Tools for EMS manufacturing quote pricing analysis - Optimize total landed cost savings for your contract electronics outsourcing programs

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Tools for EMS manufacturing quote pricing analysis - Optimize total landed cost savings for your contract electronics outsourcing programs

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Reward (or risk) for OEMs seeking India EMS manufacturing partners

By VentureOutsource.com Staff

Indian EMS providers and Indian EMS industry both have their challenges. Partnering with the right Indian EMS providers can prove cost-effective for even the most demanding OEM executives.

As China loses some of its competitiveness for electronics design, manufacturing and PCB assembly, India and other Asian nations try to capture more contract electronics market share.

While India has direct labor costs competitive with China, Indian ESDM companies cannot claim this as an advantage for most OEM prospects because of India’s 200+ labor law constraints.

Employment and labor laws in India

For example, Indian government’s Industrial Disputes Act (IDA) says any Indian firms with more than 100 employees must seek government permission to re-assign or lay off even one employee. Some Indian states even require companies with 50+ employees to get government approval for assigning one employee from one task to another. (Electronics OEM professionals can click here to request a list of contract electronics factories and providers in India based on Indian state, services needed, and industry market.

 

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Also, India’s Trade Unions Act allows any 7 employees to form a union. This means any one Indian ESDM provider can have several, different unions within the same factory that management has to and engage.

Labor-market flexibility of developing Asia v. other, larger economies (2018)

Flexibility of wage determination and hiring and firing practices for most emerging Asian countries (with the exception of Malaysia and Taiwan, which are in line with developed market standards) have further room for improvement.

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Noting India’s relative placement below, and that results were partially derived from World Bank’s ‘Ease of Doing Business Rankings’, readers should note investigative journalists revealed the Modi government gamed rankings for World Bank’s ‘Ease of Doing Business Rankings’ by prioritizing minor institutional and procedural tweaks v. making bold economic reform, as promised. See proximity matrix below.

Concentrated revenues

Indian ESDM providers also, typically, can often have a high concentration of a few customers making up the vast majority of revenue. Its not uncommon for most revenue to come from three customers.

 

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Cost (pricing) models for EMS contract manufacturing

 

India’s ESDM industry is estimated to post a CAGR of roughly 30 percent through 2021 (from 2016) due to development of certain electronics end markets. Indian domestic ESDM providers have limited competition v. global EMS providers (except in smartphones). Recent developments at Apple will likely change this. Read more on Apple and India here.

Electronics manufacturing cluster locations in India, policies, and infrastructure

Indian government aims to rely on manufacturing hubs to provide employment and reduce imports of consumer electronics in the coming years. (See map, India clusters, below)

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