Indian automotive sector to focus more on HR technology

18 October 2017 4 min. read

A new report highlights the need for the Indian automotive component industry to improve its human capital dimension, primarily through strategic HR digitisation. The call to action comes in light of the significant growth of the industry, which has become one of the largest in the country, as well as across the globe.

The Indian arm of KPMG released a new report titled ‘HR in the era of globalisation and automation,' in which the Big Four accounting and consulting firm highlights the substantial growth in the automotive component industry in India, and provides recommendations for the way forward. As per the report, the automotive component industry in India has gained the attention of the global market by growing to 2.2 % of India’s Gross Domestic Product (GDP). The industry also contributes around 25% of the country’s GDP in the manufacturing sector.

HR trends in automotive

The industry is further projected to see exponential growth in demand in years to come, primarily as a result of the ‘Make in India’ initiative from the current government. In order to bolster the automotive industry’s contribution to the initiative, the Automotive Mission Plan 2016-2026 has been launched, which is expected to bring the industry into the global top three with respect to engineering, manufacturing, vehicle export and vehicle-component exports.

In order to keep pace with this growth and match a global profile, the report emphasises the need for the industry to digitise and automate key processes, most importantly within its HR segment. Digitisation has enabled the revolutionalisation of a number of key processes. As per the report, 41% of the firms in the industry are looking to change the structure of their HR segments. Of these, 58% seek to increase efficiency, 45% to improve quality, and 39% hope to cut costs.

Biggest areas of investment in the digitisation of HR services

80% of the firms in the industry plan to spend the equivalent of the current amount or more on the use of technology in the segment, which has a number of benefits. For example, Automated data analytics has improved the quality of decision making of companies in general. In addition, the report also elucidates how the increasing use of robotics in the HR process can enable sustained cost-reduction and substantially boost efficiency.

With hyper efficient connectivity and the advent of cloud computing, a market set to hit $1.9 billion in India by 2019, the possibility of working remotely has also been enhanced considerably. Companies can now access talent pools across the globe with minimal barriers. Cloud platforms have increasingly been molded for services, and are being designed to incorporate key HR components such as expenses, payslips and time-sheets, easily accessible from handheld devices. This potential has clearly been recognised, as 42% of the firms have plans to replace their existing HR systems with cloud-based solutions, and 58% plan to do so using mobile technology.

Macro HR trends

Within automotive's component segment, the report not only calls for the automation of bottom-line human resource processes, but also the intensive use of data analytics for assessment and prediction of individual performance, something that is increasingly valuable in a highly competitive global market.

"The HR's journey to the future is expected to leapfrog into emphasis on data-driven and fact-based insights and extensive use of technology to develop people capability, enbaling organisations to operate more effectively. Broader, the HR function will play a strategic role in shaping the future of the organisation by building its greatest asset – its people!," said Pragya Maini and Umesh Gangwani, co-authors of the report.

According to a recent analysis by McKinsey & Company, another major trend in the automotive space, electric vehicles, represents a huge growth opportunity for the country's mobility market, including carmakers and OEM players.