India's gains in tech outsourcing
The world's electronics industry is poised to increase sharply the work it
gives to outsourcing companies, with India taking a much bigger share of the
total, even though it will remain well behind China.
According to a study by Technology Forecasters, a California-based
consultancy, by 2010 more than a quarter of all the manufacturing output of the
world's electronics industry will be done by specialist contractors operating
most frequently in low-wage economies, up from less than a fifth two years
Within this total outsourcing work, India is likely to be the big gainer,
accounting for a projected 10 per cent of the total in 2010, up from two per
cent in 2005.
China, which in the past 10 years has become the most important country for
electronics manufacturing, will in 2010 account for 46 per cent of outsourcing
work in this industry, down from 48 per cent two years ago.
Outsourcing has become the dominant manufacturing process in electronics
production, an industry covering fields from computers to medical electronics,
and with combined annual sales of about $2,000 billion.
About 10 specialist electronics outsourcers do most of the work on behalf of
large electronics groups such as Hewlett-Packard, Cisco, Nokia and Sony, which
sell to the final customer under their brand name but frequently do little of
the physical manufacturing.
Specialist outsourcers include Hon Hai of Taiwan, Singapore-based
Flextronics, Sanmina-SCI and Solectron of the US and Finland's Elcoteq.
A bigger role for the outsourcing companies would fit in with branded
electronics businesses' desire to keep downward pressure on costs, according to
Matt Chanoff, chief economist at Technology Forecasters.
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