Companies are continuing to evaluate and convert to employing increased out-sourced services in order to concentrate their internal efforts to their core competency areas of expertise.
This is particularly true in the electronics industry where there are strong market forces driving companies to introduce new products in a most efficient manner.
An external engineering service firm can aid a company in product development by executing the conversion from a concept incorporating their core competency to a manufacturable product to serve a real market. There are a number of factors forcing this trend in business and a few of the key factors are outlined below.
Compression of the development cycle for new products:
By using “experts” that are dedicated to a specific service, companies can take advantage of the methodologies that these “experts” have developed over time to shorten the product development cycle and to produce a cost effective, efficient engineering outcome. These include tried and proven solutions that are common across various problem sets.
Flexibility:
An outsourcing service can allow a company to concentrate on developing and improving its core competency product while the outsourcing services provides the engineering and design to reach a finished product.
This allows the company to concentrate on various iterations on the original core product to respond to market/competitive changes over time. The outsourcing firm’s development is in parallel and can respond to changes as needed.
Additionally, when the demand to develop new products changes, a company will not have to reallocate or invest/divest fixed expenses or assets. Finally, outsourcing can accommodate overload situations that may occur.
Operational efficiency:
Outsourcing can relieve a company of investing in fixed assets, additional engineering resources and additional labor that is needed to take the core product to the market. Conversely, it can allow a company to invest in additional resources to develop their core competencies. Outsourced services are treated as an above the line expense.
Utilization of external engineering resources:
Many times the development of a product can require engineering talents that do not exist within a company’s resources such as a developer of hardware needing either firmware or software developed to complete a project. Rather than invest in additional resources, which will need to be trained and acclimated into the existing engineering team, it is an advantage to outsource these engineering projects.