Outsourcing of engineering services: risk or security?
Outsourcing has been around for as long as anyone can remember, but it has garnered increased attention due to the revolution brought about by the Internet. Engineering services outsourcing has not yet reached the scale achieved by the IT services industry, but it has the potential to do so.
The main driver of outsourcing is the availability of low-cost resources in developing countries coupled with the competitive pressures placed on organizations in developed countries. While the benefits of outsourcing are obviously manifold, it is not immune to the risks. Therefore, an effective outsourcing strategy must include risk management in the supply chain.
The ecosystem of service providers in the developing world can aptly be described as ‘a few islands of excellence in a sea of ​​mediocrity’! The trick, therefore, lies in identifying agencies that represent these islands of excellence. The intent of this article is to allow the reader to spot lighthouses and icebergs on their way to those islands.
Resources: In essence, the agency to which a task is outsourced is only as good as the constituent team that is contracted to deliver that task. Therefore, an effective way to differentiate winners from ‘also run’ is to assess key team members. Educational qualifications, diversity of work experience, number of years with the company, and a list of tasks executed by them are good indicators to assess the competence of the team.
Free Throws Vs Organization: If good employees were the only point of control, one could easily get ‘freelancers’ who are not backed by any organization. Freelancers are sufficient for small jobs from time to time, but cannot be relied on for large tasks that require various skills on a sustained basis. Especially in the service industry, where the requirement can be generic or specialized depending on the type of task, it is imperative that the execution be carried out by a team made up of multiple resources (with diverse capacities and points of view). Therefore, one should look for organizations that have been in business for at least a few years. The size of the organization, registration with local statutory bodies, web presence and client list are some of the aspects to consider.
Interaction quality: Before hiring a company from a developing country, it is advisable to interact with the company’s customer-facing professionals. Although it may seem insignificant, clarity of communication, promptness of responses, understanding of cultural differences, professionalism in approach and the ability to provide legal documents to enter into a contract are very important signs and main indicators of the success of the association.
Rent: The quality of infrastructure varies greatly from place to place in developing countries. Uninterrupted power, high-speed Internet access, the availability of competent engineers, and the ability to quickly add or replenish the pool of competent resources have a significant impact on an agency’s ability to meet client requirements. The agency’s location in a major metropolitan city is obviously desirable from this perspective.
software licenses: There are many freelancers and small-time organizations that blur the requirement to buy licensed software with impunity. Most engineering services require the use of special software and almost all developed country clients have a policy of full legal compliance. Therefore, it is important that a commitment is obtained from the agency regarding legal technical compliance.
References: The evaluation of resources, the existence of an organizational entity and the quality of communication are indicators of the process, but not sufficient predictors of the result. In this sense, there is nothing better than a track record of past performance. A customer list indicates only the names of the customers, but does not reveal the quality of delivery and customer satisfaction. It is best to look for contact persons among the list of clients and get first-hand feedback on the capabilities of the company and the quality of delivery. A positive reference from satisfied clients should have a high weight in the selection of an organization to outsource your engineering services.
incremental approach: Even with rigorous evaluation, there would always be some risk in outsourcing engineering services assignments to developing countries. This arises from differences in the professional ecosystem, method of execution, time zone differences, and variations of business cycles, etc. Therefore, it is prudent to start small and build the partnership with experience gained through a full cycle of pre-award engagement, delivery, billing and payment.
If carried out effectively, successful outsourcing of engineering services has the potential not only to save costs, but also to help organizations move up the value chain and target much greater growth.