Chennai: Chennai Calling

VoicenData Bureau
New Update

A Gururaj

GM and director, Flextronics India


Chennai has deep reserves of technical talent and is renowned for its large

pool of engineering expertise. In addition, it also has favorable infrastructure

and policies that make it conducive as an investment destination for Flextronics.

We will begin manufacturing operations in Chennai in the last quarter of

2006, and have committed an investment of $70-100 mn in 3-5 years.

The facility at Chennai will initially cater to mobile handsets, consumer

digital products and telecom infrastructure equipment like base stations.  


Flextronics has two manufacturing plants in India located at Bangalore and

Pondicherry. In these facilities we provide PCBA and reverse logistics services.

The facility at Chennai will initially cater to mobile handsets, consumer

digital products and telecom infrastructure equipment like base stations.  

Given that our presence is in Chennai, Pondicherry and Bangalore, our

on-going recruitments are for these markets. In the very near future, the bulk

of our hiring will be for Chennai as our industrial park goes on-stream very

soon. However, our recruitment campaign is carried out across India.

Our primary requirement is for mechanical engineers as well as candidates

with tooling, SMT, design engineering, program management, procurement and

supply chain. On the technical front, all our employees are expected to have

either an engineering degree or a diploma from a technical training institute.

But besides just technical competency, for some posts, flexibility is a much

required trait.


As the EMS sector is ever changing, our people should be able to make quick

responses and pro-actively adapt to changes. Both technicians and management

people must be capable of making improvements and changes. Next is leadership.

Here the leadership is not only in human resources management, but also in

personal accountability. It is a kind of entrepreneurial spirit. Leadership

should be result and performance oriented in order to deliver positive outcomes.

The Industrial Park coming up in Chennai is modeled on our global industrial

parks. We have fully-integrated, high-volume industrial parks in Brazil, China,

Hungary, Mexico, and Poland. These campuses provide total supply chain

management by co-locating our manufacturing and logistics operations with our

suppliers at a single low-cost location. This strategy increases our

customers' flexibility and reduces distribution barriers, turnaround times,

and overall transportation and product costs. We will facilitate the development

of a similar ecosystem at our Chennai Industrial Park.-

Arto Makela

director, Salcomp Manufacturing India


Coming to Chennai was a business decision and we were invited by Nokia to be

a part of their park. We have been looking at setting up new factories from

early 2003, in different locations in India including Mumbai, Pune, Bangalore

and Chennai. We have relationship with an EMS company in Bangalore since the

last year, and hence we found that it makes more sense from the business point

of view to come directly to Chennai to set up our own factory. Chennai's port

was also an important criterion for the selection.

 We are in the process of

recruiting, starting from managers onward. There is good availability of

manpower in Chennai. We intend to send some of the new recruits to our factories

in China for training.

According to the volume projection that we have got from Nokia and others, in

the first phase we will only manufacture for them. We are manufacturing here,

the final destination actually does not matter, it could be domestic, it could

be outside India.


We got very good support from the development commissioner and his office for

starting up this Economic Zone. Sipcot has also been very helpful. As we are at

the Nokia Telcom Park, basic infrastructure like electricity, water and waste

treatment are already there. We did not have to do that kind of direct

interaction for land.

The land cost was very reasonable but the construction cost has been

exorbitantly high-even higher than in China. But we were prepared. We plan to

start production in the first half of 2007 as announced earlier and we would

have about 2,500 people in this facility.  We will produce 100 mn units per year from this facility.


Calling: The Billion Dollar Opportunity

A list of companies

(mostly EMS companies) who may consider India as a possible manufacturing


  • Benchmark

    Electronics-Angleton, US

  • Venture-Singapore

  • Universal

    Scientific Industrial (USI)-Nan-Tou, Taiwan

  • Cal-Comp

    Electronics-Bangkok, Thailand

  • Plexus-Neenah, US

  • Jurong


  • PEMSTAR-Rochester,


  • Nam Tai

    Electronics-British Virgin Islands

  • Zollner Elektronik-Zandt,


  • WKK

    Technology-Hong Kong

  • SIIX-Osaka, Japan

  • Beyonics


  • ELITE Industrial

    Group-Hong Kong

  • Alco

    Electronics-Hong Kong

  • 3CEMS

    Group--Guangzhou, China

  • Kimball Electronics

    Group-Jasper, US

  • Scanfil-Sievi,


  • CTS Electronics

    Manufacturing Solutions-Moorpark, US

  • Wong's

    Electronics-Hong Kong

  • Integrated

    Microelectronics, Inc-Laguna, The Philippines

  • VIDEOTON Holding-Székesfehérvár,


  • Suntron-Phoenix,


  • Surface Mount

    Technology (Holdings)-Hong Kong

  • Flash

    Electronics-Fremont, US

  • Fabrinet-British

    West Indies

  • Enics-Baden,


  • PartnerTech-Malmo,


  • Neways Electronics

    International-Son, The Netherlands

  • Orient

    Semiconductor Electronics-Kaohsiung, Taiwan

  • EPIC Technologie-Rochester

    Hills, US

  • Simclar Group-Dunfermline,


  • Kitron-Lysaker,


  • Computime-Hong



    Bay, US

  • SMTC-Markham,


  • DRS

    Technologies-Parsippany, US

  • BreconRidge-Ottawa,


  • COB


  • Topscom

    Electronics-Hong Kong

  • NOTE-Norrtälje,


  • Mid-South

    Industries-Gadsden, US

  • Hana

    Microelectronics-Bangkok, Thailand

  • KeyTronicEMS-Spokane,


  • Inventec-Taiwan

  • Wistron Neweb


  • M/A-Com (a unit of

    Tyco International)

  • Savcor


  • Ahlstrom-Finland

  • Scanfil Oy-Finland

  • Enviset-Finland

  • Friwo-Germany

  • Astec (part of

    Emerson Power)

  • Phihong


Firdose Vandrevala

chairman, Motorola India

Motorola's manufacturing facility at Sriperumbudur, near Chennai, will be

operational in 2007 and will support a wide range of handsets. It will also

support production and assembly of network base stations for products across

Motorola's Networks & Enterprise portfolio. Most models of handsets

currently sold in India will be manufactured at the facility. Our main focus,

however, will be to manufacture sub-$30 phones in keeping with our commitment to

connecting the unconnected.  At

first, manufacturing would be undertaken to support local needs. We will look at

exporting to other countries later.

The initial investment will be of $30 mn, which will be scaled up to a total

of  $100 mn in phases.


Sriperumbudur, near Chennai, has emerged as a prominent manufacturing hub

with several electronics and component manufacturers setting up base. We decided

to set up our facility here after reviewing several short-listed potential

locations. The industrial ecosystem at Sriperumbudur was best suited to our

requirements. Moreover, the many engineering institutes in that area are

expected to offer requisite manpower.

If we are to compare the infrastructure in India with other global locations,

there is room for improvement. However, the infrastructure at Sriperumbudur is

much better than some other states. There is no shortage of power supply, and

with the national highway coming up near the port, infrastructure here is

expected to improve further. One major area of concern is the irregularity of

flights. Once that is resolved, Sriperumbudur will be able to measure up to

global standards.

In the first phase, about 1,000 people are expected to be employed. This will

be ramped up as we grow. Our focus will be on recruit-ing best-in-class people.

We will be recruiting leaders, engineers and technical level staff in the

beginning.  Our focus would be on

technology and the right culture match between individual aspirations and

organizational goals.

Jarmo Kolehmainen

general manager, Perlos India

Nokia is setting up a plant in Chennai, and as it is one of our main

customers, it makes sense to be near them. Other telecom manufactures are also

planning to set up their factories here in India, which is good for our

business.  Chennai is a good

location considering the harbor is close by and the highway is being built.

Other important factors are the abundance of talent, and also a growing

automobile industry.

It will be a challenge to train people for manufacturing operations, and we

are prepared for that. We believe that we can find good people to start with. We

intend to train some of our people in other global locations.

We have about 200,000 square feet of space for the first factory to come up,

the ground breaking of which was done on August 21, 2006. We have a similar

space available in case we want to expand, in keeping with our future

requirements. The capacity we are creating in India is big mainly because we

believe in this market.

Being a global company, we have set up factories in different locations and

we want to bring that experience into India. Learn, and at the same time improve

our global practices. There is a lot of Indian talent which we will utilize for

our global operations. We have a flexible assembly concept. The market is

booming...there are so many new models of phones being introduced. In practice,

it means squeezing the development cycles and manufacturing times. We want to

match our know-how with customer requirements so we are involved in early

discussions with customers.

Jukka Lehtela

director, India Operations, Nokia

There are a lot of reasons, but the decision was mainly based on logistics.

Logistics is very important in the kind of business we are in and we felt that

Chennai's airport was relatively better. The existence of a port also helped

in the decision-making.  Also,

Chennai has a culture and mindset for manufacturing.

We have invited nine other partners to set up their units in the Nokia Zone.

Out of this, Perlos, Salcomp, and Foxconn are already in the process of setting

up. Others are looking at the viability, and will announce their shortly


We looked at other cities in terms of colleges and universities, but in

Chennai their density is highest. There are lot of good, trained, and skilled

people in Chennai.

There are signs of improvement of infrastructure in Chennai. There is some

talk of railroad and I hope that will ease the infrastructure woes to some


Fulfilling demand is the most important thing for us. We will soon be in a

situation where we can do that. We are exporting about 20% of the handsets from

the Chennai factory. We are supplying to Thailand, Singapore, Indonesia and

Malaysia.  Most of the handsets we

manufacture here are priced at below $150. It is a volume factory and as long as

there is demand, we will continue to manufacture.

Patrick Veron

CEO, C-DoT-Alcatel Research Center

Alcatel has been in Chennai since 1996 and there is a very good ecosystem of

manufacturing, R&D and IT companies. Apart from this, there are a number of

very good institutions, and the traffic condition here is better than in


We had no difficulty in recruiting our existing workforce of more than 100

people-who are all very good and knowledgeable. We are also getting people

from other places like Bangalore.

On activities of the WiMAX: This is basically a broadband research center and

we are starting with WiMAX 802.16e. We do that in two parts: One is

infrastructure equipment and its customization to the Indian customers, and the

other is end user device which we are designing with the support of Alcatel. The

idea is to offer end-to-end solution to the market.

Timeline: Currently the WiMAX products are not WiMAX forum certified. The

certification will officially start at the beginning of 2007. We are doing some

trials so that we are ready when the products are officially certified. It is

not only out of technical interest that this center has been set up, we have

real business interest in the technology. There are some severe limitations of

the existing broadband technologies like DSL. You cannot lay copper everywhere.

If you want to take broadband all over the country you have to go the wireless

way. The time has come to take broadband beyond cities now that there is a

broadband policy in India and a target has been set up. I think implementation

of WiMAX can help achieve this target.

Ground breaking ceremony of Jabil's

Chennai facility

3G vs WiMAX:  Both technologies

are complementary. With the exception of Japan, 3G has not really been deployed

in a big way anywhere. There are very few operators who would think of deploying

a full 3G network. This technology is for both the urban and rural markets, and

proof that you can reuse the current infrastructure and takes care of the

current assets.

If we take a helicopter view, there are two main directions. One is that the

world is going broadband, and the other that the

word is going wireless. We believe the world will go broadband wireless

as soon as you can offer that to the market because that will be for the

convenience of the end users, who are interested in guaranteed service and are

not bothered about the technology that is involved in providing the services. I

am absolutely convinced that this is what WiMAX will offer.

Rural applications that will drive WiMAX: The areas that have been identified

include e-Governance, e education, and telemedicine. There are several places in

India which are remote and unconnected; you can't provide doctors, teachers

and others at such locations. If you want to empower people, you have reach out

to them. WiMAX is the way to go.

Suresh Kumar Bopparaju

center head, Software Engineering, Extreme Networks

Chennai used to be a laid back, sleepy town 10 years back... dead by 9 pm. It

had not been hyped or been in the limelight, and it did not get proper attention

due to lack of its cosmopolitan flavor, as was the case with Bangalore. It was

also because the younger generation work force preferred Bangalore.

I have seen a radical transformation in the way the city has grown and has

expanded and matured with time. The general quality of life has improved.

Hyderabad, Bangalore, and Pune were the other cities we considered before

settling for Chennai.

We do very complex software work from this facilty and hence needed very

competent and committed people who could work on longer term for us, because it

takes lot of effort and time to train.  A substantial part of our workforce is from Tamil Nadu. In

fact, we were able to lure people from as far as the Silicon Valley to Chennai

to work for us here.

Extreme's activities in Chennai revolve around technologies required for a

converged network on the enterprise, and the service provider side, so that

voice, data, and video can move effectively in their pipe. We have two main

platforms or OS: ExtremeWare and ExtremeXOS. We are also part of various

projects in the near generation operating system.

Guindy Industrial

Time for civic

authorities to wake up

V Swaminathan

Head, Chennai Software Lab, Telcordia

Chennai has been home to several telecom companies like Alcatel. We did not

get the right space at the right time in Gurgaon and Bangalore, which we have

got in Chennai. Also, we felt that Chennai had a strong base for telecom

companies which have set up their operations here. We also felt that the state

government is investing in infrastructure in areas where IT is developing.

We do software development and customer support from our Chennai facility.

There are two areas of activity here. One is IMS and the other NG OSS (products

activities and inventory fulfillment and service activation). We have customers

like Tata teleservics and Idea cellular. We have also done consultancy work for

Reliance Communications.

Ramesh Nair

local director and head of Industrial Services, Jones Lang Lasalle

Why Chennai? There is a lot of engineering and technical talent available in

Chennai. Tamil Nadu produces 80,000 engineering graduates every year. Chennai is

the primary urban employment center in Tamil Nadu and most qualified persons

from other states would prefer to come and work in Chennai.

A lot of automobile and electronics ancillary units are located here. Some

big international companies have set up their units in Chennai.

It is nowhere as compared to global standards but far better than other

Indian cities. The air connectivity is also good. The in-city infrastructure is

excellent and better than cities like Bangalore

Lower cost of operation and low attrition levels due to loyalty factor

are the other positives for Chennai. 

The state government has given industrial land at a subsidized rate of

$25-30,000 per acre to attract investors from the industry. According to our

estimates, the market rate is $1 lakh per acre, which is a big incentive. The

R&D companies who prefer to be located within the city, however, pay higher

than this.

The Tamil Nadu government has been proactively promoting industrial

investment, but it should also follow the Hyderabad model: what the government

did in places like Madhapur to attract IT companies. The government should give

clear title land with infrastructure on open bid or auction to real estate

developers to build on. Let the highest bidders bid. The government should

package it well. Today the city is facing shortage of IT space... IT companies

want ready spaces.

As told to Sudesh Prasad

(This is the concluding part of the Cover Story of the September issue)