A Harvard Business Review article says, “The days are long gone when a single vertically-integrated manufacturer like Ford or General Motors could design and manufacture all or most of the subassemblies and components it needs to make a finished product. Technology is just too complicated, and it is impossible to possess all the skills that are necessary in just one place.”
More and more companies are choosing to keep their in-house staff focused on their primary business, so they engage an outsourced engineering team to provide technical expertise. According to a report from Grand View Research, “The global engineering services outsourcing market… is expected to expand at a compound annual growth rate (CAGR) of 22.9% from 2021 to 2028. The increasing collaboration between Engineering Service Providers (ESPs) and Original Equipment Manufacturers (OEMs) is expected to emerge as one of the primary factors contributing to the growth in the adoption of engineering services outsourcing (ESO).”
The need for specialized skills often drives OEMs to partner with our team at Orthogone. For example, a medical device manufacturer with industry-leading image detection needed FPGA expertise to take their products to the next level. They partnered with our team to develop the latest version of their product.
Read the case study about our FPGA design for a highly programmable image processing engine.
In addition to needing specialized skills, companies also need to get their products to market quickly. They can’t wait for a time-consuming talent recruitment process and ramp-up delay for new hires. Companies that are developing industry-leading innovations work with us to speed development time. For example, we partnered with an optical detection and ranging technology company to design the electronics for an automotive LiDAR solution. Through the partnership, we met an extremely tight schedule to meet a product introduction deadline.
Learn more about our solid-state 3D LiDAR with 180 field of view project.
Many companies have taken advantage of the cost savings associated with using an offshore team for services such as IT. However, the IT outsourcing business model doesn’t exactly translate to engineering outsourcing. Working with an engineering firm or engineering team can be done on a project basis. This arrangement allows companies to scale up their teams as needed to meet peak requirements.
Also, the focus on cost savings as the primary factor in deciding to outsource and selecting a partner has shifted. Finding people that have the necessary technical skills along with essential communication and project management skills can make all the difference in the success of a project. Engineering services are extremely specialized. Building a team that has knowledge and experience takes years and requires investing in continuous education. Innovative product development demands creative thinking in an environment that supports collaboration and nurtures continuous learning. Every team member at Orthogone benefits from the company’s investment in research and development.
There is no one-size-fits-all model for engineering outsourcing. Every company, team, and project will have its own unique needs. However, there are 3 categories that engineering outsourcing services generally fall into:
1 - Augmenting your in-house staff
With this option, the outsourced team members work side-by-side with your in-house team, either in person at your offices or remotely with frequent meetings. The augmenting model works well for OEMs that have a large engineering team in-house and require specific expertise for a project. By augmenting your in-house team with an engineering services partner, your team members will benefit from knowledge transfer and learn more about the new technology from experienced developers.
Find answers to frequently asked questions in our Custom Engineering Services FAQs
2 – Assigning a portion of product development to the outsourcing team.
With this option, the outsourcing partner typically provides more input into the project management and design of the product, while taking on responsibility to complete a significant portion of development. This model is used by both OEMs and startups. For OEMS, this option can speed development significantly, while leaving their in-house staff available to focus on other priority tasks. For startups that have some staff, but need help with certain portions of product development, this option can be used at any point in the product development life cycle, for example, to show proof of concept or develop a working prototype.
Learn more about increasing the capacity of your technical team.
3 – Opting for turnkey product development.
For some projects, having an outsourcing partner take on the entire project from idea to manufacturing makes the most sense. This can happen for a variety of reasons, such as when a startup has a great idea with a time-sensitive market opportunity, but doesn’t have the bandwidth to take on the project. For OEMs, sometimes a project is outside the boundaries of the company’s normal operations, so it makes more sense to outsource it completely. Another reason for turnkey product development is when the idea presents seemingly impossible engineering challenges that need experienced developers to manage.
Development is still done as a collaborative process, with open communication and input from your company’s experts, but the majority of the development work is done by the outsourcing partner.
An experienced outsourcing partner can provide a pricing model that meets your needs. Typical options include time and materials, and fixed price contracts. The suitability of these options will depend on the size and scope of the project.
Sometimes, both models will be used. For example, if you want to use fixed price terms, but don’t have an RFP or specifications, an experienced developer can use the time and materials model to help you to define the requirements and specifications for your project. Then you can use those requirements as the basis for a fixed price contract.
Whether you need to access people with specific skills, speed development, or scale up your internal team for a special project, engineering outsourcing can be the ideal solution. Our successful work with clients develops into long-term partnerships where we collaborate on multiple projects.
Learn more about the benefits of partnering with a leading software development company.