The Hindu Business Line : India outscores China in product innovation: Accenture

THOUGH China continues to be the primary source market for low-cost manufacturing globally, India has an edge over its neighbour in product innovation and value addition, according to Mr Jose T. Morales, Partner, Accenture.

He was speaking at the release of a study on global sourcing from low-cost countries by global management consulting, technology services and outsourcing company Accenture.

"Sourcing in manufacturing from India is estimated to be about $20-40 billion. This could go up 10 times in the next 10 years," said Mr Sanjay Darwar, Associate Partner, Accenture.

The study, based on a survey of 238 US and European executives, says that US and European companies plan to increase the amount of goods and services they source from suppliers in low-cost countries by 85 per cent within the next two-three years. Procurement by these companies is expected to increase to $130 billion in the next three years from the current $70 billion.

The study also found that 50 per cent of companies that do not source goods and services from China and India may start sourcing in the next two-three years.

Mr Morales said: "India is more cost-effective for small- to medium scale industries while China has more volumes". Experience of MNCs in India was a plus in India's favour, he added.

India scores over China in terms of better design capability, better legal and accounting practices, adherence to contractual agreements, and its English-speaking capability, he added.

Pharma, auto-parts and electronic goods are some of India's strengths in manufacturing, according to the study.

Mr Darwar said: "It is not about India versus China but creating value for market demands".

Companies also anticipate saving an average of 22 per cent on the goods and services they acquire from these countries. Major concerns with regard to sourcing from low-cost countries include long lead times, insufficient product innovation and questionable delivery reliability.

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