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Mint
24-07-2025
- Business
- Mint
Spanner in the works: How worker attrition is threatening India's manufacturing ambitions
Bengaluru: Nitasha Agarwal is a different kind of headhunter. In May, she trekked to a small village in the hills of Meghalaya in search of factory workers for an electronics manufacturer in Bengaluru. Armed with YouTube videos, case studies, and stories of successful migration, she organized a camp in Mawlynnong's panchayat office. Over the next few hours, she pitched factory employment as an escape from low-paying tea garden jobs. 'Some of these women have never even travelled outside their villages. We had to convince their parents," she said. 'They asked me chawal milega ki nahi; non-veg milega?" She answered hundreds of questions from curious village elders, parents, and applicants regarding salaries, safety, work profile, travel, food, and accommodation. Ultimately, she was able to recruit 70 young women. Her job is a tough one. Scarcity of labourers in industrial towns has led her to travel to remote locations to find foot soldiers for the factories that power India's manufacturing ambition. Her company, staffing firm Quess Corp., organizes, on average, 400 such camps across villages in India every year with the help of state and district-level officials. Local governments are keen to find employment for the youth. However, convincing parents and potential workers is only the beginning of the story to power India's mission to transition young workers from unproductive farm jobs to better-paying factory jobs. A long road In classical economics, land, labour, and capital are the key inputs for production. While governments have splurged on subsidies to attract capital and promised land to big-ticket projects, labour remains the weakest link. Despite more than half of India's population being under the age of 25, manufacturers are struggling to build a reliable pipeline of labour to power their 'China+1" ambitions in India. 'China + 1" is a manufacturing strategy adopted by multinational companies looking to de-risk their supply chains. Long-distance migration is not easy, especially if it involves moving from an informal and flexible work environment to the strict discipline of factories. Attrition is alarmingly high, with over half of contract workers leaving within a year, according to staffing firm Teamlease; about a tenth of labourers drop off within the first three months of joining, it added. 'Attrition is very high in the first 60-90 days," confirmed Jasbir Singh Gujral, managing director of Syrma SGS, an electronics manufacturer. 'The worker wakes up in a house where there may or may not be electricity and running water. He comes from chaos to the factory gates, where everything is organized. The first 10-15 days, he may not be able to adhere to protocol." Gujral has made peace with factoring in high early attrition and absenteeism in his overall cost structure. 'These people are on ₹18,000-20,000 salaries, so they will leave even if they get ₹1,000 extra. That is their monthly milk expense," he said. 'My parents were not allowing me to leave home and work in a factory. I am their only son, and they want me to be near them. They have told me to come back if I am not comfortable," said 19-year-old Bishnucharan Behera, who recently travelled 2,000 kilometres from Cuttack in Odisha to work in Hosur, an industrial town in Tamil Nadu. India had about 68.5 million manufacturing jobs in 2022-23, according to household survey estimates analyzed by Data For India, but nearly four times as many people still work in low-productivity farm jobs. When Chuhao Chen, human resources head for Taiwanese firm Delta Electronics' Indian region, came to the country about two years ago, he was in for a surprise: the work culture, hiring, attrition, and absenteeism all proved challenging. 'Transitioning from farm to factory is a long and challenging journey, especially since manufacturing hasn't traditionally been popular in India," said Chen. 'If the process has five steps, they'll do steps one and five, skipping two, three, and four, thinking the final result looks fine." Chen is working on changing the work culture of Delta's labourers, but is mindful that importing the Taiwanese and Chinese work model as is may do more harm than good. After joining Delta, he worked on teaching labourers what 'meaningful contribution" looks like while simultaneously educating managers from China and Taiwan to tone down their 'very pushy or strict" management style. Human resources teams at Zetwerk, another manufacturer, start from the basics in the training programme—hygiene, mealtime routines, and washroom breaks—for fresh recruits in its electronics factories. They then move on to teaching the Japanese philosophy of 5S, a workplace organization and management methodology focused on creating a clean, efficient, and organized work environment. 'The learning curve is sharp," acknowledges Josh Foulger, president of Zetwerk's electronics business. He has been watching the labour migration and transition for over two decades now. Foulger was previously with Taiwanese contract manufacturer Foxconn and was involved in scaling up its Indian operations. 'India, as a culture, is not naturally a 5S country," he told Mint. Skills and scale Creating a competent manufacturing workforce is the country's biggest challenge if it wants to rival China. Less than 5% of India's young workforce, aged 15-29 years, has undergone formal vocational training, according to the PLFS data released for the year ended June 2024. Just 28% and 34% of polytechnic and industrial institute graduates, respectively, were employable in 2023, according to Morgan Stanley. Sahil Ahmed, owner of a small abrasives factory in Udaipur, wakes up every morning to decide which machines to operate depending on the number of people who show up for work. He has three hydraulic press machines and five mixing machines in his factory, and runs them depending on the number of people and their skill levels. 'I am never running at full capacity. You know I cannot raise wages to retain workers. What I was selling at ₹850 a piece 12 years ago, I am now selling at ₹350 a piece because of competition from China. The margins are thin," said Ahmed. Ahmed joined his father to run the factory after graduating from IIT-Bombay more than a decade ago. He hopes to broaden his client footprint, but is running behind in the expansion schedule. 'These youth are not used to working in a scientific manner. You can teach them technicalities through training, but you cannot teach tenacity, working diligently, following environmental and safety standards, and not bypassing rules. They cannot tolerate the new environment's pressure," said Lohit Bhatia, president of Quess' workforce management business. India is banking on a manufacturing boom to absorb its vast, underemployed youth population. China rapidly industrialized its economy at the end of the 20th century by mobilizing its workforce from farms to factories. India has struggled to emulate its neighbour. According to the World Bank, India had 44% of its workforce employed in agriculture in 2023, down from 63% in 1991. During the same period, China's workforce on farms came down to 22% from 60%. Delta Electronics has started increasing automation on its assembly lines to reduce dependency on labour and maintain quality standards. 'We can't always rely on consistent human availability. Even though labour costs in India are low, automation helps us meet quality and delivery expectations," Chen said. With millions of young people joining the workforce every year in India, the government is urgently looking to create formal employment and increase workforce participation. Manufacturing jobs pay 30-40% more than agricultural work, on average, according to an analysis of PLFS data by the Foundation for Economic Development, making them critical in increasing welfare at scale. Constant labour troubles may lead to companies adopting more automation, undercutting the government's goal of generating jobs. Indeed, a report by government think tank Niti Aayog last year acknowledged India's 'limited success" in capturing the 'China+1" opportunity. Without addressing labour disillusionment, India risks missing its moment. Where the heart is The reasons for high factory attrition are complex and manifold. Factory owners have heard it all: frustration over long hours, strict factory operating procedures, homesickness, inability to adjust to a new state's cuisine, long commutes, and poor accommodation, especially on the outskirts, where factories are located. Sometimes, workers don't have the money to survive the first month before their salaries hit their bank accounts. Rajesh Mohanty, a 21-year-old electronics diploma holder, left his village in Odisha in June to hunt for a job in Bengaluru. After almost a month staying with nine others in a single room on the outskirts of the tech city, he has managed to find a position in an electric vehicle (EV) manufacturing unit. 'I miss my home food, and my parents keep asking me if I eat enough," he said. Mohanty is not the only migrant who misses his home cuisine; a recruiter recently saw 245 out of 600 workers from Karnataka quit an automobile maker's factory in Gujarat within two months. 'We asked them why, so they said they found the food too sweet!" he said. On top of social isolation and the culture shock of working in factories, the government's free food welfare schemes for 800 million Indians are also making it harder for youth to leave home for newer opportunities, according to economists. The reverse migration from cities to villages seen during the pandemic-era lockdowns hasn't fully corrected itself, they note. 'You don't have to fight for food in the villages, but in the cities, wages are stagnant and savings are poor due to inflation. In leaving the farm, the opportunity cost is much higher—you'd think twice before leaving," said Dhiraj Nim, an economist at ANZ. Housing challenge We need fewer frictions in matching of labour to industry," said Rahul Ahluwalia, founding director at the Foundation for Economic Development, a New Delhi-based think tank. 'Industrial worker housing is an important part of the puzzle—the government needs to allow it in industrial areas and treat it as infrastructure." A Niti Aayog report released last year stated that inadequate housing near industrial hubs is a major bottleneck in India's manufacturing story, leading to high attrition rates, reduced productivity, and workforce instability. It observed that the lack of suitable accommodations is restricting the migration of workers, particularly women, and limiting the manufacturing sector's growth potential. Doozy Robotics, a maker of autonomous robots for other factories, has a small manufacturing unit near Chennai. It sees 60% of employees leaving within a month of joining and high levels of absenteeism, all of which have delayed its plans to scale up production. 'Nobody wants to live on the outskirts of these manufacturing hubs. The infrastructure is poor, there are no schools for their children, and they can't bring their families. There is a mismatch between aspiration and reality," said Ajmal Thahseen, founder, Doozy Robotics. When construction equipment maker Schwing Stetter started a factory on the outskirts of Chennai a few years ago, it struggled to hire and retain local, experienced workers. 'Even existing workers from our old factory didn't want to move to the new factory, so we decided to go pan-India looking for workers. Now, the majority of our workers come from West Bengal, Odisha, and Jharkhand," said V.G. Sakthikumar, the chairman and managing director. Some electronics manufacturers, such as Foxconn, Delta Electronics, and Tata Electronics, are building mega dormitories to house their workers. Meanwhile, Aequs, a maker of aerospace components and kitchen cookware, claims it has a stable workforce because it has set up factories in the heartland of Karnataka. This has helped avoid uprooting labourers from their families while maintaining cultural homogeneity. 'The key strategy for us has been not to be in a tier I city. Metros are crowded, and everyone is fighting for labour. The problem in factory clusters in Hosur and Bengaluru is that everyone is coming from the North to work in them. Companies should go where the labourers are," said Aravind Melligeri, chief executive at Aequs. The Aequs case is a rare instance of factories moving closer to the labour pool than the other way round. Most large factories prefer working in clusters for economies of scale and access to critical road and port infrastructure. An outlay of ₹2,500 crore for industrial housing was announced in the latest budget. According to experts, free or subsidized labour housing may not only reduce the cost of living and commute time, but also address the need to thrive in a community. While most factories are being built in south India, particularly in Tamil Nadu and Karnataka, the labour-surplus states are in north India. The culture mismatch in terms of language and food takes an emotional toll on young workers. Lure of quick money Rather than working in a factory, the lure of city life is making the gig economy, especially quick commerce and ride-hailing jobs, a more attractive bet for young men choosing to leave their villages. Kartik Narayan, chief executive officer, staffing, TeamLease Services, has observed that many young men, especially in the 18–25 age group, who form the bulk of the manufacturing workforce, are opting for flexible gig jobs in cities instead. 'This is a growing issue, especially in metro and tier-I cities. Gig jobs offer faster earnings, more autonomy, and daily payouts, even if the overall salary is lower," he said. Cities such as Delhi, Ahmedabad, and Kolkata recorded over 100% growth in last-mile-delivery related job postings, making them key hubs for gig-based logistics roles. Manufacturers are thus forced to find creative ways to try and retain their workers. At Delta, Chen has managed to reduce the issue of quitting and absenteeism to some extent by linking skilling, retention, and attendance to extra payouts. Zetwerk has announced a Diwali bonus in its new Chennai factory to reduce absenteeism and increase retention. Once Diwali goes by, Foulger plans to announce a new incentive scheme. 'In Tamil Nadu, we celebrate Pongal, so I just need to figure out something for Pongal next," he says, laughing.
Time of India
15-05-2025
- Business
- Time of India
Syrma SGS Technology Q4 profit zooms 87%, revenue drops 18%
New Delhi: Electronics systems design and manufacturing firm Syrma SGS Technology has reported an 87% jump in consolidated net profit to ₹65.4 crore in the March quarter of FY25 due to higher margin, even though revenue from operations fell 18.4%. The Mumbai-headquartered firm shifted its focus away from low-margin consumer business to high-value segments like industrial and healthcare, which together accounted for 50% of Q4 income. "Over the past year, we have strategically pivoted our exposure from the consumer business to other businesses. This calibrated move away from low-margin business towards engineering and design-led manufacturing has resulted in a significant improvement in our margin profile, even as top-line growth moderated. The margin expansion was driven by this improved mix, with high-value, high-margin segments contributing a greater share to our overall business," Syrma SGS MD Jasbir Singh Gujral told PTI. The company had logged a net profit, attributable to owners of the holding company, of ₹34.9 crore in the January-March quarter of FY24. During the quarter, its revenue from operations was 18.4% lower at ₹924.3 crore against ₹1,134.2 crore in the year-ago period. For the full financial year 2024-25, its profit grew 58.2% to ₹169.8 crore, from ₹107.3 crore in FY24. The company had logged a net profit, attributable to owners of the holding company, of ₹34.9 crore in the January-March quarter of FY24. Revenue in FY25 increased 20% year-on-year to ₹3,786.6 crore. Looking ahead, Syrma SGS is projecting a 30-35% increase in revenue for FY26. The firm on-boarded 25 new customers in FY25, including export clients. The benefits from these new customers were not fully reflected in FY25 results, in addition to pending ramp-ups of a few other old export clients, Gujral said. This gives the company confidence of good growth in exports in FY26, he added. Syrma SGS is looking to cross ₹1,000 crore in export value in FY26, up from ₹860 crore in FY25. "The global supply chain realignment and heightened interest from international customers in India as a reliable manufacturing base are providing strong tailwinds. Inbound inquiries and plant visits from global players are at an all-time high, indicating robust demand and future order inflows," Gujral said. Further, the company's board has approved raising of funds via Qualified Institutional Placement (QIP), "for an aggregate amount not exceeding ₹1,000 crore". Gujral clarified that the existing organic business does not require additional funding, given its near-zero-debt status and strong balance sheet. "This fundraise is strategically positioned for two potential requirements. First, we're actively exploring inorganic acquisition opportunities that align with our growth vision. Second, we're evaluating various component manufacturing verticals under the PLI ( Production Linked Incentive ) scheme, with applications being filed before the July 31 deadline. For component manufacturing, investments could range from ₹50 crore to ₹1,000 crore over a five-year period, depending on the component type. We're currently in discussions with potential technology partners for various components, he said.
Mint
14-05-2025
- Business
- Mint
New ₹3,700-crore HCL-Foxconn JV to help India localise display manufacturing
NEW DELHI : India's display manufacturing industry received a boost on Wednesday when the Union cabinet approved the India Semiconductor Mission's (ISM) fourth chip-testing facility and the fifth semiconductor project overall. The ₹3,700-crore ($433 million) project, first floated in January 2024, is an outsourced semiconductor assembly and testing (Osat) facility being developed by IT services firm HCL Technologies Ltd in partnership with Taiwanese contract manufacturer Hon Hai Precision Industry Co. Ltd, better known as Foxconn. Also Read: What China's CEO meet means for India's top semiconductor stocks However, the HCL-Foxconn joint venture is the first 'advanced manufacturing Osat" in the country, catering specifically to displays, making it the first chip-testing project of its kind. It will help the country localise the manufacturing of displays used in mobile phones and laptops, a senior official with direct knowledge of the matter told Mint on the condition of anonymity. The facility, likely to become operational by 2027, will target a monthly output of 36 million chips, made from processing 20,000 semiconductor wafers per month. The fifth OSAT in the country, which aims for a $500-billion electronics economy in the next five years, comes as the semiconductor industry awaits cabinet approval for the second tranche of ISM incentives worth up to $20 billion. Mint reported in September 2024 that incentives could focus more on chip and display fabs than on Osat projects. ISM second phase However, the HCL-Foxconn Osat is in line with the overall strategy of the ISM second phase, according to industry stakeholders. While chip-testing plants are typically of low margin and value, 'the ideal strategy to set up Osats in India would either be to partner with a world-class chip and electronics brand that has existing clients and can draw business to the country, or for new forms of technology that will contribute to increasing value addition in new product categories," Jasbir Singh Gujral, managing director of electronics manufacturing firm Syrma SGS Technology Ltd, told Mint. Also Read: Adani plans to invest $3 bn to kickstart semiconductor biz via JVs with two Israeli firms This project, for reference, is the first project that will help India localise displays to a greater extent. This, though, is not the same as a display fabrication plant, which is responsible for the end-to-end manufacturing of the semiconductor components of a display. It is what generates the second-highest percentage of domestic value for products such as smartphones and laptops (apart from the primary processor itself). But, according to the stakeholders, it is also highly complex and expensive to establish. 'More than that, the HCL-Foxconn project is what will produce high-value display driver integrated circuits (DDICs). These are far more complex devices than the general-purpose ICs that projects such as the Tata Electronics Osat are set to produce, which will deliver higher per-chip dollar value," said Ashok Chandak, president of India Electronics and Semiconductor Association (Iesa). 'These projects are what will eventually help India realise its electronics goal, since it will, for the first time, add value to the display sector in all of electronics manufacturing in the country. The demand for display ICs is high, and establishing this project will help India eventually attract a full-scale display fab, or other projects in both upstream and downstream divisions of the Indian semiconductor industry," Chandak added. Also Read: There are no shortcuts to leadership in the field of semiconductors Other Osats being built in India are Tata Electronics' chip-testing plant in Assam, which plans to make 48 million chips per day at a net investment of around $3.2 billion; Kaynes Technology's Osat in Bengaluru, which will produce 6.3 million chips per day at an investment of $388 million; Murugappa Group's CG Semi, in joint venture with Japan's Renesas, targets the production of 15 million chips per day at a net investment of $222 million. Chandak affirmed that while each of these projects will produce more chips, the HCL-Foxconn project's assembly of display chips is the cause for the latter's lower volume, but higher value. The project is being built near Jewar Airport, close to Noida, Uttar Pradesh.
