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A PROJECT REPORT ON ASSESMENT OF DOMESTIC AUTOMOTIVE ANCILLARY MARKET POTENTIAL FOR ENGINEERING SERVICE BUSINESS
FOR Mahindra Engineering

Services
Submitted as a partial requirement for the degree of POST GRADUATION PROGRAM Submitted By: Mohit Fauzdar Sec B Submitted To:Ms. Ajeta Bhatia

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INDEX Sr. No
1 2 3

CONTENTS
Acknowledgement Company Certificate Executive Summary

Pg. No
4 5 6

Chapter 1

Introduction Introduction Of Industry Objective of the Report

7-11

12 13-30 32-42 36 37-41

Chapter 2 Chapter 3

Section Two: Engineering Services Business Research Methodology Project Cycle Review Of Literature

Chapter 4 Chapter 5

SWOT Analysis Findings (Constraints, Recommendations, Conclusion) Reference Material Annexure Bibliography

42-48 48-49

Chapter 6

50-51 50 51

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AKNOWLEDGEMENT

I owe a great many thanks to a great many people who helped and supported me during 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, of Mahindra & 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. The subsidiary 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 development program.

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 chipdesign. 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 for engineering 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: Category Economy segment (upto Rs 0.25mn) Mid-size segment (Rs 0.25-0.45 mn) Luxury car segment (Rs 0.45- 1mn) Models Maruti Omni, Maruti 800 etc. Hyundai Santro,i10, Tata Indica, Maruti Alto, Ritz, etc. Tata Indigo, Honda City, Mitsubishi Lancer, Ford Ikon, Opel Astra, Hyundai Accent & others Mercedes Benz, BMW, AUDI,VOLKSWAGEN, VOLVO, etc

Super luxury segment (above Rs 1mn)

Figure -Structure of Passenger Vehicle Market (India) Source : www.acmainfo.com

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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?

Share of foreign R&D

In 1975 70 45 In 2009

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

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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

Top reasons for foreign R&D sites

25 20 15 10 5 Top reasons for foreign R&D sites 0

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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 mockup 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 there physical constraints to outsourcing engineering services, as against outsourcing 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 and expertise 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 offshore outsources. 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 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. 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 potential
suppliers, 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:

Secondary Data Includes

Name Of the Suppliers Commodity Group Location Postal Address Employee Strength Annual Turnover Description

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.

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Project Cycle:
Data Received by M & M Pvt. Ltd. For Suppliers (500 companies)

No

Filtration Done according to the prescribed format

Yes

Contacted Filtered Companies through the EDS Software

Forwarded to technical Department to device software named EDS (Electronic Database Management)

Found approx. 28 Companies ready for the Business

Fixed 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 copartners 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 AJ Auto Private LTD Name Of the Company Industry Type Location Postal Address Employee Strength Annual Turnover Description about their Work. Location Mumbai Postal Address H/110, ANSA IND. ESTATE,SAKI(E) MUMBAI - 400 072 Employee Strength 380 Annual Turnover 80 CR Description Fulfils None Of the Criteria Fulfils Both The criterias

Industry Type Electricals

ACEY Engine Chennai ENGINEERING Proprietary PVT

170-172, 610 Indl.Estate, Perungudi,Chennai 600 096 E-14, Nandajyot Indl. Estate,Near 530

130 CR

BOND SAFETY BELTS

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Trim

Mumbai

200 CR

Fulfils Both The criterias

 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 The Company AJ Auto Private LTD Industry Type Electricals Location Postal Address Mumbai Employee Annual Description Strength Turnover H/110, ANSA IND. 380 80 CR Fulfils None ESTATE,SAKI(E) Of the MUMBAI - 400 072 Criteria 170-172, 610 Indl.Estate, Perungudi,Chennai 600 096 E-14, Nandajyot Indl. Estate,Near 530 130 CR Fulfils Both The criterias

ACEY Engine Chennai ENGINEERING Proprietary PVT

BOND SAFETY BELTS

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Trim

Mumbai

200 CR

Fulfils Both The criterias

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 function and 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 ANNUAL TURNOVER, 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 setup 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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Poteintial Customers Available

500 450 400 350 300 250 200 150 100 50 0 No. Of Companies Available Companies Fulfiling Criteria Poteintial Customers Available

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. This finally made a call convert in the end.

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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 this institute, 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 certifications such 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 engineering and 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 Boston Consulting 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 are1. 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 in December 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

Respondents (%)
INDIA China Mexico Brazil

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 the next 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.

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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 lowcost 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 piracy and 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 nondisclosure 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 FOR ENGINEERING 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 Publishing Company Limited, New Delhi, 2000 Web References Hill

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 INDIA http://bullshouse.com/blog/?p=889 www.acmainfo.com

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