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Transcript of Summer Project Report 2010 12final
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A PROJECT REPORT
ON
ASSESMENT OFDOMESTIC AUTOMOTIVE ANCILLARY MARKET
POTENTIAL
FOR ENGINEERING SERVICE BUSINESS
Submitted as a partial requirement for the degree of
POST GRADUATION PROGRAM
Submitted By:
Mohit Fauzdar
Sec B
Submitted To:-
Ms. Ajeta Bhatia
FOR
Mahindra Engineering
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INDEX
Sr. No CONTENTS Pg. No
1
2
3
AcknowledgementCompany Certificate
Executive Summary
4
5
6
Chapter 1 Introduction
Introduction Of Industry
7-11
Objective of the Report 12
Chapter 2 Section Two: Engineering Services
Business
13-30
Chapter 3 Research Methodology
Project Cycle
Review Of Literature
32-42
36
37-41
Chapter 4 SWOT Analysis 42-48
Chapter 5 Findings (Constraints,
Recommendations, Conclusion)
48-49
Chapter 6 Reference Material 50-51
Annexure
Bibliography
50
51
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AKNOWLEDGEMENT
I owe a great many thanks to a great many people who helped and supported meduring the writing of this Project Report.
My deepest thanks to Lecturer, Ms. Ajeta Bhatia the guide of the project for guiding and
correcting various documents of mine with attention and care. She has taken pain to go
through the project and make necessary correction as and when needed.
I express my thanks to the Director of ,I ILM-AHL JAIPUR, for extending their support.
My deep sense of gratitude to Mr. Karim Shibi-Marketing Manager, ofMahindra &
Mahindra Ltd. for his support and guidance. I also want to thank and appreciate to the
helpful people at the Mahindra & Mahindra ltd, for their support.
I also want to thank my Institution and my faculty members without whom the project
would have been a distant reality.
Mohit Fauzdar
Sec : B
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EXECUTIVE SUMMRY
It is said, The most important single word is we and the zero important word is I this
is even true in modern era. It is absolutely impossible for a single individual to complete
assigned job without help and assistance of others. The project study is an integral part
of the Post Graduate Program. I Mohit Kumar Faujdar, IILM ACADEMY OF HIGHER
LEARNING chose the organization Mahindra & Mahindra ltd, Delhi (Delhi) for the
project study .This organization provided me an aesthetic opportunity to enhance my
knowledge about Ancillary Component market in India . Mahindra Engineering Services,
which is the part of M&M ltd, is Indias one of the largest service provider .It is doing its
business by continuously delivering differentiated services that provide high business
value in return. I decided to do an internship in M&M ltd, because Ancillary Component
market is a new sector which has great potential in terms of expanding itself.
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Chapter 1
Section One: Introduction
The Automobile Industry
Stiff competition in domestic automotive market is forcing OEMs and automotive
component manufacturers in North America and Western Europe to outsource and
offshore their engineering requirements to low-cost countries.
Cut-throat competition in the US and European automotive markets coupled with rising
labor costs and shorter product cycles are drastically impacting the profitability of
automotive manufacturers. Automotive manufacturers who are able to maintain the
shortest "concept-to-market product cycle" at the lowest production cost will emerge as
market leaders. In an attempt to lower production costs and streamline production
lifecycles, OEMs and component manufacturers in the US and Europe are adapting off
shoring and outsourcing of engineering services such as designing.
Why outsource?
The time taken to design new cars has shrunk from five years a decade ago to 10
months now. Increasingly, engineering drawings are becoming more complex as vehicle
manufacturers introduce niche vehicles across various segments to meet changing
consumer preferences. In order to keep product development costs low without
affecting product life cycles, more of the design work is being outsourced to low-cost
destinations. By outsourcing the design work to low-cost countries like India, US
automotive manufacturers can save between 10-30 per cent of their production costs.
Aravind Melligeri, President of Quest Engineering & Software Technologies, a
developer of passenger cars in the US notes that, in 2004 a typical US automotive
manufacturer could get engineering drawings developed in India for approximately US$
1 million, whereas the same would cost thrice as much in the US.
In addition, matured domestic markets are forcing the European and US automotive
manufacturers to gain a foothold and expand their reach in developing markets.
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Compared to the OEMs, component manufacturers are way ahead in outsourcing their
operations such as component designing due to their lean business structure and the
pressure from OEMs to keep production costs down.
Reasons for outsourcing vary. General Motors outsources a part of its operations to cut
costs, while Toyota considers outsourcing as a tool to develop new markets and to use
the diversified talent pool around the globe to enhance its output and quality.
Outsourcing scenario in India - Industry analysis
Outsourcing in industries such as information technology started much earlier than the
automotive industry. In the automotive domain, a constraint was the need to share
product-specific information, which is intellectual property of the company and requires
development of trust among the business partners.
In the initial phase, engineering services outsourced to India were limited to drawing
and converting 2D images to 3D images. Today, Indian companies have moved up the
value chain and are handling critical tasks such as development of designs for
automotive machinery and tools, patented products, and conversion of engineered
drawings from paper to CAD. They are developing chip designs and designing
electronic circuits that are finding increasing use in modern automotives.
Categories of engineering service providers in India
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Captives
These are the business units of foreign OEMs such as GM, Delphi, Renault and Ford.
Renault operates its automotive designing centre named "Design India" in Mumbai to
design vehicles for the Indian and other regional markets. In order to explore various car
design cultures, Renault in partnership with Autocar magazine conducts 'IndDesign,' a
car design competition.
Subsidiaries of Indian OEMs
Some of the Indian OEMs such as Mahindra, Hero and Eicher belong to this category.
For example, in July 2003, Mahindra and Mahindra established a subsidiary named
Mahindra Engineering Services that operates through an in-house design team. Thesubsidiary provides design and product development services for the automotive
industry and also develops other industrial products.
Independent engineering design firms
These include companies such as Plexicon, DC Design and Neilsoft. For instance,
Neilsoft offers design and detailed engineering services such as design modeling,
design validation and design automation across the entire vehicle developmentprogram.
IT service providers
This category includes companies such as TCS, Satyam, Wipro, Infosys, etc. These
Indian IT giants are entering the engineering service outsourcing industry which is still in
its nascent stage in India. Companies like TCS that already offer software solutions for
engineering companies can easily expand their range of services to include product
design and development.
Major automotive companies including General Motors, Ford, Toyota and BMW
outsource their engineering operations to either third party vendors or captive centres
established in India. For example, in 2005, TCS won a major IT and engineering service
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contract from Scuderia Ferrari for IT and engineering services for its Formula 1 car.
Daimler Chrysler established its Daimler Chrysler Research Center (DMRC) in
Bangalore to conduct research in the areas of encryption, image signal processing,
telematics, fuel-cell modelling, CAD, CAM, CAE and PDM for the company's global
requirements. The company has also tied up with TCS for its CAE requirements.
IT giants such as Intel, Motorola and TI have gained international reputation in chip-
design. For example, Intel has been developing engine control electronics such as
microcontrollers since 1983. The company's 8061 microcontrollers were first introduced
in the 1983 Ford EEC-IV. Intel continues to develop innovative and highly integrated
microcontrollers to help automotive manufacturers with evolving power train
applications. These factors leverage India's position as a preferred destination forengineering service outsourcing. Equipped with technological expertise and availability
of cheap finance, Indian companies are poised to offer complete solutions from design
to manufacturing for firms outsourcing work to India.
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Source: www.acmainfo.com
Market analysis
In September 2008, CIOL reported that automotive engineering service outsourcing
market in India was valued at US$ 18.40 billion. According to ValueNotes, Automotive
design and engineering outsourcing market in India was valued at US$ 8.70billion in
2005, and is projected to cross US$ 20 billion by 2010. Foreign companies save
approximately 20-40 per cent on their design and engineering cost by outsourcing.
Considering the comparative cost advantage, investment in R&D to produce a new
vehicle is estimated at US$ 150 million in India, as compared to US$ 600-800 million in
the US. According to data published by A.T. Kearney, India holds a major share of the
global automotive design outsourcing industry, which was valued at approximately US$
9 billion in May 20
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Objective Of Project Report
The objective of this project report is to find and assess the potential of the
domestic automotive ancillary suppliers market for the engineering services
business.
Engineering services represent one of the largest sections of the industrial world,
with an estimated 750 billion $ worth of value addition per year. These services
comprise a vast swatche of design & support services essential for the
functioning of practically every industry, spread across the entire spectrum of
engineering.
Engineering services are those functions that deal with or related to core
engineering processes like:
CAD/CAM Auto Design
My objective to make this project is to get the finest and proficient list of suppliers
in order to get a cut above level of business experience, while making a deal.
While making a product there are many phases which comes during its cycle and
during that season a single fault can cause bigger losses. To stop such defects
and tribulations assessment was necessary.
Structure:
The models in the car market can be fitted to different segments as given below:
Figure -Structure of Passenger Vehicle Market (India)
Source :www.acmainfo.com
Category Models
Economy segment (upto Rs0.25mn)
Maruti Omni, Maruti 800 etc.
Mid-size segment (Rs 0.25-0.45 mn) Hyundai Santro,i10, Tata Indica,Maruti Alto, Ritz, etc.
Luxury car segment (Rs 0.45- 1mn) Tata Indigo, Honda City, MitsubishiLancer, Ford Ikon, Opel Astra,
Hyundai Accent & othersSuper luxury segment (above Rs1mn)
Mercedes Benz, BMW,AUDI,VOLKSWAGEN, VOLVO, etc
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Chapter 2
Section Two: Engineering Services Business
Engineering services represent one of the largest sections of the industrial world, with
an estimated 750 billion $ worth of value addition per year. These services comprise a
vast swatch of design & support services essential for the functioning of practically
every industry, spread across the entire spectrum of engineering.
What is Engineering Work?
Engineering work is unique in the sense that it is generally not considered a commodity;
rather it is considered a value-added service. It is not something that can be automated
as there are always different factors and emerging technologies. The engineer is in
contact with the client at all steps. The user may also be brought in the process. This is
an iterative process. Constant reevaluation of the process and the progress is required.
This leads to modifications. Upon completion, the engineer may be involved in the
operation, the sales, or may teach the use of the product.
I.Idea Phase - Identification of a problem or an idea (new building, product)
II.Design Phase - The engineer analyzes the idea or problem. Designs solution
under guiding factors
listed below.
III. Test Phase - The
engineer applies the
design to a model to
test. This would occur
more frequently with
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products as opposed to construction.
IV.Manufacturing or Construction Phase - The engineer supervises the
manufacturing processes (for electrical and mechanical engineers), construction (mainly
for civil engineers), or improvements made to a plant, operating system. Modifications
made during this process.
V.Product Completion or ProductionEngineer or manufacturer may simply
hand product over to the client (i.e. electrical device), may sell the product (i.e. scientific
instrument), may actually operate the product (power plant), or may teach the operation
to the user (i.e. office building).
Standards play a large role in engineering work as much of engineering results in the
design of products. Standards serve to facilitate the reproduction and ensure
compatibility between products. This could be in the form of standard software formats
to guidelines for fitting screws or pipes.
IT is linked to the entire value chain but engineering sits at the heart of it. Some
companies such as Toyota are built around engineering
% of respondents considering their function as core / strategic (BAH survey):
Engg - 95%
Finance - 80%
S&M 70%, Mfg - 60%
IT - 30%
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How large is the engineering services domain?
Engineering domains, Well, very large, because practically all core engineering
functions will have an accompanying service / support aspect. In some industries, the
support activity might be much less in scope than in some others, but in practically all
the support element exists.
Some estimates put the engineering services industry to be close to a trillion $ in size.
That is over 2% of the total world economy. Imagine!
Engineering Services Business Over The World
In the 1900s, engineering and engineering services were primarily in some parts of
western Europe and north America. Currently, engg extends to more parts of Europe,
Russia, and Australia. In the near future (2015), it will be in India and China as well.
Share of foreign R&D: 45% in 1975, 70% in 2009 (for all cos) Source: Booz Allan
Hamilton/NASSCOM
4570
Share of foreign R&D
In 1975
In 2009
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Top reasons for foreign R&D sites: Business Environment (9%)
Technology Clusters or Academic Institutes - 20%
Markets or Customers - 24%
Proximity to production facilities - 12%
Qualified workers - 18%
Base 10%
Low cost exit
0
5
10
15
20
25
Top reasons for foreign R&D sites
Top reasons for foreign R&D sites
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Q. Top industries that involve significant amounts of engineering
services?
Automotive, Aerospace, Telecom, Semiconductor, Consumer electronics and
Pharmaceuticals verticals
Q. Why should engineering service be outsourced?
For pretty much the same reasons why many other services - such as traditional
business processes such as accounting and software development - are outsourced.
(1) Cost
(2) Ability to get better quality, through a vendor qualified in and focused on a specific
engineering service domain.
While cost was perhaps the most important aspect in business process outsourcing, in
the case of engineering services outsourcing, the ability to get better quality from a
domain focused vendor is an equally important driving factor.
But ESO is much more complex than BPO because of the complex nature of
engineering design. Engineering services delivery revolves around technical skills,
domain expertise and good engineering judgment. Engineering design work centers on
product IPs of manufacturing companies. Most of the services outsourced are related to
design services around patented products, design specifications or customized interiors
of a total engineering solution.
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Q. Type of engineering services being outsourced?
Well, a rather wide range of engineering support services have been outsourced for
many years, but most of these outsourcing assignments have been with onshore or
near shore partners/vendors. Offshore outsourcing of engineering services is a
relatively recent phenomenon and only a small subset of services are currently being
offshore - examples are CAD outsourcing for a variety of design intensive industries,
automobile & other product designing, testing & analysis of products for various
parameters and characteristics.
Many companies have begun to make a mark, successfully using the skill-sets, tools
and experience from IT software and services, to evolve from providing basic data
conversion, through 2D and 3D CAD/CAM/CAE, advanced simulation, prototyping,
testing, PLM, product design (engineering), process engineering, plant automation and
asset management services. Though most of the initial players in the segment have
emerged from legacy IT services businesses, today the segment has matured with
several of these firms having established an independent engineering services practice:
Engineering Services Outsourcing
Design, Mechanical & Manufacturing Engineering
Plant Automation & Enterprise Asset Management
Electrical & Electronics Engineering
Advanced Simulations, Prototyping, Styling & Testing
Embedded Design & Development Engineering
Product Lifecycle & Data Management
Offerings to US clients include concept modeling of products based on customer
requirements, as well as the design and manufacture of:
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Jigs and fixtures
Hydraulic systems
Material handling equipment
Assembly systems
CAD and design services in AutoCAD
SolidWorks, SolidEdge, and Pro/E
Architectural drawings
Building and Systems layout (HVAC, piping, systems, etc.)
Legacy data conversion
Drafting and detailing
3D modeling and assembly
Preparation of production drawings
Parts lists and bill of materials
Handling ECNs (Engineering Change Notices)
Higher-level CAD tasks
AutoCAD, SolidWorks, SolidEdge, Pro/E
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Q. Can all engineering services be outsourced?
In theory, yes. In practice, no.
Q. Why can't some engineering services be outsourced in practice?
For strategic reasons and integer action with other processes
Strategic - for many companies that consider their engineering expertise to be
their core strength, outsourcing their engineering services might be akin to giving
away their crown jewels. They might wish to keep a select list of engineering
services to be done within their company, at any cost.
Integration with other processes - Even in cases where a company might not
consider a particular engineering process as its core strength, it might not be
able to outsource it because of the close integration this process has with some
other core engineering processes / services. For instance, an auto company
might not be willing to outsource its mock-up modeling processes to other
companies because its main car design architectural team (which the company
might consider its core strength) might be working far too closely with the mock-
up modeling team and any disruption in this seamless process could be very
costly to the company in the long term.
Legal & Policy / Governmental, Trade Restrictions
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Q. How is it possible to offshore engineering services? Arent therephysical constraints to outsourcing engineering services, as againstoutsourcing IT or business processes?
Engineering services, especially in design, can easily be exchanged offshore. Almost
30% of companies have outsourced a piece of their new product development and
introduction (NPDI) process. And another 40% are expected to outsource activities in
the next two years, making offshore outsourced engineering services one of the
fastest-growing outsourcing markets.
Engineering work is generally not seen as a commodity. It is seen as an iterative
process of design and reevaluation. There are many stages planning, design,
manufacturing or construction, and then finalization. Each step requires the skills andexpertise of an engineer in different ways. The final step may require an engineer to
actually operate, teach the operation, or sell the product. While the entire engineering
process does not seem conducive to offshore outsourcing, there are pieces that can be
outsourced. Typically, a company outsources projects or engineering tasks to another
company within the United States. However, some of this work is starting to go offshore.
Larger engineering companies would actually set up divisions abroad where they would
hire foreign engineers to work for their company. For example, Boeing has a Russian
division designing airplane components. General Electric employs over 6000 engineers
and scientists in Israel, Hungary, India and China to research and develop
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Q. What are the engineering services that cannot be outsourced in
practice?
There are many processes that limit the amount and type of work that can be offshore
outsourced:
1. proximity needs
2. expertise
3. licensure
4. quality of work.
Construction or manufacturing engineering requires proximity to where the project is
being undertaken. U.S. engineers possess expertise in specific areas, making it
undesirable to use foreign engineers. Certain types of engineering work require the
signature of a licensed engineer. Thus far, it is difficult for a foreigner to become
licensed or for licensed engineers to sign off on work that is not done under their direct
supervision. Finally, if offshore outsourcing results in diminished quality, insurance
companies may take notice and charge higher premiums. This added expense would
make offshore outsourcing less appealing.
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Q. Are engineering services being outsourced to offshore centers
such as India?
Yes, countries like India have just about begun to assist in providing outsourced
engineering services, but this trend is expected to grow much faster in future. Offshore
outsourcing to India holds enormous promise as new industry verticals are being
explored and manufacturers across the globe face the challenge of integrating
technology, design and management for superior performance, reduced time to market,
and improved ROI.
Mkt potential for India - About 30 billion $ by 2020
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Q. Which are the major offshore sites being considered for ESO?
Sites Under Active Consideration for Engineering Services:
St. Petersburg
Moscow
Changchun
Beijing *
Budapest *
Shanghai
Gurgaon
Bangkok
Guangzhou
Pune
Manila
Hyderabad
Mexico City *
Bangalore
Mysore
Chennai *
Johannesburg
* - Global service sites
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India leads the pack for engineering services, CURRENT (by order of importance)
India
China
Mexico
Russia
Czech
Poland
Hungary
Thailand
Philippines
Egypt
Ukraine
Bulgaria
Brazil
Vietnam
Romania
Turkey
South Republic Africa
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Competitive Index of Countries for Engineering Services ( by order of importance)
China
India
Russia
Mexico
Thailand
Czech
Poland
Philipp.
Hungary
Egypt
Ukraine
Bulgaria
Brazil
Romania
Vietnam Turkey
South Africa
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Countries like China are formulating policies that are aggressively geared towards
attracting high value add services Comparison of Incentives Offered by Countries for
R&D/Engineering Services (Relative Scale) Czech India China Mexico Russia Republic
Poland Hungary Thailand Philippines Tax Reduction (e.g. tax abatement in SEZs)
Subsidies & Grants (e.g. Subsidy on percentage of total cost) Infrastructure
Improvements (e.g. access to communication, power, water supply, roads, etc.)
Training & Education (e.g. grants to train employees for new roles, grants to R&D
institutes) Policy Support for Engineering Off shoring Strong Support Moderate Support
Passive Support 12
(Source:www.acmainfo.com)
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Q. What are the aspects that affect offshore outsourcing of
engineering services?
The Progressive Policy Institute found that there are two factors that limit the offshore
outsourcing of general service jobs:
1) the degree to which functions can be cost effectively transformed into
electronic flows facilitated by telecommunications .
2) the degree to which these new activities still require spatial proximity to
suppliers, customers, competitors, or other unites in the firm.
Other aspects
Trade limitations
Quality issues - Foreign engineers training and Stability in country, Security &
safety
Insurance
Legislation
Administration (govt in control at that time)
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Q. What is the exact process of an engineering services offshore
outsourcing assignment?
Some engineering fields are more technologically advanced and are utilizing current
computer and technological capabilities. These firms are most prone to outsourcing as
items can easily be sent electronically. This strongly affects the computer and electrical
engineers first, and then the mechanical and chemical engineers. Civil engineers are
the least prone to be affected due to the type of work and how the work is performed.
It is currently easier for large engineering firms to offshore outsource (examples of
which were given previously in the section titled Current situation). Very large firms
already have engineering and manufacturing sites offshore. So they outsource
engineering work to their own engineers in another country. (Boeing currently has an
engineering team in Russia.) Small firms are less likely to use outsourcing as it is costly
to setup a counterpart in a foreign country at a small scale. After outsourcing consulting
companies are setup, it will be easier for smaller companies to outsource the smaller
quantities of work. Examples of such companies that offer globalization services
(facilitates offshore outsourcing) is Genesis International and Continental Design &
Engineering. Genesis International is an engineering consulting firm that offshoreoutsources. It sends abroad such services as Detailed engineering for distributed
generation, co-generation and tri-generation Real-time Performance monitoring and
VerificationPreventive Monitoring and Diagnostic Maintenance Training. Its website
outlines the following process for offshore outsourcing:
First, a US-based Customer Process Manager (CPM) will work with you to
assess the specific talent, training and number of hours your project/process
requires. The CPM is your prime contact.
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Next, an India-based Project Leader/Outsourced Process Manager (OPM) is selected
and brought to your site by the CPM for the project's first few days. This Project
Leader/OPM will manage all activities of the team offshore.
After gaining an in-depth knowledge of your needs and requirements, the Project
Leader/OPM will select the remote team members, chart out roles and
responsibilities, and develop the specifications for the milestones and
deliverables involved. A communication protocol will be established and reporting
mechanism deployed so that you know exactly what has been accomplished and
what needs to be accomplished at any point in time
Finally, your project leader will return to India to direct all activities of the team.
Process of Engineering Work Including Offshore Outsourcing
I. Idea Phase - Identification of a problem or an idea (new building, product,
improvement)
II. Design Phase - The engineer analyzes the idea or problem. Designs solution
under guiding factors listed below.
IIa. Design Phase - The engineer conveys the scope of the work to be done to
the foreign engineer. The foreign engineer either does design work or
manufacturing work.
III. Test Phase - The engineer applies the design to a model to test - can be done
domestically or abroad at the offshore site. This applies to manufactured
products.
IV. Manufacturing or Construction Phase The engineer supervises the
manufacturing processes domestically or abroad (for elec. and mech. engineers).
Construction (mainly for civil engrs.), or improvements made to a plant or
operating system, all done domestically.
IV. Product Completion - Engineer or manufacturer may simply hand product
over to the client (i.e. electrical device), may sell the product (i.e. scientific
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instrument), may actually operate the product (power plant), or may teach the
operation to the user (i.e. office building).
Q. Who are the top ESO vendors?
Some of the top vendors include:
EASI
Eicher
Entegee
eServ Perot
Geometric
HCL Technologies
Hero Global Design
Hoyt Engineeing
Infosys
Mahindra Engineering
NeilSoft
Plexion
QuEST
Satyam
Tata Group
Wipro
Source:www.acmainfo.com
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Chapter 3
Research Methodology:-
Human nature is always inquisitive for the quest of knowledge. Researchers have
provided better changes for the development in social phenomena. Research is part of
any systematic knowledge. It is the process of any systematic and in depth study or
research for any particular topic , subject or areas of investigation backed by collection,
compilation, presentation and interpretation of relevant details or data. It is a careful
study or inquiry into any subject or subject matter, which is an endeavor to discover or
find out the valuable facts, which would be useful for further application or utilization.
Methodology is a plan to study that will lead to the collecting of required data and its
analysis.
Research definition:
Research is careful inquiry or examination to discover new information and relationship
and to expand and to verify Exiting knowledge.
Research always starts with questions or a problem. Its Purpose is to find answer to
questions through the application of the scientific method. It is a systematic and
intensive study directed towards a more complete knowledge of the subject studies.
Type of research:
Descriptive: are undertaken in many circumstances. Descriptive studies can be
complex, determining a high degree of scientific skill on the part of the researcher.
Research Design:
Research design is the plan, structure and strategy of investigation conceived so as to
obtain answer to research question and to control variance.
- BY KERLINGER
From definition it is evident that research design is more or less a blueprint of research.
At the outset may be noted that there are several ways of studying and tackling a
problem. There is no signal perfect design. The research design can be classified in to
true broad categories:
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SOURCES OF DATA FOR COLLECTION
The study that is conducted being descriptive one the research source of data:
Primary Data
Secondary Data
Primary Data: The primary data is collected by making calls to different suppliersbelongs to Mahindra & Mahindra. Since it is a descriptive research design the primary
information is collected through discussion between the manager of Mahindra &
Mahindra and Mahindra Engineering Services.
We would now classify the information into different mediums with the help of
following parameters for making targeting easier.
Format includes:
Name Of the Company
Turnover
Employee Strength
Industry Type
Functions
Secondary Data: The data is a resource list of suppliers belongs to Mahindra&
Mahindra. Since it is a descriptive research design the primary information is collected
through discussion between the manager of Mahindra & Mahindra and Mahindra
Engineering Services.
The information is now classified into different mediums with the prescribed
format.
Format includes:
Name Of the Company Turnover
Employee Strength
Industry Type
Functions
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Secondary Data: Secondary data includes the filtered list of those potentialsuppliers, which fulfils the criteria as per the prescribed format.
Description:
SAMPLE:A sample is a portion of the defined population.SAMPLE SIZE : 500
SAMPLING PROCEDURE :
This data includes Sample size of 500+ Automotive Ancillary Suppliers of Mahindra &
Mahindra, list includes the Name, Commodity Group (Industry Type i.e. Engines,
Electricals, Glass, etc), Location and the Postal Address.
In order to reach maximum useful resources their functions and the size of the company
was required to be found. Hence, filtration process was required.
Further Research:
Under this topic criteria based information was explored, Turnover of the Company,
Employee Strength, functional areas, etc.
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Secondary Data Includes:
Description:
Filtered Secondary data is the data which fulfils the standard on which further work
could be carried out.
Annual Turnover
Employee Strength
Functional Area
Above are the standards on which filtration process was carried out. Here we found
120+ target Companies which were fulfilling the criteria for further business need.
Secondary Data Includes
Name Of
the
Suppliers
Commodity
GroupLocation
Postal
Address
Employee
Strength
Annual
TurnoverDescription
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Project Cycle:
-
Data Received by M & M Pvt. Ltd. For Suppliers
(500 companies)
Filtration Done
according to the
prescribed format
No Yes
Forwarded to
technicalDepartment to
device software
named EDS
(Electronic
Database
Management)
Contacted Filtered Companies
through the EDS Software
Found approx. 28
Companies ready for the
BusinessFixed Appointments for the
Management
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Review Of the Literature:
Part I
STEP BY STEP OPERATION
Data Arrival:Under this phase details of around 500 Companies were given to the project
handlers. These 500 Companies are the existing suppliers for Mahindra &
Mahindra since a long time and now company is looking for their assistance into
different business as well. Following this tag line our team was given
authorization to use internet and several other portal(s) like (HOOVERS, etc) to
get the maximum details of the organizations in order to be successful co-
partners in work. With the help of which we could determine the suitability of the
companies to our business need.
Format for arranging the details is as followed:
Format:
Name Of the Company
Industry Type
Location
Postal Address
Employee Strength Annual Turnover
Description about their Work.
Name Of TheCompany
IndustryType
Location Postal Address EmployeeStrength
AnnualTurnover
Description
AJ Auto PrivateLTD
Electricals Mumbai H/110, ANSA IND.ESTATE,SAKI(E)MUMBAI - 400 072
380 80 CR Fulfils NoneOf theCriteria
ACEYENGINEERINGPVT
EngineProprietary
Chennai 170-172,Indl.Estate,Perungudi,Chennai600 096
610 130 CR Fulfils BothThecriterias
BONDSAFETYBELTS
Trim Mumbai E-14, NandajyotIndl. Estate,Near
530 200 CR Fulfils BothThecriterias
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Filtration:Under this hood, after getting the ample data about the companies work profile,
we had to filter the data according to the prescribed format with following
parameters to be followed here under.
Format:
Name Of the Company
Type of Work
Location
Employee Strength
Annual Turnover
Parameters:
Employee Strength Should be More than 500 Employees. Turnover to be more than 100 Corers.
With the above information found we were required to filter the details as per our
requirement.
Companies which came under our parameters were taken into the bucket for further
functions.
Through above analysis of available data useful information was kept aside.
Name Of TheCompany
IndustryType
Location Postal Address EmployeeStrength
AnnualTurnover
Description
AJ Auto PrivateLTD
Electricals Mumbai H/110, ANSA IND.ESTATE,SAKI(E)MUMBAI - 400 072
380 80 CR Fulfils NoneOf theCriteria
ACEYENGINEERINGPVT
EngineProprietary
Chennai 170-172,Indl.Estate,Perungudi,Chennai600 096
610 130 CR Fulfils BothThecriterias
BONDSAFETYBELTS
Trim Mumbai E-14, NandajyotIndl. Estate,Near
530 200 CR Fulfils BothThecriterias
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Technical Assistance:
With the help of filtered data now it was easy to reach the suitable clients with ease. But
still, there was a trouble to contact them as early as possible because still we had too
many people to contact. Hence, we found a way to contact them with a same functionand easy assistance so that the work would not be delayed. For which we transferred
our data to the technical department to form a mechanism or a software program
through which easy handling of the data could be done. With the help of which several
companies were getting the messages on the same time and hence our purpose to
speed the work was also accomplished.
Technical people prepared a program into which all the contact details of the companies
were present, like their E-mail ID, contact person and its designation, etc.
Contacts Proceedings:
After getting the replies to the mails sent by us, we had to simplify them to positive
ones. Who were ready to form a business with us.
Companies were from different industries so, It was our task to arrange them and
forward it to the concerned person of our company. Industries were as follows:
Trims
Engine Proprietary
Electricals
Sheet Metal
Hardware
Spring Assembly
Glass
Arrangement for Meetings:
Now this was the time for the final job to arrange meeting for the management, in order
to get the business and make a alliance. Hence, it was our job to call them and arrange
a meeting. By this way
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Take Away Of the Filtration Process:
With the help of Research Design, Data is being filtered at various level in order to get
the required information to help in building the perfect project thesis. Under this
procedure following things went through the data filtration:
Primary data was given by Mahindra & Mahindra which were existing customers to
them. But, with the help of filtration useful Companies were found to help in making new
tie-ups,
Parameters?
Parameters were defined to filter the data because to suit the business not every
company was eligible. Hence, the data was filtered on the basis of ANNUALTURNOVER, EMPLOYEE STRENGTH and AREAS OF EXPERTISE. This made our
work effective enough to reach the right people at the right time.
Data Mining:
Data Mining was done to get the information required for further procedures like to set-
up meeting for business purposes, etc.
Data Analysis:Under the heading of Data Analysis we generally find result of the ongoing activities.
Hence, to follow the instructions here is the result and the Analyzed report.
Customers Approached:
Number of customers approached was 342 out of 500 who were fulfilling the criteria i.e.
(No of Employees and Annual Turnover). Hence, below is the chart which shows the
useful clients and availability.
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Contacted Companies VS Closing Companies:
Under this heading we approached almost 342 Clients with the help of software
mechanism. We made mails, calls and followed them to find out their business
expectations with us. Amongst the 342 companies we had to convert as many
companies we could. These were the clients whom finally we had to forward to our
management team to present the business proposal. It was not a target based job, but I
personally targeted 28 companies and followed them up and converted on my own. Thisfinally made a call convert in the end.
0
50
100
150
200
250
300
350
400
450
500
No. Of Companies
Available
Companies Fulfiling
Criteria
Poteintial Customers Available
Poteintial Customers Available
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Chapter 4
SWOT Analysis
STRENGTHS
Major strengths of Indian engineering outsourcing industry include huge availability of
engineering talent, strategic expertise and the comparative advantage of outsourcing
over developing captive canters.
Talent pool
1) Among developing countries, India has the largest engineering talent pool required
to take up outsourced jobs. The Indian workforce is fluent in English, flexible to work
in shifts, dedicated, and can work under pressure to meet project deadlines.
However, there is a perceived need to develop proper infrastructure and impart
domain-specific specialized training to this talent pool to enable them meet the
outsourcing requirements of multinational OEM and component manufacturers. Dilip
Chhabria, a renowned car designer has chalked up plans to establish a car design
institute in Pune, India by 2009. Renault Design is the industry partner for thisinstitute, which can train up to 1500 students.
Strategic expertise
Indian companies have great expertise in forging long-term partnerships with
international organizations; they adapt quickly to changing global trends and business
models to improve the value proposition to their clients. In order to highlight the 'quality'
aspect of services offered in India, Indian companies are achieving quality certificationssuch as SEI CMM Level 5, COPC, PCMM, ISO 9001:2000. These advantages position
India ahead of other developing economies such as China in the list of outsourcing
destinations.
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Outsourcing Vs establishing captive centers
As compared to establishing captive centers, outsourcing is a more feasible option for
foreign OEMs who prefer to get their engineering operations done by a third party.
Establishing captive centers requires diversion of management attention and investment
in infrastructure; there is also the risk of managing a workforce in a multicultural
environment. Outsourcing can help tide over these problems.
WEAKNESSES
Major weaknesses in the engineering service outsourcing sector in India are ;
1. poor infrastructure development
2. Lack of domain expertise among workers or companies,
3. Lack of initiatives taken on the R&D front and poor regulatory support.
Infrastructure and domain expertise
While India produces a large number of engineering graduates each year, the number
of candidates possessing the required skill sets is not increasing at par with the demand
in the engineering outsourcing sector. India also needs to strengthen its engineeringand physical infrastructure to cope with the demands of the industry. Infrastructure
development in other low-cost countries such as China, Thailand, Malaysia, Mexico and
Brazil is far ahead of that in India. To stay competitive, India needs to make huge
investments in infrastructure, which will give a boost to the outsourcing industry.
Lack of impetus in R&D
Indian OEMs need to gear up their research and development activities. The BostonConsulting Group found that R&D centers of Indian automotive manufacturers are not
utilizing their full potential and have less operational autonomy compared to their
counterparts in the West. The R&D staff in a typical automotive company in India
comprises about 3 per cent of its total workforce. According to Priyadarshi Thakur,
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Secretary, Ministry of Heavy Industries & Public Enterprises, Government of India, R&D
expenditure in the Indian automotive industry is below the global norms and averages.
Regulatory support
The Indian automotive engineering outsourcing sector lacks full-fledged governmental
support notes Vikas Sehgal, Principal and Director, India business at Booz Allen
Hamilton. Though engineering services are critical to the growth and development of the
automotive sector, the Indian government has done little in terms of formulating policies
to attract outsourced work to India. In contrast, the Chinese government offers an array
of incentives and is implementing aggressive policies to vantage engineering offshoring
opportunities.
OPPORTUNITIES
Opportunities for Indian engineering outsourcing market are-
1. Growth potential for Indian service providers in the global scenario
2. Creating a privileged position for India as preferred outsourcing destination,
3. Scope for Indian service providers to develop as global players.
Growth potential
Global spending on engineering service outsourcing is on the rise and accounts for
approximately 2 per cent of global GDP, as reported by Booz Allen Hamilton. M. K.
Padmanabhan, President and co-founder of Plexion Technologies (India) Pvt. Ltd
observes that the global engineering outsourcing market was valued at US$ 7 billion inDecember 2008, and the automotive market accounted for 68 per cent of this market. In
2008, 20 per cent of these engineering services were outsourced to low-cost
destinations and this per cent age is projected to increase to 50 per cent by 2011.
Privileged position of India
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A survey conducted by A.T. Kearney regarding the preferred destination of American
automotive executives for engineering outsourcing found that they ranked India well
above China, Mexico and Brazil. The survey also revealed that 39 per cent of the
respondents preferred India for engineering and technical service (including engineering
and design) outsourcing which was valued at approximately US$ 2 billion in May 2009.
A.T. Kearney survey (May 2009) - Preferred engineering outsourcing destination by US
companies
Developmental scope
In order to upgrade the quality of services offered, Indian companies operating in the
outsourcing domain can gain access to the latest technologies, develop prototyping
skills and testing facilities by collaborating with global OEMs. While other countries
offering outsourcing services capitalize on low-value and high-volume services, Indian
service providers can capture the high-value and low-volume segment.
Considering the pace of development in the global automotive industry, the activities
that are considered core to the OEM manufacturer now, will become non-core in thenext five years. Thus, Indian services providers can initially sign up contracts with global
OEMs to provide low-end services for their core operations (such as design and
development services for new and legacy products) and gradually take on full
responsibility for those activities as they become non-core to the OEM.
Respondents (%)
INDIA
China
Mexico
Brazil
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THREATS
Threats to the Indian engineering service outsourcing industry include rising wage
levels, competition from other developing economies, competition resulting from market
concentration, information safety issues, and decreasing value of the dollar.
Rising wage levels
Wages for highly skilled workers in India are rising as the economy develops. This is
reducing the gap between the wages paid to professionals in developed economies and
those in India, which can severely curb the economic advantage that India has as a low-
cost outsourcing destination.
Competition from other economies
India faces stiff competition from developing economies such as China and Malaysia.
The automotive market in China is growing at a faster pace than in India. Hence,
Chinese automakers are expected to pose stiff competition to their Indian counterparts
in the struggle to capture greater share of the automotive engineering outsourcing
market. However, A.T. Kearney reports that issues such as intellectual property piracyand political red tape can negatively impact the image of China as a reliable service
provider.
Malaysia is fast emerging as a serious contender against India and China in the
outsourcing domain. Political stability, strong governmental support and infrastructure
development in Malaysia is better than it is in India or China. The Malaysian
government is striving to position the country as the hub for technology and services
innovation; this has caught the eye of multinational organizations willing to outsource
their operations to reliable but low-cost destinations.
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Competition resulting from market concentration
Considering the immense potential in the engineering service outsourcing market in
India, many foreign design / CAD service providers are setting their foothold. Global
OEMs are also expanding their R&D operations to low-cost destinations, which will
result in market concentration and increased competition.
Information safety issues
Few European OEM manufacturers feel threatened that if outsourced, their product
designs would be copied by other manufacturers. In order to convince global OEMs
regarding their intellectual property security, Indian service providers can sign non-
disclosure agreements or proprietary information agreements with the client. Indian
companies can take safety measures like developing client-approved firewalls to restrict
access to critical product information.
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Chapter 5
Limitations
The collection of primary data is comparatively difficult and sometimes the question of
non-response arises because the people may not like to disclose the information.
Respondents to whom we questioned about the product did not take the survey
seriously and answered the questions just for the sake of answering.
Due to sample size and the parameters defined by the company, we as a team could
not target as many customers as we can have done.
Shortage of time period is also a reason of incomprehensiveness.
Recommendations
From the study carried out and the analysis of the result obtained from the survey, the
following suggestions and recommendations can help the firm to improve upon the
product and the sales.
1) Expertise of the Company needs to be highlighted.
2) Market involvement not present by Mahindra Engineering Services.
3) Market segmentation is not present.
4) Follow up needs to be more secured.5) More service outlets should be opened.
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Conclusion
Research has taken place for market development and product development. From the
findings I find that opportunity for Mahindra Engineering Services is too much because
in the market there are a number of OEMs who doesnt even know about the Mahindra
engineering services Expertise and work range. Hence, Awareness among the potential
clients is necessary.
Drawbacks at Mahindra Engineering Services!
Follow up is the major cause of less productivity at MES because this is new into this
sector of engineering services outsourcing and whenever we reach a client they seems
to be unaware of the existence. So we should be following up with such important
clients.
Marketing of the completed jobs should be evolved. They should always promote their
work towards the important clients in order to get highlighted.
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Annexure
Engineering Service Business (Questionnaire)
1. What is Engineering Work?
2. How large is the engineering service business?
3. Engineering services business over the world?
4. Top reasons for foreign R&D Sites?
5. Top industries that involve significant amounts of engineering
services?
6. Why should engineering service be outsourced?
7. Types of engineering services are being outsourced?
8. Can all engineering services be outsourced?
9. Why cant some engineering services be outsourced in practice?
10. How are possible to offshore engineering services?
11. What are the engineering services that cannot be outsourced in
practice?
12. Are engineering services being outsourced to offshore centers such
as India?
13.Top ESO vendors?
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Bibliography
The project report is on Mahindra Engineering Services and the topic is ASSESMENT
OF DOMESTIC AUTOMOTIVE ANCILLARY MARKET POTENTIAL FORENGINEERING SERVICE BUSINESS. This project could not be possible without the
sincere help and effort by my project guide and faculty guide AJETA BHATIA. She
helped me in preparing this piece of work.
Book References
Overdrive(August 2009 )
Auto India (January 2010)
Marketing research, G.C.Beri, Third Edition, Tata McGraw HillPublishing Company Limited, New Delhi, 2000
Web References
http://www.ciol.com/content/special/eso/
http://www.outsource2india.com/services/engineering_services.asp
http://www.engineeringservicesoutsourcing.com/
http://www.dnb.co.in/smes/overview.asp
http://www.legalpundits.com/Content_folder/AUTOCOMPONENTIN
DUSTRYREPORT290710.pdf
http://www.equitymaster.com/research-it/sector-info/autoc/
http://www.acmainfo.com/pdf/Status_Indian_Auto_Industry.pdf
Sujata Chandra (2010,Febuary 1st) GROWTH OF ANCILLARY
COMPONENT MARKET IN INDIAhttp://bullshouse.com/blog/?p=889
www.acmainfo.com
http://www.ciol.com/content/special/eso/http://www.ciol.com/content/special/eso/http://www.outsource2india.com/services/engineering_services.asphttp://www.outsource2india.com/services/engineering_services.asphttp://www.engineeringservicesoutsourcing.com/http://www.engineeringservicesoutsourcing.com/http://www.dnb.co.in/smes/overview.asphttp://www.dnb.co.in/smes/overview.asphttp://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.equitymaster.com/research-it/sector-info/autoc/http://www.equitymaster.com/research-it/sector-info/autoc/http://www.acmainfo.com/pdf/Status_Indian_Auto_Industry.pdfhttp://www.acmainfo.com/pdf/Status_Indian_Auto_Industry.pdfhttp://bullshouse.com/blog/?p=889http://bullshouse.com/blog/?p=889http://bullshouse.com/blog/?p=889http://www.acmainfo.com/http://www.acmainfo.com/http://www.acmainfo.com/http://bullshouse.com/blog/?p=889http://www.acmainfo.com/pdf/Status_Indian_Auto_Industry.pdfhttp://www.equitymaster.com/research-it/sector-info/autoc/http://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.legalpundits.com/Content_folder/AUTOCOMPONENTINDUSTRYREPORT290710.pdfhttp://www.dnb.co.in/smes/overview.asphttp://www.engineeringservicesoutsourcing.com/http://www.outsource2india.com/services/engineering_services.asphttp://www.ciol.com/content/special/eso/ -
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