Engineering Outsourcing
When Outsourcing Engineering Tasks May Be the Best Step for Your Business
Engineering process outsourcing is the transfer of responsibility for an organization’s architecture, engineering and construction functions to a third party.
Engineering process outsourcing has been growing steadily due to the many challenges that companies face. Building and maintaining internal engineering capabilities are some of the most expensive items in an organization’s budget. There is also the pressure to accelerate time to market, the issue of high fixed costs during peak product development periods, and the shortage of qualified engineering talent. These challenges can overwhelm small and midsize business with limited resources and delay projects for larger businesses.
Why Companies Outsource Engineering Services
Many businesses work with experienced third parties to source engineering talent, improve internal engineering processes, and access the latest technology while controlling costs. Cost reduction is still the number one reason companies outsource their engineering activities.
Most firms start with cost reduction in mind, and then extend their outsourcing campaigns for more strategic reasons. For example, a study showed that General Motors (GM) outsources engineering work to help reduce costs, while Toyota outsources product development to reach new markets and improve quality.
Analysts predict that strategic engineering process outsourcing will prevail over time, as companies squeeze more out of their outsourcing engagements to gain more value, drive innovation, and speed up time to market.
Key industry verticals that outsource engineering services include architecture and design, industrial equipment, oil and gas, automotive, utilities, and high tech.
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