Atmanirbhar Bharat and its impact on Executive Hiring - Part 3 - Electronics Manufacturing

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Atmanirbhar Bharat and its impact on Executive
Hiring - Part 3 - Electronics Manufacturing
By Rahul Shah, Co-founder Director, Walkwater
Talent Advisors At WalkWater, we have been
tracking the Atmanirbhar Bharat campaign through
a series of articles since October, about those
sectors which could see a lot of action in
executive hiring in the coming few years in
India. The first two articles in this series
covered the Defence Manufacturing and
Pharmaceuticals sectors. This article tries to
understand the potential of the Electronics
Manufacturing sector in India - a sector which
has many more facets than just mobile telephony
(which has understandably caught everyones
attention in the last few years). In our view
this sector looks to have the brightest
prospects for helping India take centre stage in
the world economy. This paper tries to
understand the reasons for the same.
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Electronics With the recent announcement of
Performance Linked Incentive (PLI) scheme for
Indias electronics manufacturing sector, the
country has already received fresh investment
proposals worth INR 12 lakh crores from some of
the the largest Indian and global OEM and EMS
players including Samsung, Micromax, WInstron,
Foxconn, Dixon etc. In a more recent
development, the Tata group of companies is
seeking overseas loans of up to 1B to set up a
phone plant in Tamil Nadu. Also, there was news
in December that the Korean giant Samsung seems
to be firming up plans to shift one of their
units out from China to India. The rapid
growth and scale up of the mobile phone
manufacturing industry in India clearly
illustrate the massive investment potential of
this industry. Till 6 years back, there were only
two companies that manufactured mobile phones in
India. Today, India has become the
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second largest mobile phone manufacturer in the
world. In recent exciting developments, the
country has seen Apple mobile phones being
manufactured in India and several of Apples EMS
partners are ramping up their operations in
India - Foxconn, WInstron and Pegatron. Then we
have the other two giants Samsung and Nokia. But
that is not all. There is a long list of around a
dozen Indian companies including Micromax,
Intex, Lava etc. which are manufacturing their
phones in India. In fact, Indian mobile phone
manufacturers are not catering only to domestic
demand. The number of mobile handsets exported
from India jumped to 36 million in FY20, an
increase of more than 100 from the FY19 export
figures. The emerging geopolitical realignment
is another factor that could work in Indias
favor. The relentless standoff between the UK and
USA on one side, and Chinese company Huawei on
the other, make it clear that mobile telephony
is today an important part of espionage and
national security, and not limited to only
communication. The general feeling of antipathy
of the world towards China following the
outbreak of the pandemic has been another strong
factor in many electronics giants rethinking
their manufacturing dependence on China and
considering alternative locations like India.
Around the world, governments and companies have
been actively considering reshoring some parts
of their global value chains to their own
countries or to alternative low cost
manufacturing destinations, and the pandemic has
acted as a shot in the arm for these efforts.
There are several countries which are actively
soliciting for such manufacturing or supply
activities which might move out of China, and
India looks to be strongly placed to be one of
them.
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Apart from these external factors, India itself
provides a very strong reason for global
electronics manufacturers to have some part of
their manufacturing or assembly operations in
India. India is the second largest user of
mobile phones, fourth largest user of
televisions, third largest producer of solar
energy, just to name a few. The sheer volume of
aspirational consumers with impressive spending
power makes India a very attractive destination
for electronics manufacturers. As per Statista,
there were almost 450 million mobile phone
internet users in India in 2020, and this number
is expected to go up to 500 million in the next
three years. Given India is such a vast market
for mobile phones and many white goods, most
companies around the world are keen to have a
slice of the pie. But all these good news come
with a caveat. Our manufacturing expertise in
mobile phones is actually limited to manual semi
knocked down (SKD) level assembly of mobile
phones and their accessories. A large number of
the spare parts of these semi knocked down kits
comes from different countries like the USA,
Taiwan, South Korea, and even China. There are
several reasons for this. Let us take chips, for
instance, which are at the core of all the
circuit boards used in every electronic gadget.
The Extreme Ultraviolet (EUV) Lithography
machines that are used in the Chip Manufacturing
process are not yet manufactured in India. In
fact, we do not even have enough wafer
fabrication units, which are needed before
lithography. This is true even for simpler
components like the display panels. In India we
are not yet able to manufacture panels that can
match the quality of those that Samsung and other
manufacturers use in their smartphones. There
are many other such stumbling blocks
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which have ensured that we are still assemblers
of smartphones, and not manufacturers. In the
context of the assembling versus manufacturing
debate, it is also important to discuss
Electronics Manufacturing Services (EMS). Till
the end of 2018, the EMS market in India was
close to 7 billion, as per a 2019 report by
Frost Sullivan, while the total market for the
electronics sector in India was around 60
billion. As we come to the end of 2020, the
positive sentiment about EMS in India continues.
In November, Dixon Technologies stock zoomed 290
up from its March levels. This 26 year old
homegrown Indian giant began by manufacturing
televisions, then moved on to color televisions,
metal sheets and mouldings, washing machines,
before beginning mobile phone manufacturing in
2016. Dixon also added CCTVs and DVRs to its
portfolio recently. On the other hand, Sanmina is
a US company whose Chennai factory has EMS
capabilities outside the mobile handsets, and
manufactures medical equipment, storage
computing, avionics, industrial and multimedia
solutions. Flextronics is a global major in
automotive and healthcare EMS and has
manufacturing facilities in 3 locations in India
- Pune, Bengaluru, and Chennai. These are part
of its 7 locations in India which employ a total
of 25000 employees. These are just 3 examples
from the exciting roster of companies that make
up the EMS landscape for India, who are expected
to take advantage of the PLI announcement along
with new players. To give a further filip to
the electronics sector, The government has also
approved proposals to set up electronics
manufacturing clusters in as many as 20
locations across the country. As an example, the
cluster at Naihati, Bengal will be focussed on
consumer electronics,
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• health and medical electronics, industrial
  electronics, LED lighting, solar panels,
  photovoltaic cells etc., while the cluster at
  Bhiwadi, Rajasthan will have electronics
  components. Here is an indicative list of the
  other facets of the umbrella term Electronics
  that would be covered through these 20 clusters
• IT hardware
• Set top boxes
• Televisions
• Electronics manufacturing
• Automotive electronics
• IoT and network products
• Power electronics
• Electronics consumables, components, and
  accessories
• Point of Sale (POS) systems
• So what impact do all these developments have on
  hiring? At the outset, all manufacturing
  companies in general, and the electronics
  manufacturing sector in particular, have learnt
  many lessons in 2020 the hard way. As the
  bullwhip effect in Indias automobile sector has
  shown us since 2019, small disruptions at any one
  end of the supply chain can cause progressively
  larger disruptions in the other components of
  the supply chain. So retail demand fell
  continuously, as a result of which many car
  dealerships and component manufacturing units
  folded up. Similar horror stories have played out
  all year in all sectors, including electronics.
  The year 2020 has stressed every element of the
  supply chain of every industry in the country,
  and no amount of demand forecasting could have
  predicted the carnage that this year has
  unleashed. What this tells us is that from 2021
  onwards, all manufacturers (including electronics
  manufacturers and EMS companies) will have to
  put in a lot of effort

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and expertise in efficient forecasting models.
Apart from the engineering and technical hiring,
electronics manufacturers will have to seriously
invest in putting robust forecasting models in
place, preferably with artificial intelligence
capabilities which can trawl through humongous
amounts of data and come up with useful
insights. This will need them to plan for hiring
AI and ML experts who can help those machines
and tools do that forecasting efficiently. After
this, of course, are the engineering and
marketing requirements that any established or
newly formed electronics or EMS company would
surely need. The caveat in the engineering side
is that, as discussed above, we are still some
way off from having the technological capability
to manufacture wafers, lithographs, chips,
display panels etc. If India needs to take the
next quantum jump for assuming the mantle of
global leadership, then all companies would need
to attract talent that is familiar with and has a
minimum degree of expertise in these areas. As
we said at the start, the potential for the
electronics sector in India goes way beyond the
assembling or manufacture of smartphones. If all
the areas of the electronics industry that we
have covered above perform to their potential,
this sector can easily be one of the
frontrunners in providing economic activity,
employment generation, import substitution and
so much more. About WalkWater Talent
Advisors WalkWater Talent Advisors is one of
India's fastest growing Executive Search and
Talent Advisory firms. Started in 2011 by search
industry leaders, we are today a 30 member team
across five
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offices and an enviable track record across
industry sectors, both in India as well as
globally. The WalkWater team brings a unique mix
of strengths Intensive Client Partnering, Deep
Domain Knowledge and Global Coverage, among
others. This, coupled with a start-up drive to
excel, and a constant focus on values, provides
an unparalleled experience to our
clients. WalkWater has an impressive track
record across sectors Technology, Consumer and
Retail, Industrial, Pharmaceuticals, Healthcare
Lifesciences, and BFSI. Apart from assisting
350 companies hire 700 leaders, WalkWater has
also completed 40 bespoke Talent Advisory
engagements for established organizations and
startups. For more Information
https//www.walkwatertalent.com/