With imports from India exceeding $7.25 Billion (roughly twice the $3.64 Billion exported), it’s one ‘offshoring’ destination worth exploring if you run a small business and concepts like ‘profitability,’ ‘quality,’ and ‘gross profit margin’ are things that keep you awake at night. While it’s true that the US offshores a lot of service-based jobs to India (such as IT, call-centre, and administrative roles), nearly twice that amount comes to the US in the form of hard goods. This makes India a valuable supplier to the United States, and for good reasons.
The Indian Economy at a Glance
First, it’s worth noting what makes India so attractive to big and small businesses alike. With a population base of 467 million, India’s GDP of $3.57 trillion is the fifth largest in the world (US GDP is $17.95 trillion). But what stands out is that India is considered an expert when it comes to businesses processes and knowledge outsourcing. India isn’t about monotonous and repetitive piece-work. India offers high-intellect expertise, which allows the country’s manufacturing base to excel in engineering and production design, something that presents US companies with a lot of possibilities. Possibly of greatest importance to business owners is that India’s wages are less than 1/3 of those in North America.
India is the World’s Largest English Speaking Country
Unlike a lot of developing, foreign countries, India is the largest English-speaking country in the world, even greater than the US and UK…combined. This not only makes communications a lot simpler but given India’s highly skilled and educated workforce, the lack of a language barrier ensures that errors that typically result in miscommunication are nonexistent. And since India’s suppliers not only speak the same verbal language but the same ‘business’ or ‘technical’ language, it means fewer production delays.
Prolific Companies That Work With Suppliers in India
Given the lower wages, high technical and communication competencies, and the fact that India boasts the largest annual number of graduates compared to any other country, world-leading companies across all industries source supplies from India’s many manufacturing facilities. For instance, General Motors deals with India’s Tata Consultancy Services for key automotive components (i.e. engines and motors). Boeing’s defense and aerospace efforts (F15 and F1 fighter jets and the C17 aircraft) are possible through ongoing collaborations with TAL Manufacturing Solutions (another Tata Company). GE, a global leader in error-free manufacturing through its Six Sigma program, manufactures its locomotives and turbine engines in India.
Other noteworthy companies that procure hard goods from India include Abbott Laboratories and Eli Lilly (pharmaceuticals), Hewlett-Packard and Apple (electronics components), Ford (automotive), and Gillette, Johnson & Johnson, and Kimberly Clark (household staples). It is also worth noting that Tata Motors, which owns luxury brands Jaguar and Range Rover among their own brand’s models, is an Indian company.
With India’s educated and skilled population base, it makes sense why these prolific companies turn to India for its engineering and manufacturing expertise. But India isn’t reserved for large-cap, NYSE-listed corporations with revenues in the billions. Small businesses have access to all types of manufacturing options, from PVC pipes, electronics components, furniture, textiles, even apparel.
Potential Challenges When Working With Suppliers in India
Small business owners who want to find a supplier in India should understand a few basic risks associated with an Indian relationship. Probably the most noteworthy risk is the high employee turnover rate in India. According to this LinkedIn article by Keith Warburton, high turnover comes from the repetitive and ‘boring’ work performed by Indians. Further compounding this problem is that India, in an effort to protect jobs, has regulated large companies’ ability to dismiss employees; so while the ‘good’ ones often move on, the ‘bad’ ones not only stay but are protected legislatively.
Another mentionable challenge is sending payments to India. Notwithstanding the lack of transparency with wire transfer fees and costs, the process itself is mired in bureaucracy, subjected to domestic and Indian scrutiny and, if a payment is held up along the way, it can interrupt your own business’s ability to procure goods from India.
Finding Your Indian Supplier
When seeking out suppliers in India to help your own business in whatever capacity, start your search for a partner with these four companies and websites:
- Tata Consultancy Services – As part of the Tata Group, this behemoth of a consulting firm is a top global employer with over 387,000 employees. Given their sheer size, Tata is clearly the leader in all domains within India. While their primary business line is IT, their reach extends to automotive and aerospace/defense, steel, manufacturing, and engineering.
- Outsource2India.com – offers a wide range of services, but is a great starting point if your company requires engineering expertise in India.
- Global Sources – Global Sources offers partnership recommendations for tens of thousands of manufacturers in India and caters to businesses looking to procure manufactured goods from India.
- TradeIndia.com – this website boasts over 38 million users and its directory is specific to manufacturing in India.