Accelerating to market through outsourcing

by Mike Bartley

Developing new or updating existing high-tech products and then bringing them to market is a complex and potentially costly process. It usually involves a number of skills and/or resources some of which your company does not possess. Hiring is one option, but it can take time to get the person you want and will add to your fixed cost base. Outsourcing can provide a solution with many strategic benefits.

For example, the outsource resource can usually be turned on sooner, is temporary and is a variable cost, allowing you to scale the resource to the amount you want for the time period you want. Also, as your product moves through its various development stages then the skills you need change too and once again outsourcing can provide what you need when you need it. Finally, outsourcing allows you to focus on your core expertise and access non-core expertise as-and-when required.

Let’s consider a few generic examples.

You have a great idea for a new social networking web site. You understand the market, you understand the users but you don’t understand how to implement your web site. You could outsource the complete website design, test and maintenance to a web company. Or you could decide that it is important to have the web development and maintenance in-house but outsource the testing.
You are developing a new computer I/O peripheral product designed for users with limited mobility. You are expert in understanding how the users will use the product and in processing the user gestures (via complex software algorithms). So you outsource the hardware development, the software testing and the product regulatory signoff. This allows you to keep a small, core team of domain experts whilst employing experts to perform the areas where you lack expertise.
You are developing a silicon product. Your expertise is in the architecture and design so you choose to outsource the verification and backend. Also, you need to develop example applications in particular vertical markets and use outsourcing to access the required application expertise.

If you want to capture the strategic benefits of outsourcing rather than just subcontract work packages then you need to structure your outsource relationship appropriately. Start by understanding your motivations in outsourcing: Access to resource? Cheaper cost base? Quality improvement?

Answering these questions should you enable you to answer the next level of decisions: Where to locate the outsourcing and which aspects of your development process to outsource? You should now be at the point of understanding what, when and where. You now need to understand who and how.

The first involves identifying partner selection criteria and then following a structured selection process. The ‘how’ involves establishing the execution processes that strike the right balance between independence at the outsource partner whilst ensuring they are delivering what is required. This all needs to be captured within a service level agreement.

For an SME, the advantages of outsourcing are very pronounced. However, it can be daunting to set up an outsource capability through a service provider. Execution of the outsourcing can also be difficult and many companies find the management overhead and the quality assurance of the service provider excessive.

This is where an agent can help. An outsourcing agent will already have established relationships with service providers and will have experience in establishing and maintaining outsourcing partnerships, and ensuring they deliver the strategic benefits sought. The agent should also be able to provide a managed interface to the resource thus reducing your execution overheads.

Mike Bartley is with Test and Verification Solutions Ltd at the SETsquared Business Acceleration Centre in Bristol, UK.

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