Engineering Services Outsourcing – Risk or Security?

Outsourcing has been around for as long as anyone can remember, but it has garnered more attention due to the revolution that the internet has brought. Outsourcing of engineering services has not yet reached the scale that is being reached by the IT services industry, but it has the potential to do so.

The main reason for outsourcing is the availability of inexpensive resources in developing countries combined with competitive pressures exerted on companies in developed countries. While the benefits of outsourcing are obviously many, it’s not immune to risks. An effective outsourcing strategy should therefore have risk management built into the supply chain.

The ecosystem of service providers in the developing world can be aptly described as “a few islands of excellence in the sea of ​​mediocrity”! So the trick is to identify agencies that represent these islands of excellence. It is the intent of this article to enable the reader to spot the lighthouses and icebergs on their way to these islands.

resources: In essence, the agency to which a job is outsourced is as good as the constituent team tasked with executing that job. Therefore, an effective way to distinguish winners from those who answered is to evaluate key team members. Educational qualifications, variety of work experience, number of years with the company and a list of the tasks they have performed are good indicators to assess the competence of the team.

Freelancer vs Organization: If good employees were the only checkpoint, it would be easy to get hold of “freelancers” who have no backing from any organization. For small jobs, freelancers sometimes suffice, but they can’t be relied on for large-scale tasks that require a variety of skills over a long period of time. Especially in the service industry, where the requirement can be general or specialized depending on the nature of the job, it is imperative that the execution is carried out by a team composed of several resources (with different skills and perspectives). Therefore, one should look for organizations that have been in business for at least a few years. Organization size, registration with local authorities, web presence and client list are some of the aspects to be checked.

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quality of interaction: Before hiring a company from a developing country, it is advisable to interact with the company’s customer-oriented professionals. Although it may seem insignificant, clarity of communication, speed of response, understanding of cultural differences, professionalism in approach and ability to provide legal documents for contracting are very important signals and leading indicators of the association’s success.

location: The quality of infrastructure varies greatly from place to place in developing countries. Uninterrupted power supply, access to high-speed Internet, availability of skilled technicians, and the ability to quickly add or replenish the skilled resource pool have a significant impact on an agency’s ability to meet client needs. From this point of view, the location of the agency in a large metropolis is of course desirable.

software licenses: There are many freelancers and small organizations that flout their obligation to purchase licensed software with impunity. Most engineering services require the use of specialized software, and almost every customer from the developed world has a policy of full regulatory compliance. It is therefore important that a commitment from the agency for legal technical compliance is obtained.

references: Resource assessment, existence of an organizational unit and quality of communication are process indicators, but not sufficient predictors for the result. In this regard, there is nothing better than a history of past performance. A customer list only shows the names of the customers but does not reveal the quality of the delivery and the satisfaction of the customer. It is best to find contacts from the client list and get first-hand feedback on the firm’s capabilities and quality of delivery. A positive reference from satisfied customers should be given high weight when choosing an organization to outsource your engineering services to.

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Incremental approach: Even under strict scrutiny, there always remains a certain risk in outsourcing engineering service contracts to developing countries. This stems from differences in the professional ecosystem, execution method, time zone differences and fluctuations in business cycles, etc. It is therefore prudent to start small and grow the connection with the experience gained through a full cycle of engagement prior to award, delivery, invoicing and payment.

Successful outsourcing of engineering services, if done effectively, has the potential not only to save costs, but also to help companies move up the value chain and aim for much higher growth.

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