Outsourcing means that a client purchases a service from some third party service provider, rather than obtaining it from within his own organization. Outsourced services range from call centers and software solutions to computer-aided design [CAD]. Offshore outsourcing is constantly growing, and many companies outsource to foreign companies or to firms located in their home country, which possess a foreign presence. The trend of offshore outsourcing of services has been led by IT [Information technology] services. Now CAD [Computer aided design] services are being outsourced offshore as well.
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. 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 savings in costs are made possible because most foreign personnel require lower salaries when compared to employees in the U.S. and other developed countries. In developing countries, salaries are around 1/3rd of what is being 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 associated services.
- Security of data – It is a major risk for clients who outsource IT-related services. Most work is outsourced to developing countries where measures for data security are often minimal or lacking. But usually, CAD information is much less sensitive compared to things such as credit card databases and bank accounting ledgers that are outsourced abroad. One solution is to insource [process within the client’s own organization] CAD that is highly sensitive or divide work among different service providers.
- Differences between cultures – This is things such as accents, manner of speech and communication, voice intonations, pronunciations and understanding of your culture. Clients who outsource voice dependent/based services such as telephone help desks offshore should especially be concerned, as it is the service provider which communicates with the client’s customers. Thankfully, CAD drawings don’t talk, so your only concern is whether you and the personnel at your end can understand and communicate with the relevant employees of a service provider.
- Effect on personnel of your company – Outsourcing anywhere has a negative effect on your workforce, who were doing the tasks fully or partially before you outsourced them. Some employees might have become your good friends, and it will be hard to let them go. Retrain your employees to perform some other functions in your company; if not, help them land a good job elsewhere.
- Service Provider Reliability – This is a very important factor and one that poses a significant risk. Sometimes a service provider located offshore may completely disappear or stop communicating. This may be due to various reasons such as bankruptcy, departure of personnel, inability to complete the task, fraud etc. There are often many service providers to choose from when you are looking to outsource CAD. Careful selection of a service provider is important to minimize risk. You might want to choose a reputed and professional service provider to outsource to. It may be in your best interest to outsource a small part as a “test” before entrusting them with the whole of the work to be done.
- Customer dissatisfaction – Companies that have call center functions abroad face the prospect of customer dissatisfaction. Improperly trained employees with foreign accents or speaking unintelligibly or too quickly cause major headaches. The solution is to train call center personnel overseas more thoroughly and encourage them to view the TV shows of the client’s country to acquaint themselves with the relevant country’s accent, language and manner of speech.
- Negative effect on local job market – One drawback to the offshore outsourcing of CAD and other services as well, is that it has a negative effect on the regional job market. Many professionals who are out of work complain that they haven’t been unable to obtain jobs despite being highly skilled.
- Uncertain political climate – There is often an uncertain political climate in various countries, where work is outsourced. This causes uncertainty and worry to the client. Some business processes may suffer if there arise any major tensions in the relevant foreign country.
A viable alternative
In conclusion, outsourcing CAD offshore is a viable and cost-effective technique. But there are risks involved that must be addressed and managed, or the company may experience losses. While offshore outsourcing has its risks and drawbacks, a lot of companies find it an optimal solution to many business problems. Companies must evaluate the risks and create plans to overcome possible blocks. Moreover, companies who outsource to foreign countries should learn to be as sensitive as possible to various differences in culture and work practices, and learn to work around them. And finally, they should have a solid outsourcing strategy in place, which is in tune with overall business goals and strategy.