Auto out sourcing sector

The automotive industry not only comprises over 4% of the country’s GDP, it also directly employs about 4.5 lakh people. India has emerged as a great sourcing destination for auto parts and components for global auto majors. Indian manufacturers enjoy several benefits such as a vast pool of skilled engineers and technicians, low costs, locally produced raw material and high machine tool capabilities.

The challenge for India in the future will be to keep going up the value chain and keep delivering with regard to component manufacture, design and engineering.

Outsourcing – fuelling growth: as global makers come under pressures to manufacture better vehicles that combine a host of functionalities and maintain all safety standards, there is also the dichotomy of countering rising costs. This is where India has capitalized. There are hopes that in less than a decade, India will achieve a 3-4% share in the potential global sourcing market.

This market could be worth $375 billion by 2015, predicts a McKinsey report. The report adds that India is already a preferred destination for sourcing auto components by almost all the big global automakers. The growth in the Indian component industry will continue as long as we are able to deliver according to global expectations and are focused on high volume deliveries.

The current picture is indeed a positive one. Companies such as Toyota, General Motors and Daimler-Chrysler are already sourcing components from India. Additionally, India has also become a manufacturing hub for particular car models of Hyundai, Ford, Skoda, Suzuki and Mahindra.

Opportunities for future growth:

The opportunity’s here: Design engineering services can qualify as the next major wave, after IT. In fact, India is moving up the ladder from business process outsourcing to knowledge product outsourcing. Engineering designing and R&D are two areas that will see a lot of employment opportunities.

India is on the threshold of tremendous growth opportunities in the area of engineering design services because of skill-intensive engineering and matured IT services capabilities. This comes with the realization that India cannot stop being just a shop floor to the world but to take the next step to develop technology solutions and create a wealth of intellectual property.

With such enthusiasm among Indian industry people and with all of India’s latent potential in the automobile sector waiting to be tapped, it might not be too surprising if one day foreigners are seen riding around in their very own, top-class, “Made-in-India� cars in their own countries.