When to build, when to buy...

Points to consider for outsourcing design services

How often do you hear a sales team bemoan the fact that there are far more hot new product development opportunities than in-house engineering resources to support them. As modern products continue to integrate more diverse technologies, and development cycle times shrink, engineering staffs are stretched to the limit. Between supporting upgrades on existing products and mastering new technology for the next generation, technical work always seems to expand far beyond the available engineering time.

manufacturing sourcing product development electronic product manufacturing circuit design
At this point, companies face the "buy, build, or pass" decision. Do they redeploy their design staff on the new opportunity at the expense of current product development? Do they try to identify outside design resources to augment in-house design staff so current product development doesn't suffer? Or do they simply take a pass on a possible golden market opportunity? This decision isn't as tough as it first appears, but let's look at some of the excuses companies use to avoid "going outside."

"It's too expensive...we can't afford it." Perhaps the most common initial response from companies that have never used outside design services. Engineering is costly, whether in-house or not. The more salient factor here is pavback. If the ROI is there, the costs can certainly be justified.

"It's too time time consuming to manage outside resources" Some internal engineering time may be spent working with an outside design service but much of it will be at the beginning of the project in the
definition and requirements phase. Design service firms that can offer systems engineering support during this phase can help optimize the use of this time, and that goes a long way toward ensuring a smooth development.

"We need to keep this IP in-house" It's important for companies to recognize the difference between IP key to product value, and IP that isn't. For example, my company works with many OEMS in the commercial and residential AV markets. We provide these companies with high quality audio networking and DSP solutions for their products. When a loudspeaker company comes to us and wants to add network audio and control connectivity to a line of powered speakers, they're not looking to become networking experts. They need a networking solution that allows their products to inter-operate with other manufacturers' products using the same networking technology. The networking IP is needed to expand the product's market applicability, but it's not critical for the company to have deep knowledge of the IP
in-house. (hardware design, read more...)

If you do decide outside design support makes sense, how do you find a service provider that's a good fit? Before you fire up Google, it's a good idea to capture some essential information about your project.

What do you want your provider to do for you? Although this may seem like an obvious question, identify your desired scope before you talk to any design service providers. Do you want the provider to complete the entire project on a turn-key basis, or do you just need a portion of a project done outside? As you interview and compare different service providers, it's important that you give them the same information so that you can get an apples-to-apples comparison. Being clear up front helps avoid those
up-selling moments after the project is quoted and in progress.

What technologies and/or skills will your provider need? This question helps narrow the range of providers who are capable of meeting your needs. There are a lot of design service providers out there, from solo practitioners to huge ODMs that fully integrate design and electronic product manufacturing. You need to be sure that the provider can demonstrate experience in the technologies the project will require. The reality is that no single service provider can be all things to all people, so find a provider that will be frank about whether or not the project is in their sweet spot.

What kind of engagement model are you looking for? Different companies have different expectations about how they want to interact with their chosen provider throughout the project. Some take a more hands off approach, while others may want a great deal of interaction. In our company, every project has a program manager (PM). The PM is the key customer contact once the project begins, and they give the client a single technical point of contact for all status and project details. This makes it easy for a client to get any questions answered promptly, and any scope changes are handled efficiently between the client and the PM.

Deciding to use outside design resources, and then finding the right partner, can allow your company to develop products and take advantage of market opportunities that wouldn't be possible when you are constrained to use only in-house engineering. Once you have found a suitable service provider, you will have the flexibility to add external engineering expertise only when you need it without the risk of increasing your in-house engineering staff.

Posted from: ECN magazine, June 2014 edition

Author: Mike Sims

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