IT to help auto parts industry to achieve $40 mn in revenues

A majority of auto-component manufacturers surveyed in 2005-06 had an annual IT budget of Rs 20 lakh. The budget is expected to increase for a majority (90 per cent) of these manufacturers in the coming year, reported a Nasscom-ACMA study.

As the auto component industry has set an ambitious growth target of $40 billion by 2015, Nasscom today released a report "� IT Adoption in the Indian Auto Component Industry "� to help the industry reach its goal through IT adoption.

The report aims to understand the IT adoption challenges faced by manufacturing firms, especially in the small and medium enterprise (SME) segment and bring in an understanding of IT adoption thresholds, challenges and processes in different segments of the Indian auto component sector.

The study reveals that hardware maintenance is the most outsourced IT service by the auto-component firms.

Kiran Karnik, president, Nasscom, said, "The strong performance of the Indian auto-component sector in the past few years has led to rightfully considering it a sunrise sector of the Indian economy."

We see IT playing a very critical role in helping this sector achieve its global aspirations."

The outsourced activities related to hardware maintenance include management and functioning of office hardware such as PCs, laptops, among others.

In a majority of auto component manufacturing companies that participated in the survey, less than 10 full-time employees took care of the IT service & support function, across all locations, the survey stated.

Krishnamurthy, chairman, National Manufacturing Competitive Council, said, "The manufacturing sector in India is critical to sustaining the growth of the Indian economy.

IT has the potential to act as a force multiplier for the Indian auto-component industry."

According to the Nasscom survey, different firms appear to be devising differing strategies for IT adoption and size of the firm seems to be defining the trajectory that a firm will adopt for IT adoption.

Supply chain management (SCM) has been ranked as the most critical challenge by business unit (BU) heads.

Some of the other challenges include fluctuations in raw material costs, meeting customer demands for product quality & timelines and procurement of raw materials, reiterating the importance of the supply chain.

As a part of its recommendations for the development of these emerging sectors, Nasscom has urged the government to develop a perspective on IT investment and related policies as one that will enhance the productivity of individuals and firms.

It identifies the need to create escrow fund with tax money that a firm can withdraw only for new skill building and skill upgradation programmes.

It has also sought for the establishment of a fund for enabling investment in IT solutions by SMEs, similar to the Technology Upgradation Fund (TUF) established for the textile industry.