Ap­ple Cart Likely to Roll in with Part­ners in Tow Co will es­tab­lish ecosys­tem of part­ners that may in­clude con­tract man­u­fac­tur­ers and sup­pli­ers

The Economic Times - - Front Page - Gul­veen.Au­lakh @times­group.com

New Delhi: Ap­ple has told the gov­ern­ment that it plans to make most of its prod­ucts in In­dia and that it will es­tab­lish an ecosys­tem of part­ners, which may in­clude con­tract man­u­fac­tur­ers and sup­pli­ers. The com­pany is said to be plan­ning a start with lo­cal pro­duc­tion of its iPhone SE.

“Ap­ple plans to move up the value chain in their next phase, in terms of pro­duc­ing the en­tire suite of prod­ucts, def­i­nitely all iPhone mod­els, for which their en­tire ecosys­tem of part­ners needs to move in,” IT sec­re­tary Aruna Sun­darara­jan told ET. The com­pany’s main con­tract man­u­fac­tur­ers Fox­conn, Wistron, Pe­ga­tron and In­ven­tec are closely watch­ing its plans for that rea­son. “They (Ap­ple) have two pri­mary asks—one that they should be able to im­port the com­po­nents

that they need, and sec­ond that it should be cheaper for them to man­u­fac­ture here than to im­port,” she said.

“The sec­ond ques­tion is where gov­ern­ment has not yet taken a view, be­cause this is to be de­cided only af­ter the GST (goods and ser­vices tax) is fi­nalised.”

Fox­conn, which is Ap­ple’s large- st con­tract maker, is said to be in ac­tive talks with the Ma­ha­rash­tra gov­ern­ment, with which it al­ready has a $5-bil­lion in­vest­ment pact, said a se­nior man­u­fac­tur­ing ex­ec­u­tive.

“It may well be a three-four way game be­tween Fox­conn, Wistron, Pe­ga­tron and In­ven­tec—two of them are al­ready in In­dia,” the per­son said. Fox­conn, In­ven­tec and Pe­ga­tron didn’t re­spond to ET’s emails. A query to Wistron, which makes the iPhone 5S and the SE, on whether it will set up a sep­a­rate, larger plant for Ap­ple went unan­swered. Wistron will make the iPhone SE at its Ben­galuru fa­cil­ity, ac­cord­ing to peo­ple with knowl­edge of the mat­ter.

An Ap­ple spokesper­son said, “We've been work­ing hard to de­velop our op­er­a­tions in In­dia and are proud to de­liver the best prod­ucts and ser­vices in the world to our cus­tomers here. We ap­pre­ci­ate the con­struc­tive and open di­a­logue we’ve had with gov­ern­ment about fur­ther ex­pand­ing our lo­cal op­er­a­tions.”

Sun­darara­jan said her depart­ment has met sev­eral con­tract man­u­fac­tur­ing firms from South­east Asia look­ing to set up shop in In­dia. “It’s a ques­tion of when, not whether,” she said.

“Cer­tainly hir­ing has be­come tough for star­tups and ecomm play­ers,” said An­shu­man Das, man­ag­ing part­ner of Long­house Con­sult­ing. “Pay scales have dropped, the fu­ture fund­ing sit­u­a­tion is un­cer­tain, and the kind of tal­ent ex­per­i­men­ta­tion they have done is a put-off for many.”

At se­nior lev­els, Long­house has been record­ing at least 3-4 of­fer re­jec­tions ev­ery month, he added. GC Jayaprakash, ex­ec­u­tive direc­tor at RGF Ex­ec­u­tive Search, has seen can­di­dates for key po­si­tions pulling back in the fi­nal stages.

“Even the com­pen­sa­tion struc­ture didn’t ex­cite them. They didn’t see much of an up­side,” Jayaprakash said. This, he said, is be­cause many of these com­pa­nies have tweaked com­pen­sa­tion struc­tures. They are now match­ing the fixed com­po­nent and of­fer­ing a large vari­able, spread across 2-3 years. The pay­out de­pends on a va­ri­ety of fac­tors such as the com­pany’s val­u­a­tion as well as the per­for­mance of the busi­ness and the in­di­vid­ual.

“At a time when valu­a­tions are be­ing slashed all the time, for many it’s just not worth it,” he said.

Such is the sit­u­a­tion, said re­cruiters, that even com­pa­nies do­ing well are get­ting tarred by the same brush. Re­cruit­ment may have shrunk to half, as a re­cent ET story pointed out, but hir­ing is still hap­pen­ing for some key roles at top firms, while well-funded star­tups as well as those that have raised Se­ries A and Se­ries B fund­ing are hir­ing for se­nior roles.

WORK CUL­TURE

Re­cruiters also see work cul­ture at some star­tups as a prob­lem. “The pace at which at­tri­tion is hap­pen­ing shows chal­lenges re­lated to the lead­er­ship, tal­ent man­age­ment and busi­ness strat­egy. Can­di­dates are not will­ing to risk their ca­reer and jump in,” said Joseph Deva­sia, man­ag­ing direc­tor at An­tal In­ter­na­tional In­dia.

Se­nior can­di­dates, in their 40s and 50s, are par­tic­u­larly re­luc­tant, said re­cruiters, as they find that young founders of­ten lack ex­pe­ri­ence and ma­tu­rity. Some prom­i­nent ecom­merce com­pa­nies have earned such a bad rep­u­ta­tion for them­selves that they had to pay a sig­nif­i­cant pre­mium over the mar­ket to get se­nior tal­ent to join them, said re­cruiters.

“We are see­ing a lot more due dili­gence on work cul­ture,” said Anuj Roy, part­ner-dig­i­tal prac­tice at Transearch. “Peo­ple are even look­ing into what the re­ten­tion and per­for­mance of se­nior pro­fes­sion­als has been his­tor­i­cally.”

Light­box’s Murthy, how­ever, sees a sil­ver lin­ing. “The qual­ity of com­pa­nies that will emerge from any down­turn is much stronger,” he said. “One of the learn­ings will be that com­pany cul­ture is go­ing to be a very im­por­tant part of how com­pa­nies will be built.”

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