Outsourcing is a business practice of hiring an individual or a company outside your business to perform certain tasks that you cannot or do not wish to perform in-house. For example, a small company can outsource bookkeeping to an accountancy firm instead of employing a full-time accountant.
This is a common practice used in many spheres, including electronics design. As of 2020, the Global Engineering Services Outsourcing Market was estimated at US$825.5 billion. Outsourcing can provide businesses with various benefits. In some cases, it becomes the only way to solve a business task. Here are some of the most common reasons why companies outsource electronics design to other firms.
One of the most obvious reasons to hire an outsourcing electronics design company is to benefit from cheaper labor costs. It may not be true if you want to outsource domestically, but international outsourcing opens up interesting opportunities.
The cost of labor in some regions, such as Eastern Europe, Asia, or India, is much lower compared to how much the same job costs in Western Europe or in North America. At the same time, many companies in these regions demonstrate the same (if not higher) skill level and professionalism.
Another common reason to outsource a task to another company is the lack of human resources or equipment to do the job in-house. In theory, a business can set up a new department, hire and train new people, but it takes time. That’s why many companies find it easier to outsource.
Sometimes, it’s the lack of expertise that motivates companies to hire outsourcing firms. Often businesses delegate only a certain portion of the job to another company – the portion in which the business’ staff lacks skills or experience.
1. Selecting an outsourcing company
You will find hundreds and even thousands of electronics design firms working from different countries, so first off, you should pick the one that suits you best. To do it, you have to take into account a number of things.
As mentioned above, if you want to reduce costs as much as possible, you can look for electronics design firms in Eastern Europe and other “cheaper” regions.
Expertise and experience
Before making your mind, make sure the company you’re considering has skilled employees and the equipment required for your project. Browse the firm’s website and/or blog and study their previous projects. If the team has already done similar projects, it’s a good sign.
Check the company’s reputation
To make sure the company can be trusted, find and study reviews left by the firm’s previous customers. For example, a lot of customers leave reviews on such platforms as Clutch.
Check payment terms
It’s Ok to regularly pay an outsourcing company for a regular service. But when you need to develop a device (which is a one-time job), you may want alternative payment terms. Electronics design companies often offer the following payment terms:
Time & Material: you pay on an hourly basis; suitable for research & development tasks and iterative projects;
Fixed Price: you pay by fixed installments; suitable for tasks with a clear scope of work, strict deadline and/or budget;
Hourly-fixed: you pay in increments for a determined number of hours; suitable for projects that may require adjustments in the process.
2. Sign an NDA
When you find a company that meets your expectations, sign a non-disclosure agreement to protect your intellectual property rights. Naturally, a company that cares about its reputation will not refuse to do it.
3. Contact, have a consultation, sign a contract
The collaboration begins with contacting the outsourcing company (by phone, email, or messengers). Even if you think that the firm can handle your job, ask for a consultation first. Describe what you want and discuss what the developers suggest. This step is very important because it lets you estimate how much time and resource the project will require and what challenges you may face.
After that, sign a contract with the company and make sure to document the goals and objectives clearly. Ideally, the company should also suggest a clear plan and schedule.
4. Ask for a project manager and project management tools
It’s a bad idea to trust an outsourcing company completely without any control from your side. An experienced firm will offer you a project manager that will regularly contact you to report on what has been done.
Also, suggest using a project management tool, such as Jira or Basecamp. Expect regular meetings or phone calls to discuss problems and find solutions. Even if the project is moving as planned, a professional team will regularly inform you about alternative ways to fix issues and ask for your approval.
5. Don’t get involved too much
The previous tip may lead you to believe that you need to control every step of the outsourcing company. While you, as a customer, must always stay up to date with the progress on the project, you must also avoid micromanaging. A team of professionals will know how to complete your task the best way possible.
Most electronics design firms don’t manufacture products. Instead, they create a prototype and documentation that will be used by manufacturers to mass-produce the device. Therefore, documenting the project in detail is very important, especially if an outsourcing team collaborates with your internal team. So, make sure the firm provides you with all the necessary manuals, user guides, API documentation, code comments, etc.
7. Communication and good relationship
Treat the team you hired well and professionally. Remember, electronics design is an act of creation full of unforeseen challenges and issues. So, don’t be scared or angry if something does not go as planned. Delays are quite common in this field, and as long as they are not critical, there’s no need to harm your relationships.
Moreover, don’t be afraid to highlight the team’s achievements. Thanking people and telling them they did a great job can be much more motivating than you may think.
A successful outsourcing experience can transform into a long-lasting relationship with the company. As a result, you will get a team of professionals whom you can trust completely and who will always do their best to meet your expectations.
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