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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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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What is New Product Development?

Often businesses confront consumer preferences, increasing competition and advances in technology; credits to a rapidly changing market scenario. Your business may need to capitalize on an opportunity with the sole intent of getting a monopoly on your respective sector.

A common practice of companies is to engage in a process of understanding what their market wants, making smart product improvements, and developing new products that meet and exceed their customer's expectations. This entire procedure can be termed as ‘New product development’ (NPD).

New product development is the process which involves forming strategy, organizing requirements, generating concepts, creating product & marketing plan, evaluating and subsequent commercialization, thereby bringing a new product to the marketplace.

'New products' can be:

  • Products that has never been manufactured or sold before but have been introduced to ther market by others
  • Product innovations created and brought to the market for the first time. They may be completely original products, or existing products that have been modified and improved

NPD is not limited to existing businesses, but rather, new businesses, sole traders or even freelancers can forge a place in the market by researching, developing, and introducing new products. Similarly, one doesn't need to be an innovator to master NPD. One can also consider purchasing new products through licensing or copyright acquisition.

This article explains the importance of NPD and Industrial Design which is a subset of NPD and describes the steps involved. 

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