India Inc.: From IT services to product development, India seeks world-class status
After success in the IT services arena, India is making inroads into the manufacturing sector, with companies such as Bharat Forge, Bajaj, and Larsen & Toubro offering to design and build products on behalf of large global enterprises.
Following its success in the IT services arena, India is now making inroads into the manufacturing sector, with companies such as Bharat Forge, Bajaj, and Larsen & Toubro offering to design and build products on behalf of large global enterprises.
These companies also are working hard to change India’s reputation as a low-quality manufacturing center, says Noha Tohamy, a VP with AMR Research , Boston.
"India looks to use its skilled and highly educated resource pool to differentiate itself from China, by focusing on skill-intensive design and manufacturing outsourcing," Tohamy said, in a recent AMR report. "For example, Tata Technologies-the design group within Tata Consultancy Services-does 74 percent of its work for foreign clients, including Chrysler, Boeing, and Airbus."
Tata Technologies also designs the cars and vans sold by Tata Motors.
Respondents to a recent AMR survey noted that their companies plan to increase sourcing in India, citing the lure of India’s up-and-coming, middle-class consumer base and the country’s increasing cost competitiveness with China for materials and labor.
Still, global firms face a slew of operational challenges in India , Tohamy says. Unreliable electricity, dilapidated roads, and congested seaports and airports all contribute to an infrastructure decidedly lacking in preparedness compared to China’s well-run, foreign-investment-fed industrial centers. In fact, survey respondents identified immature physical infrastructure as the primary risk associated with operating in India. Additionally, in many sectors, companies still have to contend with anti-business government policies that restrict hiring and hold back domestic demand, Tohamy says.
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