Wednesday, July 04, 2007

TCS lends a helping hand to SMEs

The reinvention of Indian manufacturing has been a big part of the India growth story. It is the big corporates that are mostly in the news. But opportunities are opening up in a big way for SMEs as well, FT reports. That is because US businesses, wary of how China will shape up, would like to diversify their supplier basket and are keen to use Indian suppliers- provided they can deliver on quality and reliability of supplies.

TCS is involved in a project that will help SMEs do just that. Mind you, this is is the consulting arm of TCS and does not appear to involve software in a big way.

TCS’s project in Coimbatore – a sprawling city 300km south-west of Bangalore – could become the forerunner of a service the consultancy would offer across India. Its plan is to link small Indian businesses with the companies’ international clients in fields such as automotive and aerospace manufacturing, particularly in the US and western Europe.

TCS has identified just over 100 companies in Coimbatore – including Geekay – which it thinks could play a role in making parts and complete engineering products on behalf of its clients. It is also working in a similar way with about 90 companies in two other Indian cities, Pune and Bangalore. These 190 businesses could become a core group of potential suppliers for western companies, and which could be added to later as the service expands, so TCS believes.

.....TCS hopes that by the end of the year the companies it is working with might be able to win export orders worth a few million dollars, with its part in fixing up the contracts being rewarded by additional fees from its clients.Assuming the project works well, TCS could extend it to several hundred India-based suppliers for its foreign clients. The prize: a new source of income for TCS as a “supply chain manager” and the chance to boost growth at its big customers as well as India’s network of small suppliers.

Will it work? As the report makes clear, a key problem for Indian SMEs is access to finance. Indian banks are not too keen on SMEs because there have been bigger opportunities elsewhere (retail finance, for instance). But with competition hotting up, some are bound to see SMEs as an opportunity- especially if projects such as this one work out and SMEs are able to bag lucrative orders from abroad.


gaddeswarup said...

Professor Ram Mohan,
May I request you to give the expansions for abbreviations, perhaps once in each post. For somebody like me, living abroad for a long time but eager to follow some balanced views from India, it is not easy to guess what some of these stand for. Thanks.

T T Ram Mohan said...

Gaddeswarup, Sure, SME- small and medium enterprises. TCS- Tata Consutlancy Services.