Outsourcing means that a client purchases a service from a third-party provider rather than obtaining it within their own organization. Outsourced services range from call centers and software solutions to computer-aided design (CAD). Offshore outsourcing is constantly growing, with many companies outsourcing to foreign firms or to domestic companies with a foreign presence. The trend has been led by IT (Information Technology) services, and now CAD (Computer-Aided Design) services are being outsourced offshore as well.
Economic Benefits and Risks
The main reason why many turn to offshore outsourcing to obtain CAD services is the economic benefit. There are significant benefits, but these come with some risks. However, there is comparatively less risk in offshore CAD outsourcing compared to outsourcing of IT development and IT services. Various risks arise in the case of offshore outsourcing due to differences in cultures, language, politics, governmental regulations, work practices, and so on, which may negate the primary benefit of outsourcing services offshore, i.e., reduced cost. All these risks and blocks make collaboration between the client and the foreign service provider more challenging and may drive up cost.
Managing Offshore CAD Outsourcing
When outsourcing CAD offshore, the client should properly and carefully manage the whole process. The client’s management capabilities play a significant part in reducing outsourcing risks. Companies outsourcing CAD services must first evaluate the benefits and the risks. Up to around 40% savings can possibly be achieved while outsourcing services. If part of the CAD team is located locally or are employees of your company, offshore outsourcing enables a company to work around the clock, quickening overall delivery time.
Major cost savings are possible because most foreign personnel require lower salaries compared to employees in the U.S. and other developed countries. In developing countries, salaries are around one-third of what is paid in developed countries. In addition, workers abroad are often highly skilled and educated, widening the choices of employees for companies.
Risks of offshore outsourcing
There are risks in outsourcing offshore, but generally, outsourcing CAD is different from outsourcing IT services. Let’s look at the various risks associated with offshore CAD outsourcing and related services.
- Security of Data – A major risk for clients outsourcing IT-related services is data security. Most work is sent to developing countries where security measures are minimal or lacking. But CAD information is usually much less sensitive than credit card databases or bank accounting ledgers outsourced abroad. One solution is to insource (process within the client’s organization) highly sensitive CAD or divide work among different service providers.
- Differences Between Cultures – This includes accents, manner of speech, voice intonations, pronunciations, and understanding of your culture. Clients outsourcing voice-dependent services such as telephone help desks offshore should be especially concerned, as the service provider communicates with the client’s customers. Thankfully, CAD drawings don’t talk, so your only concern is whether you and your personnel can understand and communicate with the service provider’s relevant employees.
- Effect on Personnel of Your Company – Outsourcing impacts your workforce, who previously handled the tasks fully or partially. Some employees might be your good friends, making it hard to let them go. Retrain them for other functions in your company; if not, help them secure a good job elsewhere.
- Service Provider Reliability – This is a crucial factor and poses significant risk. Sometimes an offshore service provider may disappear or stop communicating due to bankruptcy, personnel departure, inability to complete the task, fraud, etc. Many service providers are available when outsourcing CAD, so careful selection is key to minimizing risk. Choose a reputed and professional provider, and consider outsourcing a small part as a “test” before entrusting them with the entire project.
- Customer Dissatisfaction – Companies with call center functions abroad face the risk of customer dissatisfaction. Improperly trained employees with foreign accents or who speak unintelligibly or too quickly cause major headaches. The solution is to train overseas call center personnel more thoroughly and encourage them to watch TV shows from the client’s country to familiarize themselves with the relevant accent, language, and manner of speech.
- Negative Effect on Local Job Market – One drawback of offshore outsourcing of CAD and other services is its impact on the regional job market. Also, you have a lot of professionals who are finding it challenging to get a job despite their qualifications.
- Unstable Political Situation – Several countries where work is outsourced have an unstable political situation, which worries the client.. Some business processes may suffer if major tensions arise in the foreign country.
A viable alternative
Conclusion: Viability and Cost-Effectiveness
In summary, CAD offshoring is an excellent and economical method. But there is risk in that too, which must be addressed and managed or your company can suffer. Although offshore outsourcing is not without its benefits and concerns, many businesses consider it a solution to a variety of business issues. Companies must evaluate the risks and create plans to overcome possible blocks.
Best Practices for Successful Outsourcing
Furthermore, the companies delegating tasks to foreign partners must be as much in harmony as possible with the cultural differences and way of acting at work, and adapt them if necessary. Finally, they should have a solid outsourcing strategy in place that aligns with overall business goals and strategy.