Managing Industrial Subcontracting: The Strategic Issues

This book provides a holistic view of the concept of Subcontracting and its application in various industries in India. Subcontracting in the wider sense relates to letting out a part of the overall project obligations to another party. Such dispersal of obligations often tends to be beneficial for the parent firm and also provides adequate scope for growth to the secondary firm, which receives the subcontract. This book is an attempt to delve deep into the concept of subcontracting, its essence in the production process and application in various industries. Although subcontracts are usually given out to small and medium enterprises, it is just not beneficial for the small and less experienced business enterprises. It has been observed that subcontracting often gives the secondary firm a competitive edge, thereby, leading to its all round proliferation and strengthening. Subcontracting as an operational strategy leads to cost-effectiveness, optimum management of resources including man power and distribution of business risks. However, subcontracting relations are not bereft of risks. There are risk elements involved in contract manufacturing, the most perilous one being the overpowering of the prime contractor by the secondary or subcontractors. The book goes on to give an outline of the use of the subcontracting practice in Engineering industry, Pharma industry, Automotive Industry etc. It is categorically discussed how, for most of these industries, India has become a global destination for subcontracted jobs and services. In this context, the future of Indian SMEs is discussed and a synoptic view of the road ahead is taken.