AI around the consumer side, but when it comes to B2B, it is still emerging—that is a massive prospect for us. This is because there is more data coming from the industrial world than from the consumer. Often people make the mistake of thinking that if AI is trained on a consumer-oriented set of data, that is enough. That is not true.

We have access to large sets of industrial data. That is why we have built an architecture where we can put all this data, and train our AI engines. That is a big differentiator for us. 

Second, AI is costly. To run a prompt, it costs an average of 50 cents to more than $1. So, it is necessary to use this expensive technology for the right use-cases, otherwise you will destroy its value. One way to minimise cost is by making it hybrid. There is no need to treat everything with an AI-based approach. The vast majority of use-cases are using AI to have conversations, but every sentence will cost you $1. If you look worldwide, the only one making money with AI right now, is NVIDIA. Why? Because they build the infrastructure for this.

Modelling and simulation are much more affordable ways to do this. So that's the reason why when we build an architecture, we know how to slice the prompt, and send pieces to different engines, including the AI engine, in order to rebuild the consistent results in an economic envelope, which is affordable for companies. We are in a good position, especially for the B2B market. 

Q. What makes India a different market compared to the rest of the world? 

Everything has to be at scale, which is difficult when the country does not have the infrastructure at scale. It’s an innovative country because you are managing the contradictions, to have to put everything at scale without having the resources to do it. You need to find a different way, you need to challenge the status quo, this in my view is the unique part of India. You call it ‘Incredible India’, for me, it's one of the places where imagination has no border—I would say India is a factory for the future.