Outsourcing

For the past few years India has been the focus of outsourcing. Much of the current outsourcing to India has been related to services - Software, Business process, CAD/CAE, GIS etc. Manufacturing related outsourcing has gone to China to a very large extent. However, India is a good destination for manufacturing outsourcing too. I have been associated with companies that manufactured electronics and electro-mechanical products in volumes of the order of 100,000 per annum. It is my conviction that manufacturing in this volume range or lower is certainly a area where India will not be behind China.

While low labor cost is often a consideration for manufacturing, India can contribute through a higher level of technical sophistication. Traditionally manufacturing has been successful in India to cater to the local market. Export oriented manufacturing has come under focus in the last 10 years. Thanks to a decade of Japanese collaborations, the quality systems related awareness and learning preceded the export orientation.

To a new international company based in US or Europe, looking for outsourcing partners in India, there can be many problems. The biggest difficulty may be in the cultural differences. On time delivery, acceptance criteria, payment terms are often areas where the customer has to be clear and understand the local points of view.

I invite comments from readers on their experiences of successful deals or disappointment.