summer project report 2010 12final

7/31/2019 Summer Project Report 2010 12final

1/52

1 | P a g e


2/52

2 | P a g e

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


3/52

3 | P a g e

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


4/52

4 | P a g e

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


5/52

5 | P a g e


6/52

6 | P a g e

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.


7/52

7 | P a g e

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.


8/52

8 | P a g e

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


9/52

9 | P a g e

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


10/52

10 | P a g e

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.


11/52

11 | P a g e

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


12/52

12 | P a g e

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


13/52

13 | P a g e

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


14/52

14 | P a g e

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%


15/52

15 | P a g e

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


16/52

16 | P a g e

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


17/52

17 | P a g e

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.


18/52

18 | P a g e

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:


19/52

19 | P a g e

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


20/52

20 | P a g e

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


21/52

21 | P a g e

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


22/52

22 | P a g e

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.


23/52

23 | P a g e

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


24/52

24 | P a g e

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


25/52

25 | P a g e

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


26/52

26 | P a g e

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


27/52

27 | P a g e

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)


28/52

28 | P a g e

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)


29/52

29 | P a g e

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.


30/52

30 | P a g e

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


31/52

31 | P a g e

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


32/52

32 | P a g e

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:


33/52

33 | P a g e

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


34/52

34 | P a g e

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.


35/52

35 | P a g e

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


36/52

36 | P a g e

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


37/52

37 | P a g e

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



38/52

38 | P a g e

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


BONDSAFETYBELTS

Trim Mumbai E-14, NandajyotIndl. Estate,Near



39/52

39 | P a g e

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


40/52

40 | P a g e

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.


41/52

41 | P a g e

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


42/52

42 | P a g e

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.


43/52

43 | P a g e

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,


44/52

44 | P a g e

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


45/52

45 | P a g e

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


46/52

46 | P a g e

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.


47/52

47 | P a g e

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.


48/52

48 | P a g e

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.


49/52

49 | P a g e

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.


50/52

50 | P a g e

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?


51/52

51 | P a g e

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/


52/52

summer project report 2010 12final

Documents