Choosing an insourcing partner

Insourcing software development has turned out to be an effective way for tech firms to boost business. Not to mention that is the exact opposite of outsourcing with similar intents. But like any business strategy, preparation and execution is necessary and are crucial for a successful endeavor. Choosing an insourcing partner requires as much meticulous planning and careful observation as in the case of outsourcing. Following are the tips on choosing the right insourcing partner for your business.

Establish insourcing goals

This is the most critical step a company can take while choosing an insourcing partner. The scope of work, the billings, the project requirements has to fall under the capability of the insourcing partner. The responsibility of the partner is to maintain a high standard of quality.

The Right team size

Many companies overlook this consideration while they are looking into insourcing options, but it’s one of the most crucial factors in the successful completion of an in-house project. Make sure the vendor partner has the right blend of expertise and number to cater to your requirements.

Work Experience

Find out if the vendor supplied workforce has the right experience and expertise in delivering services similar to the one you plan for insourcing. This includes several projects executed, types of clients worked for, and function expertise for knowledge-intensive tasks. Assess the experience and qualifications of the management team, project managers, and other team members of the vendor company. Before entering into a long-term or substantial contract, interacting with the proposed team members before the commitment ensures fitment between requirement and the team chose to execute it.

Financial Stability

This factor is also overlooked to a great extent. It is essential to make sure that the vendor partner has sufficient working capital and is financially secure. There have been cases where the insourced workforce is not paid correctly by their employers. This, in turn, affects their productivity. This is a classic case of ergonomics.

Privacy and Confidentiality

Numerous projects emphasize confidentiality factor. There might be instances where a task cannot be outsourced merely because of the sophisticated nature and business goals entangled with it. But then, lack of workforce and budget issues drive a company to go for the insourcing route. This helps in keeping the work in-house and private while supplying it with necessary measurements.

There might be a variety of other factors out there depending upon client preferences and conditions. Irrespective of the vendor one chooses, starting a pilot project with a small team is always feasible to assess the scope of the outcome on the long run and scale-up with time seeing the fitment of the vendor with the business objectives and culture.

 

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Fixed-time contract vs Time & material contract

When outsourcing projects or insourcing tasks, organizations face a very crucial question about billing. Working with outsourced development team means that there are a few elementals that need to be sorted out from the beginning. It is because each project is different in its regard and comes up with its own set of requirements.

When a customer signs a deal with a software development company, they sign a billing agreement. The pricing model used depends mainly on project requirements. Two popular billing models are — Fixed-price Contract and Time and Material Contract. Selecting the right contract agreement is a vital step when outsourcing software development. Consequences of a wrong choice may yield unexpected outcomes.

Each type of contract has its pros and cons; hence, choosing any one of them may be a complicated task. The option that is well suited for one project may not be the ideal for another one. This article emphasizes on the advantages and disadvantages of these pricing models and explains which is better in what condition.

Fixed Price Contract

The fixed-price agreement is a type of contract where the service provider is accountable for completion of the project within the agreed sum in the contract.

In a Fixed Price model, the total budget on the project is set before development starts and remains unchanged. Plus, the exact deadline must be approved before the development starts. The contractor will bear the risks for late execution of works.

It is a practical choice in those cases, where requirements, specifications, and rates are highly predictable. The client should be able to lay down his clear vision of the project with the contractor to ensure appropriate final results.

When to use a fixed price contract:

  • Clear requirements and deadlines
  • Limited or fixed budget
  • Limited project scope
Fixed Price advantages
  • Usually requires clear deadlines and figures to be set to the budget. Planning expenses 1 to 3 months provide accurate statistics.
  • Regular project management communication with the contractor ensures scope compliance and eliminates the possibility of surprises.
  • Payments to the service provider count on the percentage of work performed. There is little involvement in such workflows since expectations are transparent and preset.
Time and Material Contract

Time and material (T&M) contract is the type of contract where the contractor is charged for the number of hours spent on a specific project, plus costs of materials.

Time and material contracts are much different from Fixed-Price because they involve billing clients for what they get. A time and material contract charges clients based on an hourly rate for all labor, along with the costs of materials. This type of arrangement might present some risk to the budget, but factors such as flexibility and opportunity to adjust requirements, shift directions and replace features prove to be very beneficial nonetheless.

In this model, the customer has a more significant role in the development of the software solution and bears all risks related to the project. The length of responsibilities that the client carries through the whole development process with time & materials is much higher than with fixed-price projects.

When to use T&M price contract:

  • Long-term projects
  • Full project scope not established
  • Flexibility to modify the range with varying requirements
Time and Material advantages
  • T&M contracts allow businesses to modify the scope of work, revise materials or designs, shift the focus or change features according to project requirements.
  • There can be an established general goal that can be achieved, however knowing how it’ll be achieved is not so important beforehand.
  • Opting for T&M contract process helps to save time and start projects immediately.

 

 

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Importance of Product Development(NPD) & Industrial Design(ID) for a business

Over the first fiscal quarter of 2018, Apple accelerated investments in research and development operations spending more than $3.4 billion on new hires and initiatives which will keep the company competitive in a fast-paced tech market.

Product development is like the gasoline that keeps the wheels rolling. But what drives companies to spend valuable resources such as time, money, human capital, etc. on new product development? And why is it so important?

 Here are five reasons:

  • Value for customers

The primary reason for any new product development is to provide value to its customers. The increasing demands of customers for innovation & new technology calls for the need to develop new or existing products. Otherwise, there is no reason to pour in huge amounts of money in the first place.

  • Keeping up with the competition

Staying ahead of the competition should always be the primary goal for any business. And increased competition is one of the major reasons leading to go for new products development. New products give us a competitive advantage over our rivals. Every firm struggles to fulfill and retain consumers by offering exceptional products. To offer more competitive advantage over the other and to satisfy consumer needs more effectively and efficiently, the product innovation seems to be needed.

  • Changing markets

Today’s market is more dynamic as compared to the past; it keeps on changing due to the wide variety of customer needs, all thanks to increased literacy rate, globalized market, heavy competition, and availability of a number of substitute. Consumers are constantly evolving which means their tastes and preferences change with them. It is the changing consumer behavior that drives the innovation and development of products. Plus, it also counters seasonal fluctuations.

  • Explore technology

Just as consumer trends drive new products, advances in technology drives companies to invest in new products. If your company has not upgraded its technology arsenal for ten years, count yourself to be at the last one in the queue within a few years.

  • Reputation and goodwill

Building image and reputation as a dynamic innovation and creative firm boosts a company’s legacy. The new product development is approached. Company desires to convince the market that it works hard to meet customer’s expectations. In fact, company developing new products frequently has more reputation and can easily attract customers.

Industrial design is a very crucial part of the entire new product development process. We are aware of the fact that industrial design develops aspects of a product that create emotional connections with the user. It integrates all aspects of form, fit, and function, hence optimizing them to create the best possible user experience. Industrial design’s role in product development process is to establish the design language of a product, as well as the corporate branding and identity.

How successfully a company is able to carry out development or modification, incorporating the ergonomics aspect, can often determine the success of a product in the market. Firms that leave industrial design to the end of the engineering lifecycle, or out completely will struggle to find success in consumer-driven markets.

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Insourcing - A Breakdown

Outsourcing has remained an integral aspect of striking deals between engineering and design firms. While it has been growing at a solid pace each year, several companies have taken the route to insource a part of their formerly outsourced services portfolio.

Insourcing is the practice of assigning a task to an individual or group inside a company. The work that would have been contracted out is performed in house. 

Insourcing is entirely opposed to outsourcing where the work is contracted outside. Insourcing encircles any work assigned to an individual, team, department or other groups within an organization. It is a task or function that a firm could also outsource to a vendor, being directed in-roads. It often involves getting specialists with relevant expertise to fill temporary needs or train existing professionals to execute tasks without the need to outsource the same. The group of professionals could either be direct employees of the organization or hired expertise from outside third party vendors.

A perfect example can be put in this way – a company based in India opens a plant in the United States and employs American workers to work on Indian products. From the Indian perspective, this is outsourcing, but from the American perspective, it is insourcing.

Causes of Insourcing

The leading reasons for insourcing include:

  • A management mandate to make changes in corporate sourcing strategy
  • To provide a remedy for a turbulent outsourcing relationship
  • To obtain the right mix of in-house and outsourced services based on current business goals
  • Mergers and acquisitions can also influence insourcing decisions. A decent post-acquisition integration plan should include a common sourcing strategy between the two companies, which may ask for the outsourcing of functions that are in-house at one company and the insourcing of a task that was previously outsourced at the other
  • Insourcing enables companies to have control over decision-making and the ability to move more quickly and precisely
Reasons to Insource
  • Boosting business agility
  • Transformation needs secure integration with the business
  • Knowledge is now available and increasingly democratized
  • Cybersecurity threats
  • Providing a platform to nurture talent

While executing an insourcing project can be achieved, it is essential to know that insourcing a service can be more complicated than outsourcing the same. The transition may require rebuilding services and leveraging capabilities from ground level that were once wholly owned by the service provider, which can turn out to be more complicated than expected.

 

 

 

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Insourcing vs Outsourcing

Both insourcing and outsourcing are feasible ways of bringing in labor or specialty skills for a business without hiring permanent employees. When it comes to selecting between outsourcing and insourcing, several entrepreneurs cannot decide what is best for them. Before jumping on to the differences between these two business practices, we need to check the definition of the terms.

Insourcing is the practice of assigning a task or function to an individual or group inside a company. The work that would have been contracted out is performed in house. 

Outsourcing is the act of assigning a task or function to a third party vendor instead of having it performed in-house.

Differences between Insourcing and Outsourcing
  • Insourcing helps to track the development process and puts control over the quality of the work, while in the case of outsourcing, it becomes difficult to trace the quality of work.
  • There is very minimal risk in insourcing, as one can have complete supervision over intellectual property (IP). In outsourcing, the entire task is in the hands of an outside third party. In case IP is leaked, it proves awful as investments on research, people and development work go in the vain and outside party claiming the idea as theirs.
  • Insourcing helps in evading intermediaries’ costs like fees and commissions. Insourcing also drives to point other cost exponentials such as incorporating and utilizing third-party vendors who offer value-based pricing.
  • As insourcing helps in keeping track of task and workforce, it runs hand in hand with development squad which in turn helps in keeping an eye on every move in the business, finding problems and resolving them. While in outsourcing, one lacks to track when the problem arises and how it’s fixed.
  • In outsourcing, there are possibilities of miscommunication as the outsourcer and outsource vendor are in different places. The information goes from head management, and then, they commune it to outsource provider’s managers, who will lastly convey it to employees. This arduous and lengthy process has a risk of miscommunications. However, insourcing cancels out such possibilities. The miscommunication aspect is reduced in insourcing, as there is direct communication with employees.
  • Outsourcing a project overseas might face a few issues due to the different time zone and cultural factors. A vendor might have varying physical outsources, various techniques, design, and engineering. There is a big chance of communication problem due to different time zone. In insourcing, the assigned team will easily decipher the requirements, design, and engineering to produce a product as per nativity.
  • Various projects require complete confidentiality of data, which cannot be outsourced to a third party vendor. In that case, it is feasible to bring in their resources over to the project location, keeping the confidentiality intact while introducing expertise.

Insourcing is more preferrable when the business requirement is for a limited time or temporary or involves little investment. Outsourcing weighs more when businesses need to cut costs while still in need of expert professionals.   

 

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NPD/ID vocabulary

Bill of materials (BOM): A table containing a list of the components and the quantity of each required to produce an assembly.

BriefInstructions and requests provided to design team prior to the commencement of a project. 

Business analysis: The practice of identifying business needs and determining solutions to business problems.

Commercialization: The process of introducing a new product or production method into the market.

Concept design: An early phase of design process, where the broad outlines of function and form are articulated.

ErgonomicsApplication of principles that consider the effective, safe and comfortable use of design by humans.

Ideation: Idea generation or brainstorming.

Industrial design: The process of designing products used by millions of consumers around the world.

Market research: An organized effort to gather information about target markets or consumers.

New product development (NPD): The complete process which involves transformation of a market opportunity or product idea into a product available for sale.

New Product Introduction (NPI): New product introduction is the complete process of bringing a new product to market.

Patent: An exclusive right granted to an inventor by a sovereign authority, for a specified time period.

Pilot Run: An initial small production run produced as a check, prior to commencing full-scale production. 

Prototyping: An early sample, model, or release of a product built to test a concept or process or built to act as a commodity to be replicated or learned from.

SketchAn image that is quick to generate and does not contain complete detail.

S.W.O.TAnalysis framework for a company relative to its competitors, market, and industry: Strengths, Weaknesses, Opportunities & Threats.

Test marketing: An experiment conducted by companies to check the viability in the target market before full scale manufacture.

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Outsourcing Product Development

Outsourcing development activities has become an essential component of any successful business strategy these days. As the global competitive market is gradually changing, product based companies are going against established norms following the trend of outsourcing activities. This article discusses about the logic behind outsourcing product development, elaborates on its benefits and discusses the other aspects to be considered when outsourcing product development.

What is Outsourced Product Development?

The outsourcing of specific activities or all activities related to the development and maintenance of a product is known as Outsourced Product Development.

Outsourcing enables product companies to get access into an untapped product-building expertise and global talent pools available with service providers. This helps in exchange of technology and varied work-process.

Why Outsource Product Development?

Every decision making panel of an organization stumbles upon a vital question—whether to develop a product in-house or outsource the same to a third-party expertise.

The product development market is becoming more competitive and mature. As the competition intensifies, product companies are under immense pressure to periodically release new versions in the market. Being an intensive activity, product development requires a lot of attention. The top management can’t afford to put all the emphasis on one activity, while overlooking the other phases of product development. It will end up affecting the profitability of the company.

When to outsource product development?

A typical product lifecycle involves the following activities: product development, product reengineering and migration, product maintenance, product implementation, and product testing. A product based company can choose to outsource one or more of these activities or it can outsource the entire string related to a particular product to a service providing firm.

The question, however remains as to when outsource an activity. There are several factors to be taken into account before outsourcing product development. It varies with company to company. Sometimes it is even seasonal and based on current marketing trends. Some factor can be summarised like this:

  1. One needs to understand the purpose of a product before outsourcing and weigh the importance of such product in the market. The biggest thing is, if you have an area of expertise where you really are the best in the world and if it’s the key to your business; that is something that needs to be kept inside. Surely, the success of a product doesn’t depend on R&D alone, as without marketing, sales, distribution, the success won’t move an inch. So the decision making panel need to sort out the area of expertise that the product company lacks.
  1. There are several products which are solely made by the parent company. But they might need enhancements to act as a catalyst to make it more user-friendly or well operable. This happens more often in software industry. You might have a software product of your own, or you might own a mechanical product but you need specific software designed to assist it in its operation. That is when you should consider outsourcing your product development activity. There are various companies out there that might specialise in this area and that might turn out to be your destination.
  1. One of the most, or maybe the most important factor in case of outsourcing product development is— availability of expertise. Sometimes this weighs in far more than other factors. There are some areas which needs specific expertise. Most firms are not entirely self-sufficient hence they have to look out for someone who can get the job done. For example, developing complex CAD roofing software would need people with CAD and mathematical software development expertise. With the advent of new generation automobiles, vehicle manufacturers outsource voice recognition feature to the OPD (Outsourced Product Development) partner who is an expert in such technology.
  1. Generally, some established companies have enough capabilities to run the entire product development lifecycle themselves. However, even these same organizations opt for outsourcing one or two activities to outside vendors. On the contrary, start-ups usually outsource a big chunk of their product development activity. This might be due to inadequate manpower, expertise, capital to afford means and various other reasons.
  1. Pertaining to the last point, besides lack of expertise, inadequate manpower also plays a role in outsourcing of product development. A company would rather outsource PD, to make up for manpower, rather than headhunting themselves. Time consumption, employment policy are few factors responsible for such decisions.
  1. Geography is another point to consider, if there are ongoing discussions about OPD. Last decade has seen big label organizations outsourcing various activities, including R&D, outsourcing their activities to locations like China, India and Eastern Europe. This has a lot to do with the low cost attached to it. Such nations provide manpower and particular expertise in affordable costs, thereby saving the organizations a huge expenditure. The low-cost geography has actually changed the dynamics of product development in such way, that big names have opened up their own R&D centres, sales and distribution office, factories etc in such locations due to lower cost factors.
Benefits of outsourcing product development

OPD has many benefits. A product owner need not worry about the outcome or excess expenditure if the activity is in right hands. Correct and well planned outsourcing saves a product company time, expenditure on systems and manpower, legal hassles. The best part is exchange of domain knowledge between the product company and the OPD, something that ensures better output in the future.

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Reverse Engineering and outsourcing: Important points to focus on

As much feasible Reverse Engineering and its outsourcing sounds, there are specific steps to follow and factors to keep in mind. Few crucial points to discuss when outsourcing RE are as follows:

  • The objective of reverse engineering; as your provider needs to know your goals to suggest a rather cost-effective solution
  • Whether reverse engineering has to be for design intent or as-built which, yet again, depends solely on the organizations end goal
  • What kind of measurement data should be approached and to what extent the accuracy of measurement should be implemented, depending on organizational planning,
  • For obtaining the most accurate measurements, the original object is often disassembled or even destroyed. Whether to go ahead with such a step or keep the original product intact for future reference is something an organization should carefully decide on
  • What tools to be used for digitizing the final date, like desired software with its version to suit the complete development ecosystem

Once the decision to outsource the reverse engineering process has been finalized, the next important step to consider is, choosing a vendor. Responsive and efficient vendors make all the difference. Finding a professional vendor with a high level of efficiency and even heightened work ethic is a complex but satisfying process. Be aware that once you are engaged with a vendor, it becomes little difficult to break the deal and discontinue ‘business’ with the existing vendor. So choose carefully but commit completely after the contract.

When a vendor has been finalized, organization issues a request for quotation (RFQ). RFQs are created to invite suppliers to a bidding process to bid on specific services/products. The organization should also take a legal approach and have the non-disclosure agreement (NDA) signed by the service provider. This is done to prevent unlawful, authorized distribution or illicit adoption of the product.

Now that the legal approach has been taken and paperwork has been taken care of, the organization sends the physical product to the service provider or the scanned files of the same; which solely depends on company needs. The vendor is also supplied with measurement specifications and related industry standards to follow. Eventually, the vendor creates digital CAD formatting required software and sends them back to the organization for further investigations on design modification or innovation.

For manufacturers, reverse engineering is a profitable strategy in today’s competitive scenario; however, outsourcing it brings along the other benefits as well that ensures product development process remains cost-effective.

outsourcing vendor

 

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Reverse Engineering: Outsourcing and beyond

We all know reverse engineering is an economical approach towards product development & innovation which is often utilized by manufacturers to evaluate and redesign competitor products. The method requires understanding the product design, system integrity and the manufacturing processes involved to realize the potential required to build a similar or an improved version of the product. The reverse engineering technique is best suitable for producing design data and related technical manuals for products that no longer have any design information available.

outsourcing
The entire work-process involves engineers studying every single design feature, associated manufacturing processes and tools needed for product development and storing information using CAD tools. After digitizing the entire information, suitable design modifications are carried out as per requirements.
However, to get things right one should have an efficient and dedicated engineering team, right software and hardware tools, etc. which seems difficult to have within the organization always.

Here comes the advantage of outsourcing reverse engineering projects where the activities can greatly reduce the cost of product development and burden on the engineers who can, then, put full emphasis on developing innovative design solutions for the product.

If one still questions outsourcing, some of the important benefits to outsourcing reverse engineering projects are mentioned below.

  • Outsourcing can bring in a global pool of talent with the myriad of innovative ideas that can assist in product design and development without investing in infrastructure and resources.
  • As the in-house resource can focus on R&D, it greatly helps in improving the productivity of an organization.
  • Product development time reduces considerably.
  • Hiring an outsourcing partner who matches requirement scale greatly enhances the organization’s capability.
  • RE outsourcing presents a scope to develop the product at a competitive price since the development cost is considerably less.

 

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The New Product Development Process

You might be a seasoned design professional thinking “What do my bosses sit around and do all day while I do the real design work".

This section outlines and explores the various early stages of the industrial design process that a product goes through. It does serve as a reasonable account of the overall and general product design process.

  • Ideating or initial ideas

Before any design work can begin on a product, there must first be a definition of what the product or product line might be. The idea’s genesis can be many factors such as:

Consumer demand – Reviews & feedbacks from the customers or even their ideas can help companies generate new product ideas.

Internal sources – Companies provide incentives and perks to employees who come up with new product ideas

Market research – Companies constantly review the changing needs, requirements and trends of the market by conducting plethora of market research analysis.

Competition – Competitors SWOT analysis helps companies to generate ideas.

  • Idea screening

An idea can be excellent, good, moderate or very bad. Once a suitable product opportunity has been identified, a specification document or design brief is created to define the product. It is usually created by the higher management of a company who’ll have access to information, such as budgeting and buyer/seller feedback. This step involves filtering out the good and feasible ideas which maintains the technical integrity while staying within realistic cost expectations.

Features such as a mechanical specification or a reference to an existing invention the product might be based upon, are outlined. Expectations, uses, and underlying intelligence associated to the product are included as well. Electronics, including sounds, lights, sensors, and any other specific inputs, such as colors and new materials may also be mentioned. Finally, a few reference sketches or photo images can be added to convey a possible direction.

  • Concept design & development

All ideas that pass through the screening stage are turned into concepts for testing purpose. A concept is a detailed strategy or blueprint version of the idea. In most companies, designers work up a design brief or product specification that guides their designs. It’s the designer’s role to make these ideas a reality. A professional designer has the ability to provide a large variety of designs in a quick and efficient manner. Many people can draw one or two ideas, but when asked to elaborate they often fall short. What separates the true design professional is depth and breadth of their presented ideas and vision in a clear and concise manner. Concept design generally means the use of hand-drawn or digital sketches to convey what’s in a designer’s mind onto paper or a screen.

  • Business analysis

A detailed business analysis is required to determine the feasibility of the product. This stage determines whether the product is commercially profitable or not, whether it will have a regular or seasonal demand and the possibilities of it being in the market for the long run.

  • Modeling

With the help of 3D modeling software (CAD – Computer Aided Design), the ideas/concept is rendered a shape, thereby creating a 3D model. The technical and engineering team has the biggest workload during this phase. These 3D models will often show up problematic areas where the theoretical stresses and strains on the product to be developed will be exposed. If any problem persists, it is a best phase of product development to handle the design errors and come up with modifications to address the same.

  • Prototyping & pilot runs (preliminary design stage)

In this stage, prototypes are built and tested after several iterations and pilot run of the manufacturing process is conducted. This stage involves creating rapid prototypes for a concept that has been deemed to have business relevance and value. Prototype means a ‘quick and dirty’ model rather than a refined one that will be tested and marketed later on. Adjustments are carried out as required before finalizing the design.

  • Test marketing

Apart from continuously testing the product for performance, market testing is also carried out to check the acceptability of the product in the defined market and customer group. It is usually performed by introducing the new product on a very small scale, to check if there are any shortcomings. This helps to know in advance, whether customer will accept and buy this product on launching in the market. Test marketing is a powerful tool indeed.

  • New product launch

This is the final stage in which the product is introduced to the target market. Production starts at a relatively low level of volume as the company develops confidence in its abilities to execute production consistently and marketing abilities to sell the product. Product manufacturing expenses depend on the density of the product, if there are numerous parts, material selection etc. The organization must equip its sales and customer service entities to address and handle queries. Product advertisements, website pages, press releases, and e-mail communications are kept on standby on the launching day.

Product development is an ever evolving fluid process and cannot be summed up in a few steps. The entire procedure sees insertion of additional stages or even eviction of a crucial part, depending on the nature of the project. Each group of professionals, whether designers, engineers or marketing, sales; has their role to play in this methodology. It is the company’s responsibility to continuously monitor the performance of the new product.

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