Top 5 Reasons to Outsource Product Engineering
1. Cost Reduction – a factor that influences outsourcing decision the most – obviously because it shows benefits to the CFO in language she understands well! But key here is to highlight indirect along with the direct cost benefits.
2. Engineering team’s focus – smart engineering management always separates what functions and skills are core to the company and what can be strategically outsourced. When done right, this improves the team’s ability to crank out products that add huge value to the top-line (revenue) of the company’s financial statements
3. Variable cost structure – any engineering management hiring headcount for their peak need period cannot be and should not be forgiven. The 80-20 rule applies well to engineering organizations – employee headcount is the number needed 80% of the time throughout the year and the peak headcount only needed during the 20% period can be outsourced.
4. To find skills – this is a very common scenario – hardware focused teams outsourcing the software components and vice-versa. This is also true when companies are unable to hire right talent which the partner company may already have.
5. Innovation – companies always learn from the specialists whether it’s the engineering process, the tools or the methodologies. The key here is that the partner chosen has a team that has proven expertise through experience and right partnerships.