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subcontract electronic manufacturing

Global Subcontract Electronic Manufacturing: Trends and Opportunities for India

The global electronics manufacturing industry has grown rapidly and transformed over the past decade. As demand for electronic products continues rising across sectors like consumer appliances, vehicles, healthcare, and industrial automation, original equipment manufacturers (OEMs) are increasingly outsourcing manufacturing to specialised third-party contractors.

This trend of outsourced or subcontracted electronic manufacturing will accelerate in the coming years. Industry analysis predicts that the global Electronic Manufacturing Services (EMS) market size is projected to grow from $534.62 billion in 2023 to $USD 856.20 billion by 2030.

India holds substantial promise in this sphere. The country is poised to capture a bigger share of the booming global subcontracting pie with its vast engineering talent pool and significantly lower costs than other manufacturing hubs.

What is Subcontract Electronic Manufacturing?

Subcontractor contract electronic manufacturing refers to third-party companies that manufacture electronic components, products, and assemblies for OEMs based on their specifications.

Also known as electronics manufacturing services (EMS), key offerings of subcontractors include printed circuit board (PCB) assembly, product testing, procurement, fabrication, and after-sales repair/replacement services.

Global Trends in Subcontract Electronic Manufacturing

Companies around the world have examined various possibilities and evaluated the feasibility of using subcontract electronic manufacturing globally. Here are some trends witnessed through the years:

1. Japan Navigates Dual Roles in Aerospace Manufacturing

Over the decades, Japan has rightly earned esteem as a dominant force in electronics, home to Sony, Toshiba, and other industry titans. Japan’s prowess extends into the aerospace sector – its precision components have long supplied firms across the United States and beyond.

However, Tokyo now endeavours to expand its domestic aerospace initiatives, at times coming into conflict with its role as a trusted supplier overseas. Unable to adequately support both priorities, Japanese sub-contractors find themselves at an inflection point.

With the bandwidth to take on more sub-contracting work, nations like India wait in the wings should additional opportunities emerge.

2. Paradigm Shift Away from China Manufacturing Accelerates

The tectonic plates supporting China’s manufacturing hegemony appear increasingly fragile as multinational supply chain leaders plan to shift operations elsewhere.

A recent Gartner survey states that almost 33% of supply chain leaders have moved their businesses out of China or are planning to.

The primary drivers range from rising tariffs enacted by Washington and Beijing to IP theft and competitive alternatives in South Asia. The once-ironclad consensus around China’s unique cost efficiencies has evaporated. Additionally, recurring corporate espionage and a more turbulent geopolitical climate compel many leaders to explore their options.

3. Luster Fades for Mexico Manufacturers

Along Mexico’s border, sustained by maquiladoras factories, the manufacturing ecosystem retains an almost mythical allure for many US firms. Offering duty-free imports and competitive labour, companies outside automotive remain dedicated partners.

However, a growing chorus of ethical concerns – from environmental degradation to unsafe working conditions – have triggered unease among conscientious consumers.

As Mexico contends with these complex dynamics, sub-contracting heavyweights increasingly analyse the upside of alternatives, especially India. Early data indicates significantly higher satisfaction among clients leveraging Indian sub-contractors across intricate manufacturing requirements.

Opportunities for India in Subcontract Electronic Manufacturing

Mirroring China’s ascent decades prior, India relentlessly fortifies its credentials as a global hub for electronics. Government programs provide mounting incentives for foreign OEMs across mobile devices, hardware components, and complex manufacturing.

The nation recently overtook the US to become the world’s second-largest smartphone producer.

Apple alone plans to triple its India output within three years. Moreover, India’s depth of expertise and elite engineering calibre, forged at universities like the IITs, satisfy demands even among aerospace firms like Boeing, now reliant on 300 local suppliers.

Cost efficiencies buoy the upside, with English-speaking labour offered at a significant discount. But orchestrating intricate manufacturing systems requires next-level competencies – at scale – which India demonstrates with aplomb.

India Answers the Clarion Call for Sophisticated Electronics Partners

As dominant forces ponder moves, India’s electronics leadership solidifies

India seems poised to harness an alignment of geopolitical and economic fortunes. This could accelerate its dominance as a first-class destination for global electronics sub-contracting.

New government incentives added kindling to a fiery growth trajectory across cutting-edge smartphone and hardware components production. With inflation squeezing Western OEMs accustomed to more favourable labour rates, India’s professional talents deliver comparable quality at a fraction of the price.

India also empowers multinationals to circumvent global supply chain bottlenecks through its vast latticework of raw material sources and export systems.

Meanwhile, an innovation epicentre bubbles as pioneering Indian researchers patent novel electronic compounds and materials applicable across industries. Fortunately for optimistic forecasters, India’s ascendence appears in its early chapters as multibillion-dollar behemoths turn toward the subcontinent for reliable, flexible, and cost-effective electronics partners.

Strategies for India to Capitalise More on EMS Opportunities

EMS opportunities

While optimism is high, realising the full potential requires concerted efforts on multiple fronts by regulatory bodies and industry players:

1. Enhancing Skills and Training 

Educational institutes must continually refresh electronics manufacturing curricula to bridge talent-skill gaps for new technologies like IoT, AI, and machine learning. Firms should invest more in upskilling programs.

2. Improving Infrastructure and Supply Chain Logistics

They boosted electronics clusters and pushed major global electronics players to open India-based R&D and manufacturing facilities. Stable infrastructure, efficient logistics, and reliable power supply are equally critical.

3. Policy and Regulatory Support

Further streamlining of processes and regulations to expedite big-ticket EMS investments from global companies looking to shift or dual shore to India. Compliance norms should secure quality but not raise entry barriers.

4. Fostering Innovation and R&D 

Indian players must build self-reliance by nurturing homegrown product design capabilities, owning global IPs, and directing more resources towards R&D for next-generation electronics advances.

5. Building Global Partnerships

Strategic technological and operational partnerships between leading Indian EMS players like Oakter and established global majors will accelerate know-how transfer and integration of Indian manufacturing into demanding foreign supply chains

Partner With Oakter for World-Class Electronics Manufacturing!

India’s electronics subcontracting ecosystem faces multiple challenges around operational costs, rapid technological disruption, and cut-throat global competition. However, its fundamental value drivers of technical talent pool strength, domestic market growth potential, and policy support continue intact.

Oakter offers expertise in high-mix, low-volume manufacturing, has internationally accredited production facilities, and is trusted by leading global OEMs.

To know more about how we can add value to your electronics manufacturing supply chain.

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