Flextronics: A Focus On Design Leads To India

Flextronics, the world’s largest contract manufacturing firm, made a strategic decision to expand its business to include original design and manufacturing (ODM) services. As an ODM supplier, Flextronics designed and built products that original equipment manufacturers (OEMs) purchased and sold under their brand names. Purchasing from an ODM allowed OEMs to bring new products to market quickly and efficiently. ODMs could sell the same basic product to many OEMs, providing substantial design and manufacturing efficiencies. Flextronics’ first ODM products were cellular phone handsets. The company had substantial hardware capabilities, which grew out of its contract manufacturing experience. In 2004, Flextronics considered adding software design expertise, since electronics products were becoming increasingly software intensive. The company considered a number of approaches to accomplish this. Having learned of the outstanding reputation of Indian software companies, the company’s CEO and the president of its Design and OEM Services operation, visited India. The case describes the contract manufacturing and design landscape in 2004, with a focus on software.