The global automobile industry, especially in the US and Europe, is facing tough times amidst the rising input costs along with the intense competitive pressures and consequent drop in profitability. This is forcing the Original Equipment Manufactures (OEMs) and ancillaries to explore outsourcing and offshoring options from countries like India. Leading OEMs and Tier I suppliers have already started offshoring design and engineering services to India. Some of them are established offshore captive centers while others are involved in high-end design and engineering services. By offshoring required services to India, automotive companies can establish a 24/7 engineering schedule. Automotive design is very suitable to outsource as the process is a combined effort of the team of the outsourcer and the service provider. India is strategically a good option going by the time zone differences between India and the US and Europe. By offshoring design, auto companies can work on a continuous basis. Automotive design offshoring is emerging as a lucrative option for engineering graduates in India, whose number is increasing every year.
Automotive sector is one of the key segments of the economy today. The industry is witnessing a booming period and sales of both two and four-wheelers are on the rise. Since 2001, the industry has been growing at a rate of 16%, boosted by delicensing and relaxed Foreign Direct Investment (FDI) norms. Further, the industry is going to benefit with the latest reduction of duty on raw materials, the setting up of NATRIP, and finalization of Automotive Mission Plan (AMP). These reforms have helped the industry to post impressive growth in domestic and overseas markets. Automotive service exports crossed the $1 bn mark in 2003-04 and increased to $2.28 bn in 2005-06. The US is the largest contributor, accounting for about 75% of the total services offshored, followed by Europe. Germany, UK, France and Italy are the major destination countries in Europe.
|
