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