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Partnering with a Service Organization? Consider These Rules of Thumb
Partnering with a Service Organization? Consider These Rules of Thumb

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Between a hazy economic outlook and mounting pressure to slash costs, tech and engineering companies are looking to bridge critical labor gaps—and experts say that four in 10 of the more than 300,000 technology jobs lost to layoffs globally could move to outsourcing hubs. But partnering with the right service organization can be difficult—especially as companies vie to get the most bang for their buck.

Unfortunately, cutting corners via a low-cost service organization can actually add costs later. Poor quality deliverables, for instance, could mean that current employees will have to pick up the slack. As a result, initial gains often get lost in the wash of additional product development expenses.

For tech and engineering companies to truly get their money’s worth, it’s imperative they partner with the best service organization—and know how to work with them. 

Here are six tips to help them do just that.  

  1. Realize that No Service Organization Can Do Everything

Sometimes the sales team at a service organization will oversell the capabilities of the engineering team, billing them as experts in every discipline. The result? Poor outcomes and an atmosphere of widespread distrust. Instead of enlisting the help of a partner that promises the moon, companies should choose an organization that’s transparent about what it can accomplish.

 

That may require some vetting on the part of tech and engineering companies. Like a hiring manager in a job interview, leadership teams should ask challenging questions, like:

  • What focus areas does your service organization specialize in?
  • What market trends (e.g., Industry 4.0) are you following closely and/or looking to invest in?
  • Do you have case studies of projects that have succeeded in the past?
  • Can you describe projects that haven’t gone well in the past—and the reasons why they didn’t?

     

  1. Look at the Long-Term Costs of a Partnership

Remember the old adage, you get what you pay for? Some companies partner with a service organization based on low fixed fee for project work, only to find themselves paying for hidden costs stemming from low-quality deliverables, rework, and project delays.

Instead, tech and engineering companies should look at the holistic cost of a project. Even when fiscal targets are met, there may still be the possibility that the burden placed on product teams did not necessarily offset initial savings—and created internal turmoil in the process.

 

  1. Partnerships Should Add to What’s Already There

Outsourced talent shouldn’t always be deployed to replace an entire team or function within a company. Rather, they should seamlessly integrate into tech and engineering companies’ existing processes and workflows.

To do that, the right service organization will go to great lengths to understand how a client gets work across the finish line, their long-term goals, and their roadmap to achieving those goals. One way a great partner can achieve this is by deploying an internal learning team to develop specific training protocols for the client. By doing this early in the process, service organizations can shoulder the burden of onboarding for their clients.

 

  1. Find a Partner that Offers a Variety of Different Service Models

When it comes to staffing, tech and engineering companies tend to think in black and white: either they focus on building a niche U.S.-based team, or completely rely on offshore talent. But with the right partner, companies can draw on different types of services, such as contract-based offshoring, near-shoring, or project-based solutions.

Mid-size and larger size organizations benefit the most from combining these services. By adopting this arrangement—as opposed to just the cheapest solution—project teams gain the flexibility to alter the makeup of their team as needs shift over time.

  1. Tamp Down Expenses Smartly

To reduce costs, companies should be looking for a service organization that uses value analysis and value engineering (VA/VE)—a creative, cross-functional process that identifies areas of high expense and helps to eliminate them—rather than just relying on the deactivation and decommissioning (D&D) of older products. By streamlining product development and design, VA/VE can improve margins and deliver greater value to the customer.

  1. Be Wary of Bait and Switch Tactics

Some service organizations will bring highly skilled workers for the first few months of a project, only to switch them out for inexperienced, cheaper engineers as time goes on. A few will even wait until the client has no recourse and can no longer pull the plug on the project.

To avoid this, companies shouldn’t be afraid to ask about the progression path for individuals on their partner’s team. After all, without a stable team, they’re liable to encounter cost overruns, missed deadlines and more.

Hold Out for the Right Partner

As consumers, we instinctively know that purchasing the least expensive product or service does not always produce the best outcome. So why should companies operate any differently?

Ultimately, the burden is on tech and engineering companies to find a service organization that delivers the best performance while keeping costs under control. Doing so will free up their internal subject matter experts to focus on critical projects and speed up project timelines—and at a time when every penny counts.

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Author: Mr. Michael Kurtz

Designation: Global Practice Director – Mechanical and Electrical Engineering 


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