Global outsourcing expenditure is on the rise and is expected to reach around $820 billion in 2025. However, many countries find their domestic resources too expensive and believe outsourcing development is the key to delivering a cost-effective product, however in our experience this isn’t generally the case. Essentially outsourcing a new product development can be complex and this post will delve into why, when and how to outsource product development.
When Is the Best Time to Outsource Your Product Design or Development?
There isn’t a right or wrong time to stick your hand up for assistance. But here are some scenarios where it would a good time relative to a typical new product’s lifecycle.
Concept development and during the MVP stage
In our experience this is the best time to request assistance from a design house. In this stage initial R&D and proving of concepts take place and it’s imperative to complete this whilst ensuring the best or close to the best solution is implemented. Startups as well as established businesses can also benefit from an external perspective regarding the technical parts of a project.
Product refinement and redesign
This is where we see most of our clients engage us. They have developed some type of concept and are now looking to refine it and make it manufacturable. Often this includes a complete redesign of a product whilst adding additional features, i.e. an outdoor product is battery powered and needs to be recharged, in this case we might add a solar panel and onboard MPPT solar charger.
Product Design and Development is not your core business
Great ideas start with solving real world problems and as such you may know of a solution to a problem, but it isn’t in your expertise to develop, and manufacture said solution – Which is totally fine. Time is money and often it ends up taking more time and being more costly trying to do everything yourself.
Lower product development risk
Product development can be risky, especially when it’s electronic products that are hardware dependent, or can’t be updated with OTA (Over-The-Air) software upgrades. To this end, it’s generally much safer to leave some, or all development activities with specialists who have developed similar products before.
You need additional resources or have tight deadlines
Engineering services is a big industry, and it’s common for one firm to ask another for assistance when workloads are high. Deadlines are a good reason for outsourcing product development works; however, this can have complications as expectations need to be properly managed. Generally speaking it’s better to outsource small work to begin with – this establishes communication guidelines and sets the tone for larger projects.
Your team lacks the required skillset or expertise
Engineering, Software and Mechanical development are large industries and as such there are a lot of niches within each field. At Elemental Electronics we specialise provide a plethora of services and can cover most electronic and software solutions. Being highly specialised in Antenna Design and FPGA projects we often provide Engineering Services to other firms who lack those skills.
How to outsource product development and design?
After deciding whether outsourcing a product’s development or design is right for you, the next step is figure out HOW to outsource the required work.
What’s the process to outsource product design?
Outlined below is a simple 5-step procedure to outsource your development work, it’s not perfect and your process might be different depending on your requirements, but it’s a good place to start.
Step 1: Establish objectives and requirements
Creating a basic scope with clear objectives and expectations allows for easier engagement with outsourcing companies and individuals. Specifically try to break down and manage the requirements, it doesn’t need to be very technical but should include enough information on how a system should work. Flow charts, block diagrams and basic input/output can assist greatly.
Step 2: Selecting an outsourcing company or individual
Selection should be based on criteria relevant to the product development/design. Criteria can include:
- Proven record of completing similar projects
- Client/customer feedback
- Time zones and ability to link-up within certain hours
- Resources of the outsourcing company and key personnel experience with working on similar projects
- Company/individual strengths and what value can be added
- i. e. At Elemental Electronics we don’t just design but manufacture as well. This is a big value add as the customer can design + manufacture with one organisation
- Risk of company size – a large company might be much more expensive as they have more overheads, whereas an individual might be cheaper with added risk as all the knowledge is with them.
Step 3: Setting up a project plan with clear milestones
The outsourcing company should be able to assist with setting up a project plan with clear milestones and critical tasks. For small projects plans may not be required so it’s important to put everything into context and figure out the best method for tracking time/resources.
Technical risk should also be identified during the planning stage so that mitigation strategies can be implemented early. i.e. if it’s unknown is a new system can measure a signal fast enough to provide accurate real time feedback.
Step 4: Establishing communication guidelines
Communication is key to ensuring the success of an outsourced project. At EE we use Slack to chat directly to whomever we need answers from. If our customers don’t have Slack or a similar messaging program, we essentially tell them to get it.
Meetings are important but they need to be constructive with specific goals, as they can easily turn into a time sink.
Step 5: Following through by keeping proactive
Managing the outsourcing team/individual is pivotal to completing a project on time and on budget. Some points on staying proactive include:
- Treat the project plan as a living document. It will and should be kept updated to illustrate the current project status and what the next steps are.
- Ensure technical tasks are managed by proficient team leaders. – It’s important that tasks to be completed are managed by the people who understand them most.
- Minimise the number of managers – too many cooks spoil the broth!
- Only have meetings where required and don’t invite those who really aren’t required
- RM (Requirements Management) can be taxing, but if you have the resources try utilising a systems engineering approach.
How much does outsourced product development & design cost?
There is no fixed amount of how much a product cost to develop as each product is different. However, I always encourage to get a budgetary quote – usually it’s free!
Milestone or hourly?
Our preference is to do milestone with either a fixed budget or an approximate. Not to say we don’t do hourly but it’s always nicer to know what something is going to cost.
Project changes and variance
Unless the project is very small, or the requirements are tightly stated it’s almost guaranteed the project will change over time. How you handle these changes and variances is important as it’s unfair for the outsourced organisation to take on extra work without reimbursement.
Once a variation event has occurred its critical to take action immediately as variances and changes can easily be forgotten…….until the budget has ran out!
Future development and product maintenance
Over time most projects/products require an upgrade and, in this case, it’s usually much simpler to engage the same organisation. Maintenance – especially servers and IoT device connections need to be maintained so it’s important to factor these into the on-going cost of the product.
Elemental Electronics Experience with Product Design Outsourcing
Elemental Electronics product a turn-key approach (design + manufacture) and so can be considered an outsourcing / OEM partner. Most of our new clients haven’t created/manufactured a product before so we walk them through the steps and follow a similar approach to our 5-step guide.
Final Thoughts
Selecting when and who to outsource development of a new product can be difficult, however talking to experts in the field and following an established engagement procedure will lessen the risk of having a failed product.
Feel free to speak with one of our development specialists for a free quote on your next product.
FAQ
Can you outsource product design?
Yes. Many successful products have been designed by outsourcing development work to external organisations/individuals.
How do I outsource my product?
One method is to follow our 5-step procedure as outlined above – it’s a good starting point. Speaking to outsourcing organisations directly would also be a good idea.
What is outsourcing in detailed design?
Sometimes only specific detailed design needs to be outsourced. i.e. a circuit board that forms part of a sub-system to a larger product.
What is product outsourcing?
The engagement of an external company or individual to complete product-specific works.
Can a product designer work remotely?
Yes. However, factors like language, time-zone differences and accountability often hinder remote workers.
Can product management be outsourced?
Yes, however trust is important and ensuring the product manager has a proven record and accountability will assist in making this decision.