The Black, White and Gray of Outsourcing Engineering Services
There are a plethora of reasons for a company to turn to outsourced services. Some of the commonly highlighted benefits of having outsourced engineering partners are reduced costs, swifter TTM, access to a global talent pool, and effective resource management. While topics meriting outsourcing and why companies should increasingly outsource have been repeatedly flogged to death, we often forget that every rose has its thorn. This post attempts to take a step towards examining the possible pains involved in working with a global engineering service provider. It is an attempt to help identify the pinch points even before trying the shoe on.
The following graphs depict factors that both influence and challenge outsourcing.
We have tried to list down the most commonly faced challenges by companies while working with outsourcing vendors. While most of these challenges have simple fixes, some may require continued effort over a course of time.
1. Choosing the right engineering partner
Thanks to technology, proximity no longer has the same bearing on the workforce as it once did. Today, you can have a team of engineers working from the other side of the planet while you focus your energy on research and innovation. While this can open up limitless possibilities, it is certainly not all roses.
Identifying and choosing an ideal engineering partner is the single most crucial step in the entire process of outsourcing. If you start off on the wrong foot, none of the following sections may be of much help.
Most companies only factor competency while hunting for a vendor. While competency is a prime component, it certainly cannot come at the price of credibility and compatibility. To study if a vendor is likely to be compatible or not, it is necessary to do some digging, like identifying their strengths, studying their security policies, and going over reviews and testimonials. It is also critical to assess the compatibility aspects from a business standpoint like their financial health, cultural differences, processes etc.
Taking stock of the criticality of this step, we have dedicated a post exclusively to help you identify your ideal engineering service partner.
2. Cultural differences
Dr. Sang-Chul Lee, in the paper “Seoul Olympics – Some Cross-Cultural Communications” examines the lessons South Korea learned from hosting the 1988 Olympics. The paper focuses on the cultural differences between Korea and the US which gave rise to a number of controversial incidents during the games. Certain incidents during the Olympics demonstrated the possibility of confusion and miscommunication when different cultures come together (especially when entirely unprepared).
When such a misadventure could befall an event of such scale and grandeur with months (if not years) of planning. We certainly cannot discount the odds when it comes to cross-cultural outsourcing. While there aren’t any hard and fast rules to remedy such inconsistencies, a likely solution would be making the system more process-dependent rather than people-dependent. This will help bypass dependencies that may otherwise require empathetically or philosophically driven solutions that aren’t always enforceable.
3. Reduced control
We are used to a world where a pat on the back, or a handshake, or even an approving grin can go a long way. Today, we are conditioned to function as mere nodes across a network. As frontiers of proximity diminish, it also dilutes a certain factor of control along with it. While companies increasingly look towards outsourcing, it adds to the blurring of transparency involved in a process. This could lead to fear of losing control of the project.
However, this can be entirely avoided if you choose an ideal outsourcing firm. One where you can still overlook the process and ask the outsourced team to provide you with regular reports on the progress of the project.
An ideal engineering partner would ensure availability on real time data on production, productivity, quality, defect density, accountability, resource availability, utilization etc. All these measures with the combination of dashboards, visualization panels, reporting mechanisms, documentation can deliver a true “Next Door” experience. This eventually will lead to better control for the company that buys services.
4. Contract concerns
It is a common misconception that contracts that stipulate a shorter lock-in periods should be preferred to longer ones. That’s simply a “cup half-empty” way of looking at things. Extended contracts allow both organizations to understand and get along better. Overtime, vendors will also become perceptive to the tastes and preferences of the client. This is very unlikely to happen if organizations keep switching vendors. However, there can always be an escape clause for if things get sour.
5. Issues related to Intellectual Property Rights
Intellectual property rights are the jewels in the gem box of an organization. So much so that on a global scale, nations have a TRIPS agreement to protect it.
Choosing a vendor who can ensure data security and confidentiality by signing proper SLAs and NDAs can help remedy this issue. This can easily be accomplished by identifying vendors who are compliant with international standards like ISMS, GDPR, ISO, BITS, FISMA,
Decoding common myths about Outsourcing engineering services
Typically, any outsourcing exercise is known to evoke apprehensions of being substituted. Perhaps, a more appropriate way of looking at it would be as
• An augmentation for improved capabilities that plug the gaps in the skill spectrum rather than replacing internal talent.
• A learning mechanism that enables the internal engineering team to gain from the experience of an engineering service provider who has worked with alternatives and competitors, but more importantly with other industries that have technology that can bring in new possibilities.
• A means to leverage the value from the tribal wisdom of in-house teams with a scalable global talent pool that also happens to have a cost benefit.
Engineering outsourcing, when planned well, can give you immeasurable benefits. If you are considering outsourcing some engineering functions, we offer a pool of dedicated, skilled talent with a unique engineering model designed considering the above influencing factors.
At Merraky, we are committed to ensuring that organizations comprehend 100% of value when they come into an outsourcing contract with us.