Chennai: Chennai Calling

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.

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
decision.

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
extent.

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
Bangalore.

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 area: 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


sudeshp@cybermedia.co.in

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