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Outsourcing has been around for as long as we can remember, but it has attracted increased attention due to the Internet revolution. 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 manifold, you are not immune to the risks. An effective outsourcing strategy, therefore, must have risk management built into the supply chain.
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, is to identify agencies that represent these islands of excellence. The intention of this article is to allow the reader to spot the lighthouses and icebergs on their way to those islands.
Resources: In essence, the agency to which an assignment is outsourced is only as good as the constituted team that is hired to deliver that assignment. Therefore, an effective way to differentiate the winners from the ‘also ran’ 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 lancers vs organization: If good employees were the sole point of control, you could easily find ‘freelancers’ who are not backed by any organization. Freelance spearmen are sufficient for small jobs from time to time, but cannot be relied upon for large tasks that require a variety of skills on a sustained basis. Especially in the service industry, where the requirement can be generic or specialized depending on the type of assignment, it is imperative that the execution be carried out by a team composed of multiple resources (with different capacities and points of view). Therefore, look for organizations that have been in business for at least a few years. The size of the organization, the registration with the local statutory bodies, the web presence and the client list are some of the aspects to examine.
Interaction quality: Before hiring any company from a developing country, it is advisable to interact with the professionals of the company who are facing the client. As insignificant as it may seem, clarity of communication, speed of responses, understanding of cultural differences, professionalism in approach, and the ability to provide legal documents to enter into contracts are very important signals and primary indicators of the success of the company. association.
Rental: 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 all 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 fail to comply with the requirement to buy licensed software with impunity. Most engineering services require the use of special software and almost all customers in developed countries have a policy of full legal compliance. Therefore, it is important that a commitment is obtained from the legal technical compliance agency.
References: The evaluation of resources, the existence of an organizational entity and the quality of communication are all process indicators, but they are 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 customer names, but does not reveal the quality of delivery and customer satisfaction. It is best to search for contact persons from the customer list and get first-hand feedback on the company’s capabilities and the quality of delivery. A positive referral from satisfied clients should weigh heavily in selecting an organization to outsource your engineering services.
Incremental approach: Even with rigorous evaluation, some risk would always remain when outsourcing engineering service assignments to developing countries. This arises from differences in the professional ecosystem, the method of execution, time zone differences and variations in business cycles, etc. Therefore, it is wise to start small and build partnership with the experience gained through a full cycle of pre-award participation, delivery, billing, and payment.
Done effectively, engineering outsourcing has the potential to not only save costs, but also to help organizations move up the value chain and aim for much higher growth.