Right-Shoring to Maximize Product Engineering Efficiency and Revenue

When technology and economic globalization started erasing geographic boundaries in the 1990’s, white collar professions such as engineering began to follow manufacturers offshore. Although they achieved their goal of lowering the cost of talent and increasing engineering capacity, the current challenges of product engineering go beyond cost arbitrage and capacity augmentation. Shorter product development lifecycles, increased used of embedded systems, rapid technological advancement, shrinking R&D budgets and rising consumer demand for greater product functionality are driving today’s engineering needs, and strategies that rely solely on offshoring are leading to deterioration in client service, work quality and communication.

Perhaps the most intractable downfall, however, has been a negative impact on speed to market, the coin of the realm in the highly competitive race to release new products. Consumer expectations regarding product functionality, user experience and connectivity are higher than ever before, and getting the “latest and greatest” product to market first returns a significant reward. Conversely, each second-to-market product results in an opportunity cost that can’t be recouped.

Because of this, world-class engineering teams are increasingly opting for a hybrid strategy that leverages the benefits of offshore, domestic/near-site and onsite options to create the most optimal solution for each process or product. This strategy is called “right-shoring” — when a business analyzes and understands the complexity and strategic value of required tasks, deploying its resources and focusing its efforts in optimized arrangements that provide the best combination of cost, quality and efficiency.

Companies seeking solely to cut costs through offshoring were narrowly focused on the bottom line. In contrast, right-shoring drives growth by increasing the top line. Companies capture market share and increase revenue, more than compensating for investments associated with improving the speed and quality of their engineering operation.

Define the scope of the work
Product engineering requires significant subject matter expertise, engineering bandwidth and tools/technologies across the complete product development lifecycle (PDLC) and multiple technical domains. If you don’t have all of the appropriate resources in-house to complete the work, you have many factors to consider in determining the best way to proceed. Reviewing the options and potential risk points can help identify the right strategy to maximize your efficiency, effectiveness and revenue potential.

Once you’ve defined the work requirements, take a look at your current resources, processes and procedures.

• Do you have the necessary technical expertise, staff, space, technology?
• How is the work getting done today? Is this a new area for your company?
• Are you comfortable analyzing your operations and differentiating the individual needs of your divisions to determine the best way to get work done?
• Do you need help anticipating the next (inevitable) wave of technological advancements?
• Do you have the bandwidth to complete current/upcoming projects?
• What non-core functions and requirements are weighing down your internal resources?
• How can you improve operational efficiency and drive speed to market?

Maximizing allocation of work to permanent staff
If you can complete the work with internal employees, you may choose to have the work done on site or via a captive center. If the work to be done is highly complex and collaborative, with significant value to the organization, it is best done on-site. However if the long term objective is developing a self-sufficient workforce to create new opportunities in emerging markets, captive centers in low cost countries may be a good choice. In choosing the work location, you should also keep in mind the location of the end-user and target market.

Outsourced options for completing engineering work
As engineering service outsourcing has evolved from simply a cost reduction initiative to a strategic partnership for functions of varying complexity across the PDLC, a growing portion of engineering strategies include outsourcing and managed services. In 2012, outsourceable engineering R&D spend was about $325 billion; that number is on a trajectory to increase by an order of three to four, representing the value and importance that companies are placing on their engineering service partners.

In this highly competitive marketplace, it’s more important than ever for companies to get products to market quickly. To help them meet this goal, there are four general models of engineering service outsourcing and consulting when the demands exceed the capabilities of your permanent staff:

Managed resources
When the work that needs to be done is highly innovative and complex, highly collaborative and essential to your core product offering, a managed resources solution is often recommended. In this model, the services supplier primarily provides skilled talent and some managerial support, while the company retains control and oversight of the activities.

Case study: A multinational biotechnology company faced potential loss of skilled talent due to tenure limits, which would have had a significant impact on its product development capabilities. To mitigate co-employment risks and the loss of trained consultants and continue its successful record of product development and maintenance, EASi transitioned and deployed managed resources in a variety of areas, including:

• Systems engineering
• RoHS implementation
• Instrument integration
• CAD engineering
• Quality engineering

Our program supports this customer’s product development efforts by providing a stable engineering workforce and extending its internal engineering bandwidth.

Managed deliverables
When a company needs support that is more project-, function- or program-based and less complex, a managed services/deliverable approach works well. In this model, the company may need specific subject matter expertise that allows internal resources to focus on core responsibilities. The service provider takes on responsibility for process, function and/or deliverable management for defined activities.

Case study: Our client, a multinational technology company, needs to stay on top of a very competitive industry. For its non-production cloud environment requirements, the client was looking to extend its management bandwidth and support ongoing development activities more efficiently.

EASi established a managed service program and built a non-production lab environment to support the client’s Engineering Cloud Services business unit. To provide streamlined support and project infrastructure, we transitioned consultants from five different vendors to a consolidated structure using a communication and implementation plan based on best practices. We scaled this team as needed, providing full screening, interviewing, selection and onboarding support for increased scopes of work.

Applying industry best practices to our transition process resulted in no disruption to operations or consultant pay and a 100 percent retention rate, enabling the client to consolidate this team to a single supplier and reduce operational inefficiency through a managed service model.

The client was able to efficiently complete the following activities through project ramp-down by outsourcing them to our delivery organization:

• Site builds
• Onboarding
• Defects/issues
• Maintenance
• Automation uplifts

This enabled management to focus on core business requirements and strategy during times of change.

Full outsourcing
Fully outsourcing a project is an effective way to complete work that is of low- to medium-complexity, that can be completed with a relatively low level of collaboration or that is outside your company’s area of expertise. This model provides significant lift to your engineering capacity and technical domain expertise, but requires effective work scoping, project and delivery management, communication and governance planning, and account management by the service provider to ensure success.

Case study: Our client is a premier manufacturer of dash assemblies and wiring harnesses, primarily for boat manufacturers. During its busy season, its small engineering team becomes stretched thin with a high volume of product update requests, such as updating gauges or displays and standardizing components.

To extend its engineering enterprise, EASi provided a blended delivery model including domestic delivery center support for customer service, project management and quality assurance, and offshore support to drive cost efficiency and capacity for electrical drawing, board layout harness and harness fixtures design requirements.

Because of the time difference, EASi’s offshore operations were able to maximize engineering capacity and turn around deliverables by the beginning of the next U.S. business day. Our approach eliminated the client’s backlog of work while maintaining its very high quality standards, completing 344 work packages that included 2D harness drawings, quality audit check sheets and updated bills of material (BOM).

Contingent labor
If a company wants to maintain maximum control over highly complex and highly collaborative work that needs to be done, they may choose to use a supplier that provides access to high-level engineering recruiting. In this model, the contingent resource would bring significant expertise and work directly under your internal management.

Case study: Our client, a global designer and builder of connected products, was facing a significant increase in the amount of work. Because the work requirements fluctuated, the client didn’t want to hire additional permanent full-time staff to support the projects.

EASi, which had established a strong relationship with the client, brought in Aerotek. In addition to being able to fill the client’s immediate staffing need, Aerotek also created and implemented an ongoing, sustainable strategy for onboarding specific skill sets and technical talent to serve the evolving needs of the client’s business model. Working with Aerotek and EASi provides this client the resources readily available to deliver on the client’s engineering needs and partner on the initiatives driving their business.

Access the accompanying infographic for a fuller discussion of the parameters, benefits and risk points of each model.

As the needs of businesses advance, the ways of accomplishing the work that needs to be done are also evolving. EASi specializes in providing consultative solutions based on a thorough examination of your needs and strategy. Often, this results in a hybrid method that incorporates onshore, offshore and offsite locations, as it has with these current EASi clients:

• An American multinational automaker
• A leading global manufacturer of heavy equipment
• A multinational industrial manufacturing company

Our expertise is in creating the right solution, in the right location, to meet your needs and help drive your business forward. Want to learn more? Contact EASi now.