Outsourcing of Engineering Services

September 20, 2017

Outsourcing of engineering services can be to your advantage, if done right. Many companies ask themselves the question of whether to outsource a particular engineering project to another company or to hire someone or several people to do the work in-house, train them and turn them into your own personnel. The answer may not be as straightforward as it may seem. Several key questions need to be answered in order to make the right decision. A wrong decision can be very costly on this front. However, here I will be briefly summarizing one of many approaches that you can use. This approach is an analytical approach.

 

First make a simple sketch of a table or alike and put down the advantages and disadvantages of either case (outsourcing versus hiring full-time). On a scale from 0 to 5 or 0 to 10, you may rate what each of these advantages and disadvantages may be. Advantages of outsourcing could be such as having to pay less over a long period, as you will not need to pay a salary to employees every month and potentially year after year. Another advantage of outsourcing can be the flexibility and ease of canceling your contract with the service provider in case they do not deliver what they promised you. A disadvantage of outsourcing the project may be that you may need to constantly readjust yourself to the new people who will be working with you on a temporary basis. Or you may be worried that it may take significant time for you to explain your work to people, who will be helping you only for a short time.

 

On the same table sketched, put a weight for each advantage and disadvantage on the rightmost column. The weight scale can be subjective as every company has different priorities. For some businesses cash spent may be critical, whereas for some others knowing the company's culture by anyone entering its doors may be an outstanding priority. Using the rating points and multiplying them with the weight for each will give you a weighted number. Advantage points may have a positive sign, whereas disadvantage points a negative sign. At the end, look at the total, or in other words, the difference between advantage points (positive) and disadvantage points (negative) and see how big this difference is. If it is a significantly large positive number, then you may consider outsourcing the services for that particular task. If negative or if the difference is too small to take any risk of outsourcing, then you may stick to assigning the task to your existing personnel or you may consider hiring full time employees to work on that particular task and invest all that is needed to make them part of your internal team. We understand that this is a simplified method and may not work for everyone. However I hope it gives you at least a feeling of a first hand approach you could consider using.

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