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Outsourcing has been around for as long as anyone can remember, but it has attracted more 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 competitive pressures exerted on organizations in developed countries. While the benefits of outsourcing are clearly multiple, it is not immune to risks. Therefore, an effective outsourcing strategy must include supply chain risk management.

The ecosystem of service providers in the developing world can aptly be described as ‘a few islands of excellence in the 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 the lighthouses and icebergs on their way to those islands.

Means: 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 the winners from the ‘also run’ is to evaluate the key members of the team. Educational qualifications, diversity of work experience, number of years in the company and a list of tasks performed 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 supported by any organization. Freelancers are good enough for small jobs from time to time, but they 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, look for organizations that have been in business for at least a few years. Organization size, registration with local statutory bodies, web presence and client list are some of the things to look at.

Interaction quality: Before hiring a company from a developing country, it is advisable to interact with the professionals of the company facing the client. Although it may seem insignificant, the clarity of communication, promptness of responses, understanding of cultural differences, professionalism in approach and ability to provide legal documents to conclude a contract are very important signals and main indicators of the success of the association.

To lease: 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 customer requirements. The location of the agency 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 clients in the developed country 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 all indicators of the process, but not sufficient predictors of the result. In this sense, there is nothing better than a history of past performance. A customer list indicates only the names of 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 customers should weigh heavily in selecting an organization to outsource your engineering services to.

incremental approach: Even with a rigorous assessment, there would always be some risk in outsourcing engineering service assignments to developing countries. This arises from differences in the professional ecosystem, method of execution, time zone differences, and variations in business cycles, etc. Therefore, it is prudent to start small and grow the partnership with experience gained through a full cycle of pre-award engagement, delivery, billing, and payment.

If done effectively, successful engineering outsourcing has the potential to not only save costs, but also help organizations move up the value chain and aim for much higher growth.

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