INTRODUCTION

Consumer electronics industry is intensely competitive on account of a combination of demand (e.g., changing needs and demographic profile of buyers, emerging markets’ needs, rapidly changing technology paradigm, rapid obsolence of products) and supply (e.g., fluctuating input costs) factors. As a result, companies are under constant pressure to focus on cost efficiency and drive products and services innovation.

While most consumer electronics companies have widely acknowledged outsourcing and offshoring as an enabler of cost competitiveness, some of them are increasingly using offshore partnerships to drive benefits beyond labor arbitrage. Such companies are leveraging offshoring to drive competitive advantage by tapping into specialized skills and expertise offered by developing economies in Asia, Africa and Latin America. These companies have benefited by improving their operating performance and also have successfully created a platform to expedite their market entry and growth in these emerging markets.

CONTENTS

An analysis of outsourcing transactions confirms that the consumer electronics industry is a mature adopter of outsourcing and offshoring, and constitutes a key segment within the high-tech manufacturing industry from a global sourcing standpoint. The number of transactions across the years has been consistent and the average deal size has been growing consistently post 2005.

Against this backdrop, an understanding of outsourcing and offshoring adoption and trends in the consumer electronics industry is critical for buyers and suppliers alike. This market update analyzes outsourcing and offshoring activity, examines sourcing models and functional scope across leading consumer electronics companies, and captures emerging global sourcing trends in this vertical. Further, the report presents synthesized learnings on how leading consumer electronics companies have maximized value by leveraging global sourcing as an enabler to corporate strategy.

SCOPE

The analysis is focused on:

• Outsourcing contracts and trends in transaction announcement activity
• Sourcing models adopted by consumer electronics companies (i.e., third-party, captive landscape, JVs)
• Services scope, geographic focus and sourcing portfolios of consumer electronics majors
• Supplier landscape with a special feature on Engineering services and product development supplier landscape
• Perspectives on maximizing value from outsourcing & offshoring

We have considered manufacturers of mobile handheld devices (e.g., Motorola, Sony Ericsson), home appliances (e.g., Sony, Philips, LG), computers (e.g., Dell, Epson, HP), audio (e.g., Harman, Pioneer), and imaging (e.g., Canon, Nikon, Fujifilm, HP) to be representative of the buyers in this industry.