“Investments In Developing Capabilities To Manufacture In India Are A Big Roadblock That Holds Us Back”

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One of the earliest pioneers in the EMS sector, Tescom has witnessed the evolution of the Indian electronics industry through many ups and downs. Electronics For You interacted with V. Balasubramani, the CEO of Tescom, to understand the current trends shaping India’s EMS sector, challenges faced, and the outlook for their future.


V. Balasubramani, CEO, Tescom
V. Balasubramani, CEO, Tescom

Q. What are the three top trends driving manufacturing and the manufacturing equipment in the sector?

A. Though there have been several trends that impact the industry over the years, we believe that miniaturisation, artificial intelligence (AI), and IoT are the clear drivers of the electronics manufacturing sector.

As far as manufacturing equipment is concerned, intelligent equipment and remote monitoring are going to be the driving force for this sector. Smart devices that improve efficiency by reducing human error are becoming an integral part of the EMS industry. Devices that provide analytical data enabling fine tuning of processes are becoming game-changers.

Q. Do you have any equipment providing intelligent and remote reporting, and how does that provide your team with a strategic advantage over competitors?

A. All our lines are equipped with machines that can share data through mobile apps and provide us remote control over production and quality. We are working on integrating these data to our ERP directly. We are currently working on artificial intelligence based inspection equipment, which is a relatively new concept in the Industry.

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Q. How are these tech trends affecting investment in manufacturing equipment, staffing, and the best practices followed by EMS firms?

A. These trends are forcing all players to be more competitive and proactive. The equipment required to assemble miniaturised components for certain IoT products like modules require us to invest more. While we train our people for handling high-end products, retaining them is becoming a major challenge, and we need to follow certain best practices to keep our employees engaged and happy.

Q. What are some leadership skills needed in the EMS industry today?

A. Leaders in the EMS industry should upskill in various fields—processes, quality management, costing, technology, marketing, and customer relationship. A practical knowledge about all the fields enables them to ensure quality of work. Apart from hard skills, the leaders should also anticipate market trends. They should be able to envision ahead and understand the market in the near future. They should also be a better decision maker and risk taker. Like every good leader, they must develop strategic plans and be able to build a culture of enthusiasm and teamwork.

Q. How easy or difficult is it to attract the right talent for EMS firms? Are schemes driven by the government to train blue-collared workforce helping you to get trained manpower?

A. Talent is not readily available for EMS players like us. We typically hire and then train them as per our needs. However, with growth in the industry, the need for trained resources is sharply increasing. Moreover, the youngsters seem to be more attracted towards IT or digital marketing.

Thankfully, there are a lot of skill development programmes offered both by the state and Central governments. Apprenticeships (promoted) by the government are popular and we are able to get dedicated teams from ITI and technical training institutes, especially from tier 2 cities and rural areas.

Q. Given that most of the roles are blue-collared in EMS, are there positions that need skilled engineers or M.Tech too, for any of the production-related processes?

A. We don’t require M.Techs. We do need a certain percentage of talented engineers. They are needed to setup our lines, plan our quality assurance processes, and work in the Manufacturing Engineering department. They also help us at the end of the line for testing, debugging, and understanding the design, when the situation demands it.

Q. What are the challenges that you are currently facing?

A. Unpredictability of the market and the changes in other sectors has to be the most prominent challenge. EMS is generally sandwiched between various players. Any change in the macro-economic and micro-economic policies impacts EMS and its survival. We are neither the product nor the design owners. We also are not marketing partners. Any surprises in these lines will directly impact the profitability of EMS, which often results in non-moving inventory. Any delay or challenge in the supply-chain will finally affect the EMS sector.

Also, EMS prices are negotiated based on the minimum order quantity (MOQ). When there is an internal or external disturbance, the EMS sector lands up with a huge mismatch in the inventory. History teaches us that many of the failed EMS have landed up in trouble mainly because of non-moving inventory or mismatched inventory.

With the possibility of electronics manufacturing sector reaching new heights in the next five years, the demand for trained and knowledgeable manpower is on the rise. Retaining resources is also a great challenge.

Q. Any best practices established at Tescom to handle such challenges?

A. We proactively implement Design for Manufacturability and design review. This enhances our output yield whereby our inventory will get liquidated as planned.

Our purchase and inventory control processes are well set and defined. We are accredited by leading certifying bodies and we adhere to our process controls for inventory.

Moreover, our customised ERP software plays a role in setting certain limits and alerting us on non-moving inventory or value-wise high inventory.

Process and materials audits are conducted on a time to time basis, and we are aware of our back-end processes with the data flow.

Q. Any suggestions for customers on why they need to treat EMS players as their partners and how they can enjoy a win-win relationship through better communication and projections?

A. A paradigm shift is happening between OEMs and EMS, and there is a sweeping transformation. All along, the EMS players were operating in the shadows of their OEMs. But now many OEMs involve EMS players in their discussions from the very beginning of the project.

OEMs should not view their EMS partners as outsourced production houses. They should consider EMS as an extension of their own production line. However, the OEMs can succeed only when the EMSs succeed. The EMS players should be aware of the market sensitivity and time schedules for product launch. This partnership is critical and crucial for the success of any product/project.

With today’s component scenario being stressed, and logistics platforms getting tougher with various reasons, OEMs have to de-risk their products by engaging the EMS in the front end. This will make the EMS and the OEM equally responsible for the supply-chain, which will provide a win-win situation for both.

Q. What are some points that OEMs should keep in mind while selecting the right EMS partner?

A. OEMs should not adopt the one-size-fits-all policy. Each OEM and their requirements are different, and the offering of each EMS is different. The match should be perfect between the two parties. OEMs should look at the value-addition provided by the EMS partner and evaluate the EMS in terms of its ability to handle surprises and crises.

Q. Where does the country lack that has prevented the EMS sector from growing and competing with global competitors?

A. Investments in developing capabilities to manufacture in India are a big roadblock that holds us back. Peripherals like loaders, conveyors, unloaders, bare PCB cleaners, storage accessories, and ESD-related materials are the basic necessities in every manufacturing setup. Thus, more investment is required to acquire and manufacture peripheral equipment related to SMT and TH (through-hole) lines.

We are completely dependent on the overseas market for these equipment. If we can acquire investment for these lines, we can truly be self-reliant and can also create a great opportunity for the export market. Similarly, India is dependent on the overseas markets for copper-laminated boards. These laminates, if produced on a larger scale, will reduce costs and also our dependency on imports.

Next, we have accessories like USB connectors, adaptors, pins, SIM holders, miniature switches, and related products imported in huge numbers. Needless to say, chip components like resistors and capacitors should also be made in India.

These components can be manufactured in India without any new technology. These can be handled in India, provided we have the handholding from the government till the industries become self-sustainable. We can expand our horizon to the export market once we stabilise in these areas.

Q. Are there any global trends that Indian EMS is yet to catch on but would greatly benefit from?

A. Organic electronics can benefit with potential low cost and high mechanical flexibility, even though they have low thermal stability. Also, different electronic components can be printed on top of each other, increasing reliability. They operate on low energy and pave way for creative products made from non-toxic materials at low cost. India is slowly catching up on this trend though the industry is growing comparatively faster worldwide.

Q. What is your outlook for the future in terms of demand for EMS?

A. The trend is for IoT based products, electric vehicles and related accessories, and communication-related products. We expect this trend to continue for a long time.

Q. Many design houses are turning into ODMs and some EMS firms set up a design centre too; what are your thoughts on this trend?

A. This is a good trend that is followed worldwide and provides a good scope for innovation and testing. Customers always prefer to have ‘one number to ring’ for all their needs, so this combination of design houses and EMS is a welcome change. This broadens the scope for EMS and helps in mitigating risks of dependency on customer’s success with their designs. We too have partnered with design houses and are looking for opportunities on these lines.

Q. Do you have any strategy to cater to the startups, who often find it difficult to connect with EMS firms to manufacture their prototypes in small quantities?

A. We are always forthcoming in supporting startups. Our teams visit incubation centres and startup parks to understand requirements of the new firms. Some of our existing customers are with us from their startup stage and we have grown together.

Moreover, we do have a prototype assembly line which caters to small numbers. Engaging startups is a separate line of focus and is a separate business vertical.

Q. With the rising cost of the US dollar and freight, do you see the possibility of an Indian EMS firm being able to compete with Chinese and other APAC counterparts any time soon?

A. We need to ask ourselves the question of whether we have what it takes to challenge China.

During Covid it became apparent that the monopoly in the supply-chain poses major risk. With ease of business widening in India, we are sure to grow as an influencer in electronics manufacturing in the next five years.

To make supply-chains more resilient and diversified, global customers have to look at India as an option.

This growth and exports will strengthen our currency against the US dollar. Also, it can enable better transporting hubs and solve the freight gaps too. Fast tracking freight is very much on our government’s radar. We may soon witness cost-effective solutions. With the PLI schemes, India is competing with China in capturing the global market.

India has already captured the mobile phone and TV manufacturing to a great extent. The laptop and computer manufacturers should also consider India as the manufacturing destination. We are fast growing in the IoT based modules and are going to surpass China in this too.

Q. Last but not the least, what role can media like Electronics For You play to enable India’s EMS sector and overall electronics manufacturing sector to grow fast?

A. EFY can support the tough and strained sourcing department of EMS by providing integrated and verified market links. They can also act as an escrow account for supporting EMS players. Skill development and trained manpower availability for the industry can be supported by EFY.


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