CTOs, CIOs, R&D and Engineering professionals alike often struggle with the methodology to adopt when deciding which processes to keep in-house vs. what could (or should) be subcontracted. This short presentation will give you some guidance on the steps to take as well as a real example we have had between a French client and one of our engineering teams in Vietnam. As usual in those Eurosia Insights, we do not pretend answering it all (the presentations are meant to be walked through in less than 30 secs ;)) but give a snapshot and some food for thoughts. For more or if you want to exchange on the topic, feel free to comment below or drop me a line: cedric.brusselmans@eurosia.eu Enjoy the reading! Cedric

1. SUBCONTRACT
OR
KEEP
IN-­‐HOUSE?
THE
5
STEPS
TO
HELP
YOU
DECIDE
Eurosia™
Engineering
Insight
#5
BUSINESS
CASE
INSIDE

2. HOW
TO
DECIDE
WHICH
R&D
FUNCTIONS
TO
KEEP
VS.
OUTSOURCE?
“Most
executives
-ind
it
tough
to
distinguish
among
core
processes
that
they
must
control,
critical
processes
that
they
might
buy
from
best-­‐in-­‐class
vendors,
and
commodity
processes
that
they
can
outsource.”
Harvard
Business
Review,
“Getting
Offshoring
Right,”
December
2005

3. STEP
#1:
ASSESS
TASK’S
STRATEGIC
IMPORTANCE
• Is
the
task
important
to
your
company’s
competitive
advantage?
• Does
the
task
make
your
business
unique?

4. STEP
#2:
IDENTIFY
CONTRIBUTION
TO
OPERATIONAL
PERFORMANCE
• How
important
is
the
task
to
your
company’s
day-­‐to-­‐day
operations?
• How
does
its
performance
affect
overall
operations?

5.
High
FORM
A
STRATEGIC
ALLIANCE
KEEP
IN-­‐HOUSE
Low
ELIMINATE
SUBCONTRACT
/
OUTSOURCE
Low
High
STEP
2:
CONTRIBUTION
TO
OPERATIONAL
PERFORMANCE
STEP
1:
STRATEGIC
IMPORTANCE
TIP:
USE
A
SIMPLE
DECISION
MATRIX

6. STEP
#3:
ASSESS
RISKS
AND
REWARDS
“The
most
prominent
risk
is
the
risk
of
losing
intellectual
capital
–
both
hard
intellectual
property
and
know-­‐how.”
Booz
&
Company,
Baker
&
McKenzie
“White
Paper
on
Engineering
Design
Services
Outsourcing,”
September
2008

7. STEP
#4:
EVALUATE
TRANSFERABILITY
“Processes
that
need
extensive
and
real-­‐time
interactions
with
company,
its
engineers
or
other
parts
of
the
company’s
organization
must
be
weeded
out
since
these
processes
are
not
good
candidates
for
outsourcing.”
Booz
&
Company,
Baker
&
McKenzie

8. STEP
#5:
ANALYZE
MATURITY
“More
often
than
not,
outsourcing
of
an
immature
process
leads
to
disappointing
results.”
Booz
&
Company,
Baker
&
McKenzie

9. TIP:
EVALUATE
PROCESS
RISK
AND
MATURITY
LEVEL
(STEP
3
&
STEP
5)

10. ILLUSTRATION:
ENGINEERING
FUNCTIONS
TYPICALLY
OUTSOURCED
ü CAD
drawing
ü Process
sheets
ü Competitive
benchmarking
ü Technical
documentation
and
translations
ü Engineering
change
management
ü Homologation
&
regulatory
affairs
ü Conversions
(Catia
V4
to
V5)
ü Database
management
These
“…are
important
for
successful
operational
performance,
but
are
not
strategically
important.
Such
tasks
could
safely
be
outsourced.
They're
simply
not
worth
spending
in-­‐house
time
managing.”
Booz
&
Company,
Baker
&
McKenzie

11. CASE:
SOLIDWORKS
DRAFTING
FOR
HEXAGON
METROLOGY
(FRANCE-­‐VIETNAM)
Industries:
Precision
Measuring
Technologies
Pro]ile:
With
12,000
employees
worldwide,
Hexagon
is
a
leading
global
provider
of
design,
measurement
and
visualization
technologies
in
the
mechanical
and
industrial
engineering
sector.
Hexagon’s
brands
include:
Leica
Geosystems,
Intergraph,
Leitz,
Romer…
Location:
Stockholm,
Sweden
Business
Challenge:
Hexagon
(Romer
division)
required
the
fast
delivery
of
2D
CAD
drawings
from
their
3D
models,
at
an
affordable
price
for
new
components
of
industrial
microscopes.
How
Eurosia
Helped:
One
of
our
dedicated
team
in
Ho
Chi
Minh
City
(Vietnam)
of
Solidworks
drafters
delivered
the
2Ds
enabling
the
client
to
complete
the
projetc
on
time
and
on
an
aggressive
budget.
E U R O P E A N S E R V I C E . A S I A N P R I C E
TM

12. IN
CONCLUSION,
keep
in-­‐house
tasks
that
demonstrate:
-­‐ High
strategic
importance
-­‐ High
contribution
to
operational
performance
-­‐ Low
process
maturity
-­‐ High
implementation
risk
Subcontract
tasks
that
correspond
to:
-­‐ Low
strategic
importance
-­‐ Medium
to
high
contribution
to
operational
performance
-­‐ Good
process
maturity
-­‐ Limited
implementation
risk

13. NOW
THAT
YOU
KNOW
WHAT
TO
BUY,
HOW
CAN
YOU
YOU
FIND
IT?

14. Get
it
FREE,
subscribe
here:
eepurl.com/RaIbn
This
will
be
addressed
in
our
next
Eurosia™
Engineering
Insight:
KEY
CRITERIA
TO
SUCCESSFULLY
SELECT
A
PARTNER
IN
ASIA

15. E U R O P E A N S E R V I C E . A S I A N P R I C E
TM
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