INDIAN AUTOMOTIVE SECTOR: CREATING FUTURE-READY ORGANISATIONS - MAY 2019 - PWC
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Indian automotive sector: Creating future-ready organisations May 2019
Table of
contents
1. Automotive industry of the future: The changing paradigm 3
2. Organisation and workforce of the future in the automotive industry 7
3. Required skills and capabilities in the automotive sector 12
4. Bridging the skill and capability gap: Building the right development ecosystem 18
5. Call to action: The role of business leaders and HR in making organisations future ready 21
6 Conclusion 24
7 References 26
2. PwC | Indian automotive sector: Creating future-ready organisations
1
Automotive industry of the future:
The changing paradigm
3 PwC | Indian automotive sector: Creating future-ready organisations
data released by the Government’s Department of
Automotive industry in India Industrial Policy and Promotion (DIPP)1. In this
scenario, India’s automotive industry (including
The Indian automotive industry is seeing significant component manufacturing) is expected to reach
transformation with respect to its sustainable growth US$51.4–282.8 billion by 2026.
and profitability. The industry is crucial for the
economy as it accounts for 7.1% of the country’s There are a number of key trends that are shaping
Gross Domestic Product (GDP) and as per the industry today, which are expected to have a
Automotive Mission Plan (AMP) 2016–26, its significant bearing on its ability to realise the
contribution is projected to increase to 12%1. India is objectives of the AMP. In addition to automation of
expected to emerge as the world’s third-largest various processes to meet these goals, the sector is
passenger vehicle market by 20212. also expected to generate additional direct and
indirect jobs.
The fundamentals for growth drivers in the automotive
industry remain intact and the sector is likely to see Changing paradigm in the industry
an increased upward trend in demand in the coming
years as the economic environment improves and
Currently, India’s automotive industry is at an inflexion
investments increase. The Government’s ‘Make in
point and is witnessing five megatrends that are
India’ initiative has played an important role in
expected to transform the industry in a big way4.
elevating the country’s position and it has improved
Rapidly evolving customer needs, the disruptive
on nine out of ten parameters for ease of doing
impact of technology, the dynamic regulatory
business in the last three to four years. Today, India
environment, changing mobility patterns and global
is looked upon as a favourable destination for low-
interconnectedness are all impacting the way auto
cost manufacturing. The World Economic Forum has
companies are doing business today globally and in
ranked it 30th on the Global Manufacturing Index 3,
India. The industry has never witnessed this
which assesses the manufacturing capabilities of
magnitude of multi-dimensional change till now.
countries. The industry attracted Foreign Direct
Investment (FDI) worth US$20.85 billion during the
period April 2000 to December 2018, according to
Five megatrends impacting the Indian automotive industry
3
1
Automotive Mission Plan: 2016-26 (A Curtain Raiser) (2015) The Global Competitiveness Report 2018
http://www.siamindia.com/uploads/filemanager/47AUTOMOTIV https://www.weforum.org/reports/the-global-competitveness-
EMISSIONPLAN.pdf (last accessed on 20 April’ 2019) report-2018 (last accessed on 20 April’ 2019)
4
2
IHS Auto Database, Light Vehicle Sales Forecast, ihsmarkit.com https://www.livemint.com/Companies/FpQ6YCFflJHYPGiX6in4AN/
(last accessed on 20 April’ 2019) What-are-CAFE-norms-and-why-do-they-matter-in-the-
ToyotaSuz.html (last accessed on 20 April’ 2019)
4 PwC | Indian automotive sector: Creating future-ready organisations
1. Rapidly evolving customer expectations: In Going forward, with new technologies coming in,
view of the increasing disparity and gap between organisations’ technology capital will be the key
middle class population growth versus middle differentiator. Digital transformation and speed of
class average income growth5, customers’ execution will be the key requirements for the
purchase patterns are bifurcating between luxury survival of most automotive organisations.
and economical vehicles. And with disparate and
varying spend capacity, high levels of awareness 3. Dynamic regulatory environment: India, an
of products, rapidly evolving expectations and the emerging economy, has been traditionally looked
demand for personalised products and services, upon as a favourable destination for low-cost
customers are taking the centre stage in the manufacturing. However, regulatory pressure and
automotive ecosystem in the country today. In the benefit of industry enablers are expected to
this scenario, development of organisational have a disruptive effect on the portfolios of
capabilities that are aligned to business lines vehicles and the automotive supply chain.
and/or segments and are dynamic will help the Major regulatory interventions such as the
industry understand changing customer needs following are planned:
and deliver accordingly to meet these needs.
a. Adoption of BSVI norms in Delhi/NCR by
2. Disruptive impact of technology: The car of the 2019 and pan India by 2020 for all new four-
future will be electrified, automated, shared, wheeler vehicles sold
connected and updated yearly to make driving
easier, safer, cheaper and more comfortable. In b. Change in tax structure―GST and
addition, with increasing acceptance of digital resultant costs
solutions, a new wave of emerging technologies
are on the cusp of affecting the industry at c. Government investment on the automotive
three levels: sector and its plans for infrastructure
development (Pradhan Mantri Gram
a. Vehicles (electric, driverless and connected; Parivahan Yojana, Bharatmala
with smart sensors, real time vehicle Pariyojana, etc.)
tracking, geo fencing, driver analysis
and remote diagnostics) d. Adoption of safety standards in line
b. Supply chain and operations (digitised with international norms
trucking, upcoming logistics hubs,
automated warehouses, robotics, e. Formulation of end-of-life or
augmented reality and IoT) scrappage policies
c. Business models (mobility as a service and f. Implementation of Corporate Average Fuel
vehicle sharing) Efficiency norms4 under which manufacturers
need to improve their fuel efficiency by
The Indian Government has the ambitious target 10% between 2017 and 2021 and 30%
of ensuring that only electric vehicles are sold in or more by 2022
the country within the next few years. The
Ministry of Heavy Industries has shortlisted 11 g. Adoption of EVs and alternative fuels
cities in the country for introduction of electric through FAME-2
vehicles (EVs) in their public transport systems
under the Faster Adoption and Manufacturing of Stringent vehicle-related standards are leading
(Hybrid) and Electric Vehicles in India (FAME) to a shift in vehicular technology. Automotive
scheme6. The first phase of the scheme has organisations therefore need to invest in
been extended to March 2019. In February 2019, developing various technical skills that
the Government approved the FAME-II scheme are relevant in this era of changing
with a fund requirement of INR 10,000 crore vehicular technologies.
(US$1.39 billion) for FY20-22. The number of
vehicles supported under the FAME scheme
increased to 192,451 in March 2018 from
5,197 units in June 2015.
5 6
PwC. (2014). Adapt to survive: How better alignment between Indian Automobile Industry Analysis: A Sectoral Report. Indian
talent and opportunity can drive economic growth. Retrieved Brand Equity Foundation. (2019).
from http://www.pwc.com/gx/en/hr-management- https://www.ibef.org/industry/automobiles-presentation (last
services/publications/talent-adaptability/index.jhtml accessed on 20 April’ 2019)
(last accessed on 20 April’ 2019)
5 PwC | Indian automotive sector: Creating future-ready organisations
4. Changing face of mobility infrastructure: These megatrends are already affecting the industry,
Self-driving vehicles, ride-hailing services and and as we look ahead, we realise that thriving in this
other technologies are transforming mobility. The changing environment will require automotive
development of alternative modes of mobility organisations (across the value chain) to make
(e.g. autonomous vehicles and electric vehicles) several fundamental changes in their way of working
alongside that of smart infrastructure (e.g. smart in order to drive profitable growth and remain relevant
cities, optimisation of parking space, artificial in the market. This will also mean a shift in the way
intelligence (AI)-driven traffic lights and the focus the industry thinks about talent and capability
on enablement of EV-charging infrastructure) is requirements in the future. These changes will also
projected to transform mobility infrastructure. In offer an opportunity to automotive industry
this environment, India’s efforts to support EVs participants to use digitalisation as an enabler to
are likely to focus on two-wheelers, public create a unique competitive advantage across the
transport and fleet operations such as taxis and value chain. The industry will therefore need to gear
three-wheelers. According to the report by itself for a cultural shift, structural changes, job
Bloomberg New Energy Finance (BNEF), India disruptions and major skill and capability building to
will see much progress on electric two-wheelers, compete with global players, maintain and create a
rickshaws and electric buses over the next 10 competitive edge, and cater according to global
years and by 2040, EVs will constitute 40% of requirements and standards.
the total passenger vehicle fleet in the country7.
However, while transportation infrastructure Achieving success in the digital world will require
continues to be augmented, EV-charging new ways of thinking, especially in the area of talent.
infrastructure (with less than 1000 charging The need for transformation of the workforce in the
stations in India) is yet to take off. In this scenario, digital age will require much more than simple
the industry is expected to face unique challenges automation of routine processes8. It will be about
with changing mobility infrastructure, the collaboration between technology and talent to
specifications of fast-charging standards and unleash organisations’ full potential. This will mean
exploration of enhanced technology options. finding people with the right skills and capabilities or
providing the workforce with the required skills, while
5. Globally interconnected industry: Global and protecting employees’ experience and helping them
local markets offer a sustained growth potential build a trusting relationship with society.
for the Indian automotive industry. An increase of
FDI in India and the emergence and adoption of This may pose major challenges for industries,
globally emerging megatrends and technologies workers and policymakers as they grapple with shifts
in the country are expected to result in the in the structure of employment and jobs, which will
country’s increased dependence on other bring about significant changes in business models,
countries at every step of the automotive value downstream services and organisations. It is to meet
chain, e.g. R&D, purchase of raw material, power this need that this report sets out to predict the
electronics, manufacturing support and sales. fundamental impact of these megatrends, the
Therefore, automotive organisations’ ability to put development paradigm required by the automotive
in place and implement effective global and local industry in terms of timescale, volume and
strategies to manage risks and build their complexity, and the role of HR and leadership.
capability to drive their strategies will be of
paramount importance.
7
https://about.bnef.com/electric-vehicle-outlook/#toc-download organisation/publications/workforce-of-the-future.html) (last
(last accessed on 20th April’ 2019) accessed on 20th April’ 2019)
8
PwC’s. (2018). Workforce of the future. Retrieved from
https://www.pwc.com/gx/en/services/people-
6 PwC | Indian automotive sector: Creating future-ready organisations
2
Organisation and workforce of the
future in the automotive industry
7 PwC | Indian automotive sector: Creating future-ready organisations
2.1. Impact of megatrends on organisations and the workplace
Usage of Information Technology (IT) and integration the largest job-creating engines in the country, with
of technological research on manufacturing products the creation of approximately 65 million jobs in the
and processes is not a new phenomenon in the next decade. This should contribute significantly to
automotive industry. However, what is new is the the country’s growth, provided the sector is able to
level of sophistication and speed of application of new address and resolve the twin challenges of low
age technologies such as IoT, AI, machine learning employer attractiveness and the gap in supply of a
and robotics as part of the Industry 4.0 evolution. The skilled workforce to meet the requirements of future
speed of change is leading to a paradigm shift in the jobs. Moreover, what needs to be borne in mind is
way the manufacturing sector operates. In the area of that there are many changes that are unforeseen
megatrends, disruptions and new ways of working are and unknown today.
expected to result in irreversible changes in the
automotive industry, which are likely to generate Going forward, automotive organisations will need
significant opportunities in the sector. As per the to successfully manage the following seven key
Automotive Mission Plan 2016-26 (AMP 2016-26), the shifts to thrive in the new world order in the
Indian automotive industry is poised to become one of automotive industry.
Seven shifts faced by automotive organisations
“There are no changes being experienced or foreseen immediately, and many of the advances made in
technology, including designing of EVs, are at a nascent stage in India. Discerning the kind of skills required
and the training needed to meet future requirements will require some crystal gazing.”
– HR leader of the Indian arm of a leading European car manufacturer
8 PwC | Indian automotive sector: Creating future-ready organisations
1. Departure from traditional manufacturing: today. Therefore, there will be a need for
Today, vehicles are no longer viewed as only automotive companies to revamp their service
being a means for commuting or transporting networks and build specialised expertise in the
people and goods. The experience and utility of field of electronics (and not just mechanics) in
driving a car is very different from what it was a order to manufacture these advanced vehicles.
decade ago. Thanks to new age technologies,
customers’ expectations have risen high on three 4. Digital and automation becoming the new
counts: a vehicle’s performance, its smart and normal: To keep in step with developments in the
safety features and their experience. In addition, industry, automotive organisations in India are
all stakeholders – the customer, government digitising their plants and value chains. This is
bodies and regulators, and social institutions – taking place at a must faster pace today
are also talking about the environmental impact compared to three years ago. The automotive-
made by the sector. Furthermore, to bring manufacturing setup of the future will bare very
emissions down and encourage sustainable little resemblance to the one that exists today.
driving, there is a huge emphasis by the Indian Digitisation will not only drive automation, but also
Government on adoption of EVs. All these factors changes in processes and facilities that will be
put together are gradually making traditional automated. In these circumstances, maintaining
manufacturing and existing vehicles outdated. the momentum for digital adoption will require a
This means that infrastructure and assets different kind of culture and workforce as well as
deployed by automotive companies in the era of a shift from the existing patterns in which
Industry 2.0 and Industry 3.0, and the skills and automotive companies are acclimatised to
capabilities that are utilised to operate these operate. Digitisation is also expected to lead to
assets will no longer suffice. Consequently, democratisation of information and increase
automotive players across the value chain will transparency across organisations. Managing this
need to gear up to meet these changing new status quo will require a proactive change in
requirements, both in terms of infrastructure and management functions.
the skill-sets of people in the new environment.
The challenges posed will be accentuated as 5. Evolution of new jobs and associated skills:
new and traditional ways of working continue For decades, automotive companies in India have
to coexist and evolve. had the benefit of operating in an environment
that was relatively static and controlled.
2. Shorter cycles of innovation, development Therefore, many jobs across OEMs and suppliers
and production: The advent of electrified and have been around for years on end in their
autonomous vehicles and the emergence of new current shape and form. With the impact of
mobility patterns driven by connected and shared disruptive forces becoming more pronounced and
vehicles, coupled with the regulator pressures, automation taking place at a much faster pace,
are expected to accelerate the speed of jobs in the sector will witness a sea change. New
innovation in the automotive industry. The cycle jobs are already emerging across the different
for introducing new models and their variants is parts of the automotive value chain and repetitive
also projected to shorten. This will put pressure ones are becoming automated. The pace of
on (Original Equipment Manufacturers (OEMs) to adoption of EVs, HVs and autonomous cars will
shorten their Research & Development (R&D), further determine the speed and quantum at
planning, and production and delivery cycles, which new jobs will emerge. Going forward, new
while constantly integrating the latest technology jobs are likely to be added in the area of IoT,
in new models and variants. This will mean mechatronics, robotics, 3D printing, AI, machine
revamping the entire operating structure and its and deep learning, and analytics.
interaction with the ecosystem.
6. Requirement of new skills and capabilities:
3. Changing face of service and support The megatrends and challenges emerging from
ecosystem: The concept of service and support these trends are interlinked. The shifts in
in the automotive industry is likely to take a new manufacturing infrastructure, customers’
meaning altogether. With the advent of EVs and preferences and changes on account of
hybrid vehicles (HVs), the downtime for vehicles automation will require a workforce with diverse
is likely to reduce drastically. Even the skills and capabilities. Some of these skills that
infrastructure and capabilities required to support will be critical will be in the field of mechatronics,
and service EVs and HVs will be very different 3D manufacturing, electrical engineering and
from those used today. And while advances in the electronics. Human workers will also need skills
autonomous vehicle segment in India are still using which they can coexist and work with
ambiguous due to multiple reasons, it is certain robots. The demand for this workforce,
that the services and support required in the which is equipped with the new skills, is only
future will be very different from those prevalent going to rise. This will make the current set of
9 PwC | Indian automotive sector: Creating future-ready organisations
engineers, operators, technicians and shop floor the speed and scale of the impact, organisations will
workers redundant in the next few years. have to quickly prepare themselves to respond to
Availability of skilled manpower in adequate and thrive in the new work order.
numbers is already a concern raised by many
automotive majors. Therefore, it will be imperative ‘Organisational agility’ will be an important theme for
for automotive companies to deploy a multi- the sector for it to be able to respond to disruptive
pronged approach to bridge the talent-skill forces quickly. Organisational leaders will need to
gap between the white collar and blue unlock new levers to ensure that their organisations
collar workforce. are agile enough to respond promptly to changes –
known and unknown –the future may bring. This will
7. Shift in composition and metrics of workforce: entail their building nimble operating models and
Another major impact of these megatrends that structures, adaptable systems, and processes, agile
will be felt by automotive companies in the form of workforce models as well as continuously upgrade
changes in the composition of their workforce. their people’s learning. In addition, in order to respond
Some of this change will also be driven by the to and react quickly to such requirements,
fact that many automotive companies have organisations will have to build their digital IQ.
employed people for life and they are reaching a This will require them to digitise essential processes
stage wherein they will experience a churn on across their value chains and put in place structures
account of superannuation. This will pave the to strategise, plan and enable digitisation.
way for hiring fresh talent from outside their
organisations, especially for critical roles for In order to drive ‘organisational agility’, automotive
which a ready pipeline of leaders may not exist organisations will have to focus on two key aspects:
within their enterprises. Automotive companies
will need a multigenerational workforce that will 2.2.1. Building and organising for
come together to deliver on a new agenda that is
driven by technological and digital enhancements.
structural agility
This will require these organisations to evaluate Building an agile organisation structure will start by
their productivity norms and metrics in order to assessing how disruptive forces are likely to impact
see a significant change in the future. the organisation and aligning its key stakeholders to
build a common understanding of its future state.
2.2. Building the organisation Making automotive companies structurally agile will
mean a shift from their traditional process-centric
and workplace of the future command and control structure, which most of them
have in place because of their business models
The Indian automotive industry comprises a divergent in the past, to an empowered and customer-
set of players from OEMs to tier ‘n’ suppliers, with centric structure.
each playing a critical role in the value chain. This
dispersion has led to heterogeneity in the type of • Transformative project team structures with a
ownership, operating structure, workforce model, sound base structure: Leaders will need to
scale of operations, demand for skills, supply of jobs identify those parts of the business that require
and their availability. The automotive industry also greater agility and ensure that robust
thrives on a strong forward and backward linkage with mechanisms are in place to enable formation of
other prominent industries such as logistics and project teams in a seamless way based on
transportation. This integration is set to take new organisations’ emerging requirements. It will be
shape as vehicles become more and more important to evaluate and rethink how various
connected. Globally, the automotive Industry is dimensions of structure will be effective in a
already witnessing this phenomenon with many non- project-related environment. An efficient structure
traditional partnerships (e.g. with IT product, OTT, should enable effective, lean and scalable
electronics and telecom companies). This highly management with changes in roles and
integrated value chain within the industry and its new responsibilities, work content, span of control,
interlinkages with allied and/or adjacent industries etc., required to drive the kind of structural agility
intensifies the impact of disruptive forces. automotive organisations will need.
In this backdrop, every organisation in the industry, • Analytics-driven decentralised decision
depending on its stage of growth and where it is in the making: Traditionally, automotive companies
automotive value chain, will experience the disruptive have had a command and control structure,
forces and their impact differently. The leaders of which has enabled them to drive excellence in
various automotive companies in India share this their processes and achieve manufacturing
sentiment and are articulating their assessment of excellence. With so many changes under way
this impact in terms of the time, speed and scale and diverse variables at play, there will be a need
required in varying degrees. However, irrespective of
10 PwC | Indian automotive sector: Creating future-ready organisationsfor accelerated speed in the decision-making them to eliminate obstacles and put in place
process while retaining governance and support structures to enable free movement of
managing associated risks. The number of layers skilled labour, diploma-holders and engineering
involved in the decision-making process will have graduates. Automotive organisations will need to
to be significantly reduced with a decentralised think more widely about sources of talent, and not
approach on the back of Big Data and analytics. only explore new sectors and geographies but
This will require increased autonomy for also invest in their current employees and
employees across levels. encourage them to do new things. Moreover,
the willingness of their employees to embrace
• Appointing custodians to ‘build and manage
change and apply their skills somewhere new will
the organisation of future’: Automotive
be important for them to respond to the changes
companies will need to take that informed leap of
driven by disruptive forces. An adaptable and
faith and acknowledge how disruptive forces are
flexible workforce will therefore be invaluable
going to impact their business. They will have to
for such companies to address skills
constantly communicate how AI and automation
gaps in their operations.
can increase productivity and what will it take to
actually operationalise these within their • Rebalancing workforce through alternative
business. Appointing people and teams to take talent hiring and deployment plans: The
charge of this change and hiring people at the automotive sector, being the major employer in
management level to focus on becoming India, continues to face a challenge in attracting
organisations of the future could be a starting the best talent (partly due to the demand-supply
point. This will be an arduous task for some gap, as well as its lack of attractiveness and
companies as it would require a departure from career growth opportunities). Booming IT, e-
their current state. In addition, they will have to Commerce and finance institutions pose tough
challenge the status quo on multiple fronts. competition to the automotive sector when it
comes to attracting talent. Attracting the best-fit
2.2.2. Building an agile workforce and talent will be about creating a compelling
talent models employee value proposition and striving to
increase the inclination of Gen Y to work in a
Building an agile workforce and talent models for the manufacturing environment at leading OEMs and
future will be the second-most critical imperative for auto-component companies. However, building
the automotive companies in order to achieve the manufacturing excellence requires capability-
organisational agility they aim for9. Automotive building around innovative production techniques
companies have been managing their workforce and the introduction of integrated streams such
strategies by using a traditional pyramid approach, as mechatronics. In order to build excellence in
which has served them well in the past. Keeping up R&D, an increased focus and investment will be
with workforce shifts and deploying new workforce required on new digital platforms and
strategies and models will not be easy, especially for technologies. Hiring from outside the industry
large and complex organisations. Traditional linear could also be a solution, especially on the digital
models of workforce planning and talent deployment skills front, but, this option will be limited in many
will not fit new requirements. Therefore, automotive areas that may require automotive- specific skills.
companies will need to plan for dynamic multiple While some OEMs and auto-component
evolving scenarios. The key to success will be manufactures are partnering with engineering
their ability to identify microcosms within their colleges, their focus on this needs to increase.
organisations, which they can use to pilot Organisations will therefore need to shift their
new approaches. hiring strategies to take advantage of changing
• Widening the ‘talent catchment’: India’s market dynamics. Speed of deployment, ability to
automobile industry is uniquely structured on the flex workforce plans and adaptability of talent will
talent catchment front. While the managerial be critical for them to keep pace and compete
talent pool has seen a significant shift in hiring with their competitors. They will have to
from different geographies within India, shop floor increasingly tap into alternative sources of talent
workers, operators and other blue-collar (e.g. a ‘liquid’ workforce) to drive flexibility in their
workforce are largely hired from local catchments. workforce as well as in HR’s role. This will be
Therefore, in view of the high demand for a skilled extremely critical in creating new and innovative
workforce, automotive companies will need to channels to attract the right talent.
redefine their talent catchments. This will require
9
Workforce agility (https://www.pwc.co.uk/services/human-
resource-services/human-resource management/workforce-
agility.html) (last accessed on 20 April’2019)
11 PwC | Indian automotive sector: Creating future-ready organisations3
Required skills and capabilities in
the automotive sector
12 PwC | Indian Automotive Sector: Creating Future-ready Organisations3.1. Skills of the future in the automotive industry
The automotive sector has been a major employer in 3. Robotics: Robots and their usage in automotive
India for decades. As per the Automotive Mission manufacturing is not new. However, given the
Plan 2016-26 (AMP 2016-26), it is poised to become speed of change and shortening of cycle time,
one of the largest job-creating engines in the Indian their usage has accelerated and their application
economy with approximately 65 million jobs being gone beyond manufacturing processes. Skills to
added in the next decade1. be built for robotics do not only involve coding
applications for robots in vehicle-manufacturing,
However, jobs in the sector and associated skills are but also encompass its usage in R&D.
rapidly evolving with many new jobs expected to be
added to the employment landscape in the next three 4. Digital: In today’s world, customers are viewing
to five years. Skill-related demands from existing jobs almost everything as an experience. Unlike in the
will also be different. The industry has been investing past where every customer would visit a
heavily in automation and digitisation over the past dealership to experience a vehicle or on
few years – this is true for Indian as well as global occasions make a purchase decision without this
players operating in India and the trend is likely experience, today almost every customer is
to continue. ‘experiencing’ vehicles online. Many of them
would have already decided or narrowed down on
“Robots have enabled almost 70 to 100 per cent the vehicles of their choice, based on online
automation in weld shops, press shops, cast shops research and crowd-sourced views gathered
and paint shops and are further penetrating into through their peer networks. Digitisation of the
assembly operations to enable a higher degree of entire value chain is required to serve this new
automation and lower costs for the manufacturer.” customer, anywhere and anytime.
– HR leader at a Korean automotive company
5. Data mining and analytics: Designing and
When we spoke to the business leaders of various assembling vehicles have become increasingly
automotive companies – OEMs as well as Tier 1 and complex with the integration of automation and
2 suppliers – we heard some interesting views on IoT. Additionally, the design to dealership shelf
skills that will assume significance in the future. cycle is shortening. In order to cope with these
Based on the views of these leaders and PwC’s constraints, it is imperative for organisations to
analysis (based on secondary research), we have deploy tools that can collate, analyse and
outlined the skill buckets that will be most relevant. generate insights from data collected from every
(Note: The list provided is not exhaustive.) lifecycle stage of a vehicle – design to production.
1. Mechatronics: The shift to EVs and HVs will In addition to these skills, there are certain non-
fuel the demand for specialists in mechatronic technical skills and competencies that will assume
engineering. From electrical motor control to increased significance going forward. Problem-solving
battery and power management, sensor-making and decision-making will continue to be a necessary
to computational skills, employers will be looking foundational skill for employees across levels. Agility
for talent specialising in this growing sector. in learning and adapting to changes will be amongst
some other important competencies required. From
Note: Mechatronics, which is also called the leadership perspective, leading and managing
mechatronic engineering, is a multidisciplinary change will be critical.
branch of engineering that focuses on
engineering of both electrical and mechanical
systems, and includes a combination of robotics,
electronics, computer, telecommunications,
systems, controls and product engineering.
2. AI and machine learning (ML): As automation
and connectedness become the centre of the
automotive industry, AI and ML will play an
integral role in vehicles and factories of the future.
Understanding how AI works and its application
in the automotive context will become critical for
employees across organisations and deep
skills will be required in R&D, production,
supply chains and services.
13 PwC | Indian automotive sector: Creating future-ready organisations“Skilled talent is available but in a fragmented “While automation is non-negotiable and going to
manner and may not possess the skills of the future. benefit the industry in many ways, its perceived
There is a need for close partnership with ITIs and impact on employment has been articulated as a
other educational Institutes to update curriculums concern by many people. With automation, there will
and create a steady flow of talent equipped with be an increased need for skilled workforce in new
future skills. There is a need to build a complete areas and their ability to implement and manage the
ecosystem for learning. This cannot be done in new automated workplace. Furthermore, certain
isolation. The next three to five years are very complex manufacturing jobs may not lend themselves
critical for India from the skill building perspective to automation and will continue to need human
for the Indian automotive industry.” intervention. In this background, we will have to
constantly work on training and reskilling our
– Chairman of a leading auto people to keep their skills current and relevant.”
component manufacturer
– HR leader at a leading OEM
Training conducted for engineers, operators,
technicians and shop floor workers in the Indian
automotive industry may not be useful after two or
three years. Industry leaders envisage that as PwC’s 22nd CEO Survey10 reveals that CEOs are
EVs come into the mainstream, requirement for more worried than ever about skills and the skills gap
components, engines and batteries will change is a particular pain point, impeding innovation and
significantly with the number of parts becoming prompting higher people costs. As CEOs turn to what
fewer but more sophisticated. This will require they can actively control inside their organisations,
operators and their supervisors on the shop they confront the cracks in their own capabilities,
floor, along with technicians, to acquire these especially the information and skills gaps illuminated
new skills fast. Requirement is - in our survey sections on data and analytics and
• Upskilling in the following areas: mechatronics, artificial intelligence (AI). Organisations struggle to
telematics, robotics, autotronics, data analytics, corral data into useable and actionable intelligence,
lean manufacturing, process knowledge, quality and the main reason for their frustration is ‘lack of
core tools training, computer-aided engineering, analytical talent’, followed closely by ‘data silos’ and
robotics, programmable logic control, 3D ‘poor data reliability’. Without clean, relevant, and
modelling software and machine- handling skills labelled data, organisations are stymied in their
efforts to move aggressively on AI, which CEOs
• Building functional capabilities: Capacity for overwhelmingly ‘agree’ will have a significant impact
innovation, emotional intelligence and the ability on their business within the next five years. One of
to adapt to different cultures the more striking findings in this year’s survey is the
• Focus on building ‘multi-hatted’ talent with fact that the ‘information gap’—the gap between
combined business and technical acumen to the data CEOs need and what they get—has not
enhance cross-functional execution capability closed in the ten years since we last asked
and credibility them these questions.
• Promoting lifelong learning and adaptability
through regular re-skilling to meet changes
in market events or business models
• Revisiting corporate training programmes and
augmenting these with open online courses
and other externally available content.
Our people costs are rising more than expected 52%
Our quality standards and/or customer experience are impacted 47%
We are unable to pursue a market opportunity 44%
We are missing our growth targets 44%
We cancelled or delayed a key strategic initiative 22%
There is no impact on organisation's growth and profitability 4%
0% 10% 20% 30% 40% 50% 60%
10
PwC. (2018). 22nd CEO Survey (last accessed on
20th April 2019)
14 PwC | Indian automotive sector: Creating future-ready organisationsClosing the skill gap for the automotive industry and scale will be of paramount importance
of the future and this will require automotive companies to
engage in new forms of learning such as
Closing the skill gap for the automotive industry of the virtual learning, online learning, MOOCs
future will require auto companies to adopt the three- and classroom training. Partnering with
pronged strategy of building, buying and borrowing educational institutions and training centres,
talent, all activated in parallel. A standalone approach which have already created new training
is likely to deliver suboptimal results and may not help modules and are delivering training on the
in fulfilling the gap that exists. skills of the future will be of paramount
1. Building the current workforce: India’s importance. And while automobile companies
automotive industry has always been labour- have set up in-house training centres, much
intensive. This presents both opportunities and of the training must take place on the job.
challenges for the sector. If the industry is able to Therefore, ITIs and engineering curriculums
crack the new code of reskilling and training at will have to be tweaked and made more
the required pace, it will be able to deal with relevant so that while the fundamentals of
the skilled talent shortage to a great extent. education provided essentially remain the
Realistically, this may not be feasible for 100% same, but their applications could change.
of the current workforce in view of the ability Now, with the advent of new generation
and willingness of individual employees to be technologies, the industry needs to quickly
trained and re-trained. come together, and create and develop
workforce re-training programmes across
a. Providing tools and opportunities: organisational levels to be future-ready for
Integrating the comprehensive and innovative new job roles to attract the right talent with
skill development required in corporate skill-sets and nurture in-house talent.
strategies will be critical. Reskilling and
training can no longer be HR’s agenda alone b. Building the ‘learning intelligence’
and will have to be viewed as a cost by quotient: It is now more critical than ever
organisations. A paradigm shift needs to be before for organisations to identify, incentivise
made by automotive organisations to view and build leaders who have a high level of
these as an investment for the future. Speed learning intelligence.
2. Buying talent from the market: With new 3. Borrowing ‘domain experts’ to incubate
technologies and skills changing value chains in new skills: The automotive industry will also
the industry, building up the current workforce need to look at innovative approaches to
may not completely serve the requirements of borrowing talent from other industries and
automotive companies, especially actions that geographies on an urgent basis to create a
need to be taken on immediately. Building blueprint for organisations of the future as well
systems and processes to attract talent with as incubate new skills that can then be expanded
relevant skills and capabilities from other new across a larger workforce segment.
age industries will be critical. Infusing talent from
outside is not only likely to hasten the pace of
innovation, but also accelerate the speed at
which current workforce is reskilled.
15 PwC | Indian automotive sector: Creating future-ready organisations3.2. Building capabilities for the future at the top of the pyramid
In view of the megatrends and changes the automotive industry is witnessing, there is huge uncertainty about
the future and the unintended consequences of actions taken. Consequently, the role of leadership will have to
be of totally different from what it has been so far. With the expected disruption, leaders will need to challenge
the status quo and take big and bold decisions for the future while ensuring that their decisions are followed
through. Moreover, establishing personal credibility in organisations and the will to learn and evolve while
staying relevant will be foundational capabilities that drive organisations’ success.
Our study identified nine leadership capabilities which will help leaders navigate through India’s world of
work in 2030:11
When we spoke to the business and HR leaders of various automotive organisations, they acknowledged that
all the nine capabilities (mentioned above) will be critical for the future success of the industry. However, they
ranked disruptive envisioning, multidimensional sense-making, an orientation towards institution building,
talent magnetism and building, and nurturing of networks as the top five capabilities required from the
automotive perspective.
‘
“Leaders will have to put ‘organisation first’ and that’s where an institutional building mindset will be important.
A leader will have to lead from the front, and inspiring trust and rallying people towards a common purpose will
be the differentiating factor.”
– Promotor of an automotive component manufacturer
11
PwC. (2017). Reimagining leadership: Steering India’s workforce in 2030. Retrieved from https://www.pwc.in/consulting/people-and-
organisation/reimagining-leadership.html (last accessed on 20th April’ 2019)
16 PwC | Indian automotive sector: Creating future-ready organisationsLeadership ‘simultaneities12 another important dimension under which we tested the decisions and choices
leaders will need to make to navigate through the future. These simultaneities are characteristics at the two
ends of a spectrum and will test a leader’s ability to move across it in order to lead successfully.
The top five simultaneities are
Adopting simultaneities with decision-making capabilities to balance competing business scenarios will be
critical for leaders in the automotive sector. Having the courage to try new things and the resilience to survive
amidst disruptions and uncertainties, and being strategic and agile in implementation will be critical for them.
12
PwC. (2017). Reimagining leadership: Steering India’s workforce in 2030. Retrieved from https://www.pwc.in/consulting/people-and-
organisation/reimagining-leadership.html) (last accessed on 20 April’2019)
17 PwC | Indian automotive sector: Creating future-ready organisations4
Bridging the skill and capability
gap: Building the right
development ecosystem
18 PwC | Indian automotive sector: Creating future-ready organisationsIn the future, success will be a unique amalgamation of what talent brings to the table, what organisations
have to offer and what the ecosystems provide and demand. Hence, our point of view on development is a
three-dimensional view that focuses on three pillars―enrichment, enablement and enhancement11―for
sustained development.
The 3E model: Enrichment, enablement, enhancement3
• At an individual level Automotive companies that have advanced in
their journey of becoming future-ready can be a
Enrichment is about building the skills of the role model for other players to leverage their
workforce, which are required and are critical for environment for applications. This will mean
the automotive of the future. This will entail designing and implementation of career paths
preparing the workforce of the future and and/or development experiences outside
designing learning experiences, which will enable organisations to provide new experiences and
individuals to learn completely new and different build perspectives, for example, a short- or long-
skill-sets through hand-on experience in a safe term rotation to an OEM from an auto component
environment. An environment will be offered by manufacturer, and vice versa. The modus
organisations to individuals to try, fail and reflect, operandi for such interventions will have to be
all within short experience cycles, so that they put in place and agreed on by organisations
can take back their learning to their work. Review to enable seamless operations and
and rethinking of traditional learning and optimal outcomes.
development (L&D) models will be needed to
create an immersive and continuous learning “The increasing appetite for innovative technologies
environment and drive employees’ skill in the automotive industry has increased the demand
development throughout their careers. Workforce for a skilled workforce. The industry needs to create
retraining programmes across organisational a collaborative learning environment and develop
levels will need to have the components of training programmes across levels in an organisation
‘collaborative learning ecosystems’, which will for re-skilling and to be ready for jobs roles of
enable learning not only within the premises of a the future.”
fixed setup (which can be an organisation or
educational institution), but expand the – Chairman of a leading auto component manufacturer
boundaries of learning and applications
beyond these.
19 PwC | Indian automotive sector: Creating future-ready organisations• At an organisational level the Government (e.g. the proposal of change in
the Apprentice Act for increased flexibility and the
Enhancement is about energising and development of the National Skills Qualification
invigorating an ecosystem. This will involve Framework (NSQF), partnering with industry to
creating the right culture, structure, processes upgrade certain educational institutions) and the
and systems to enable individuals to make an industry (e.g. the introduction of specialised
impact and thrive in the new workplace. HR, courses and new technology for OTJ training and
along with leaders, must create a culture where the setups of training centres), there is a need for
innovation thrives, ideas spark into life and a more concerted effort to address the skill gap in
people—whoever and wherever they are— bound the automotive industry in India. This is critical for
together by a common purpose. In times in which staying ahead of the curve and creating a large-
everything will be changing at a rapid pace, scale impact, including:
communicating the common purpose and keeping
an organisation true to its goal will be imperative • Increased collaboration between the industry
for it to steer clear of issues in which automotive and academia on the relevance of curriculum
companies may get embroiled. in line with industry-related developments and
enhanced partnership with academia and the
Employees will need to be provided ample Government to drive the skilling and
opportunities to work in diverse networks so that learning agenda
they can learn from different perspectives and
build ecosystems of diverse networks within their • OEMs playing a significant role in driving the
organisations to drive innovative thinking. This skilling and training agendas of their suppliers
can be achieved by the following measures:
• Increasing internships and apprenticeship
• Ensuring that employees understand how opportunities for students
their organisations are changing and how
they can be a part of this change • Institutionalising standardisation of the
competency-wage grid in the industry and
• Engaging in a long-term approach to aligning recruitment and systems
acquisition of sustainable knowledge and skill
management and ensuring storage and • Undertaking skill gap assessment periodically
retrieval of knowledge and applications and to assess demand and supply gaps in the
sharing of skills relevant for the future of the automotive sector
Indian automotive industry are implemented
• Strengthening the role of a centralised skill
• Fostering a digital culture that promotes an assessment and certifying agency
entrepreneurial mind-set and developing
people capabilities that are aligned with • Creating skill development infrastructure by
emerging technologies setting up ITI s and SDC with government
and CSR funds
• Aligning talent with the digital culture
• Institutionalising industry engagement by
• Building up the digital IQ of organisations, using the Auto Skill Development Council
especially in the case of digital leaders (ASDC) as a platform for engagements
• Developing leadership capabilities relating to • Incentivising the industry to make
disruptive envisioning, development of investments in skill development and initiating
personal credibility and the curiosity to learn labour market reforms
and evolve while remaining relevant
An ideal end state for all stakeholders will be setting
• At the ecosystem level up of a robust network of educational institutions and
organisational training centres, and the ‘Skills of the
Enablement is about energising and invigorating Future University’, which will work towards the
the ecosystem and magnifying the scope of implementation of a common framework for
impact by adopting an industry or societal continuous re-skilling, learning and application. As the
perspective. The biggest challenge for the first step, organisations that have advanced on the
industry is to create the maximum positive impact. path of creating learning and ‘Skills of the Future’
Automotive organisations will need to partner with training centres can expand access to their facilities
the government, industry bodies and academia to to other stakeholders. A constant dialogue with
challenge paradigms and drive agendas that identified actionable outcomes will be critical for
reshape thinking and action to be taken. While building such ecosystems
initiatives on upskilling have been undertaken by
20 PwC | Indian automotive sector: Creating future-ready organisations5
Call to action: The role of business
leaders and HR in making
organisations future ready
21 PwC | Indian automotive sector: Creating future-ready organisationsCreate initial pilot projects Introduction of new roles such as data scientists, user
interface designers or digital innovation managers will
Cross-functional teams will need to be set up to drive be required. This will include clear and transparent
pilot projects. These teams should be fully dedicated communication of an organisation’s strategy, future
to a project and have the freedom to think outside operating model, how roles may change or be
existing company boundaries and point the company augmented in the future and skills that will
in new strategic directions regarding technology, need to be honed.
ways of working and ecosystems. Pilot projects
may also entail collaborating with leaders outside
an organisation by working with start-ups,
Initiate reskilling with support from the
industry organisations or universities to available ecosystem
accelerate digital innovation.
On the basis of the identified skill requirement,
Map and communicate strategy for learning programmes will need to be developed and
conducted through a variety of channels. Bit-sized
organisation module learning, learning through virtual reality,
gamification, AI and design thinking, setting up of in-
Organisations will need to analyse learning from pilot house training academy can be means used by HR to
projects and devise their strategy. In addition, they drive learning in an organisation. Employees will have
will have to identify existing gaps that can hinder to take ownership of their development journey, not
implementation of their strategies. Workforce planning only to build technical skills but also to gear up for the
will need to be a part of the exercise to understand changing environment from a leadership perspective.
the skills that people have and which an organisation Developing digital IQ in the organizational DNA will be
needs. This will begin with tracking and mapping the critical. HR will also need to leverage the available
‘skills footprint’ of an organisation against the model training infrastructure in the ecosystem. And most
to which it aspires. This data must not only importantly, business will have an important role to
relate to recruitment and internal job mobility play in encouraging a shift in the educational
but also learning and development. syllabus as per industry needs.
• It should analyse the impact of megatrends
and digitisation on an organisation in terms Get the people experience right
of changes in its structure, job roles,
accountabilities, skills and mind-sets. A new The employee experience is critical for any
organisational structure could include: organisation to attract and retain the hard to
find talent from the workplace environment. The
‒ Incubators to protect and grow a interaction of an employer and employee starts from
new business idea, which will not be the point when an employee explores a potential
influenced by the legacy organisation employer to exit an organisation and even further
with an ex-employee working as a part of the liquid
‒ Pods or Centre of Excellence to enable workforce of the organisation. All touchpoints add up
temporarily self-organized teams without any to the overall experience. Today’s employees, like
formal hierarchy to solve problems or develop customers, want to feel that their opinions are valued.
ideas in an interdisciplinary team setup Organisations need to understand how well they are
delivering on this13 by:
‒ Ideation labs to provide an inspiring, creative
and hierarchy-free working atmosphere • Aligning their purpose, employees’ potential and
where a trial and error culture is feasible preference to ensure placement of the right
manpower in the right role
• It should redesign job framework (capabilities -
digital, job families, roles – new/realigned and
pay), based on new business models
and technologies.
13
PwC. (2016). The power to perform: Human Capital 2020 and
beyond. Retrieved from www.pwc.com/hc2020 (last accessed
on 20th April’ 2019)
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