APPAREL INDUSTRYIT OUTSOURCING

Apparel Industry

Global Apparel Industry – Around US $ 2000 Billion

Market value forecast – By 2013, forecasted value of US $2751.2 Billion an increase of 39%

Market segmentation – Apparel, accessories and luxury goods account for 67.6% of the total industries value

Market segmentation – Europe generates 33% of the total apparel industry value

IT Spending – North America & Europe : About 3 to 5% of their revenuesIndia : Less than 1% of their revenue

33%

32%

25%

10%

GeographicEurope Asia-PacificAmericas Rest of the World

2004 2005 2006 2007 2008 2009

1759.2

1847.2

1948.2

2041.81972.2

2028.8Revenue ($ Billion)

Market Segmentation

Textile Mills

Fiber, Yarn and thread Mills

Fabric Mills

Textile and Fabric finishing and fabric coating mills

Textile Product Mills

Textile furnishing mills

Other textile product mills

Apparel Manfacturing

Apparel knitting mills

Cut and sew apparel manufactring

Apparel accessories and other apparel manufacturing

18.3

2.2

7

9.1

31.8

12.3

19.5

49.9

2.7

43.7

3.5

Segmentation

34.1

7.7

16.5

9.9

25.3

14.5

10.8

40.8

6

31.6

3.2By EstablishmentBy Employment

Cotton, Wool,Silk

Natural Fibers

Oil, Natural

Gas

Synthetic Fibers

Yan (Spinning)

Fabric (Weaving, knitting)

Petro-chemical

Synthetic Fibers

US Garment factories (Designing,

Cutting, sewing)

Domestic & Mexican

(Subcontractors)

Asian Garment Contractors

Domestic & Overseas

(Subcontractors)

Textile Companies Apparel Manufacturers North America

Raw Material Networks

Component Networks

Asia

Production Networks

All retail outlets

Brand Names Apparel

Companies

Overseas Buying Offices

Trading Companies

Export Networks

R E T A I LThe Apparel Value Chain

Supply Chain ManagementInventory

Management

Procurement & Merchandising

Quality ControlCustomer

Service Support

IT Support

Value Added Services

Staff Functions &

Admin

What Can Be Outsourced?

Organizational Dimension

External External Onshore Outsourcing

External Nearshore Outsourcing

External Offshore Outsourcing

Internal Internal Domestic Supply Internal Nearshoring Internal Offshoring

National Within the EU Outside EU

Geographic Dimension

Location Decisions

Determinants of location decisionsLabour costs and ProductivityCapital Investment Access to Markets and Inputs – such as workers, suppliers, and businessMarket Knowledge

DelocalizationLess Value Added ActivitiesLess Tactic Knowledge Required

Access to Markets and Inputs – such as workers, suppliers, and businessMarket Knowledge A

Offshore and Nearshore OutsourcingLow cost countries

Less Tactic Knowledge RequiredAccess to Markets and Inputs – such as workers, suppliers, and businessMarket Knowledge A

REACH• Registration• Evaluation• Authorization• Restriction of Chemical Substances• EU Based

EPA• Environment Protection Agency –

Monitory Agency• Covers Clean Air & Clean Water Act• US Based

Compliance

Primary• Cost• Quality• Lead Time

Complementary• Political Stability• Infrastructure• Compliance• Incentives• Labor

Market Drivers For Outsourcing

Third Party•IT operations outsourced completely•Outsourced due to continuous system outage

Captive•Pioneer in the Industry for IT•Increase in profitability

Hybrid•Has outsourced to Infosys•Also has a captive unit

Current Outsourcing Model

Growth

Profitability Enhancement

Improved Process & Technology Efficiency

Supply Chain OptimizationOperational Excellence

Improved Quality & Customer Value

Financial Benefits

Strategic Long Term Business Goals

Collaborative Product, Lifecycle Management Capability

Phases of Outsourcing

Fast Fashion Lead Time Captive

Seasonal Quality Hybrid

Basic Cost Third Party

Proposed Models of Outsourcing

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