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Subcontract or Keep in-house: the 5 steps to help you decide (business case inside)
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Subcontract or Keep in-house: the 5 steps to help you decide (business case inside)

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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. …

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

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  • 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 relations@eurosia.eu