Management

CAD Manager's Newsletter #95

29 Oct, 2003 By: Robert Green


Issue Focus: CAD Outsourcing Trends--Part 4

Continuing the Discussion The Shift is Inevitable The Beneficiaries Becoming the Outsourced Labor Summing Up

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Continuing the Discussion

Author's Note: If you haven't had a chance to read through the first three installments of this series, please take a few moments to do so now at www.cadenceweb.com/newsletter/cad_manager/index.html.

As this series progress, I will examine the business factors that gave birth to the outsourcing trend as well as the risks and benefits that characterize it. Since outsourcing is a new way of doing business, all the parties involved tend to have numerous questions, and very few answers.

I do know that certain elements must be present to make outsourcing a sensible alternative.

- Qualified contract labor must be available outside the company.

- Significant cost savings must be achievable .

- Quality of work or product must be maintained (or the costs of refining the outsourced product will undermine the original savings).

- An IT system that allows easy submission and tracking of outsourced work must be in place.

- A standards-based work culture must be in place (so the outsource work provider clearly understands what is required of them).

- Internal staff must closely monitor outsourced staff to ensure timely delivery.

Of course, meeting all these criteria isn't always easy, so not every company that undertakes outsourcing will be successful.

The Shift is Inevitable
If you consider the above list of key metrics with some historical perspective, you can draw the following conclusions:

IT systems that allow remote workers to submit work and in-house workers to track that work have become much more common and far less expensive in the past few years. These same IT systems have allowed lower-waged workers all over the world to compete for global outsourcing jobs. As the world moves toward English as the standard language, language becomes much less of a barrier in engineering outsourcing, especially in North America.

Given the globalization of labor that technology has supported, I think the trend towards outsourcing will continue. So who will benefit from outsourcing?

The Beneficiaries
Who will benefit from outsourcing? Why not you? Why can't you provide CAD services as a direct employee of a company? You already know how to do the work required, and you have a great feel for how the company operates, right? Won't other companies looking to outsource CAD work have basically the same requirements? Shouldn't you be able to meet their needs?

Rather than having your current employer or another company just down the street send outsourced work half way around the planet, why not propose that you acquire their outsourced CAD work?

Becoming the Outsourced Labor
I discovered years ago that I could serve as a part-time CAD manager to companies that didn't feel they needed a full-time one. In essence, I've been able to convince these companies that outsourcing their CAD management work to me could benefit them for the following reasons:

The company gets a person who knows the subject matter, doesn't require any training, and can be productive immediately. Compared to internal staff development, this approach can save the company a lot of time and money.

The company only pays me when they need me. This may be hourly or per project. When the company no longer needs my services, it doesn't have to pay me severance, lay me off, or risk a lawsuit.

The company doesn't have to maintain a staff position or worry about that person leaving for another job. By not carrying an additional staff position, overhead is reduced.

The company doesn't have to pay me any benefits, such as insurance or retirement, and it doesn't have to bother with any of my taxes or other government reporting requirements. Not only does this save the company money in taxes but also in accounting and record keeping.

If the company needs me to come to its location to work on computer equipment or implement software, I can do so quickly and cheaply. This is an advantage that someone located in a foreign country 12 hours away by air travel simply doesn't have.

My example illustrates that not all outsourcing contracts are necessarily going away to countries half a world away. In fact, by retaining multiple local customers, I've been able to maintain enough work at a high enough hourly rate to make a nice living over the years while giving my customers a great deal.

None of this is rocket science; it's just common sense business logic that you could easily apply to your field of expertise.

Summing Up
Now that I've shown you how to make outsourcing work for you, you need to make some decisions. Is working on your own something you feel comfortable with? Can you see yourself doing some sales work to persuade companies to work with you? Are you willing to work long hours when required?

If you have any comments please feel free to email me at rgreen@greenconsulting.com.

Relevant Links
Issue #92, CAD Outsourcing Trends (Part 1): www.cadenceweb.com/newsletter/cad_manager/0903_1.html

Issue #93, CAD Outsourcing Trends (Part 2): www.cadenceweb.com/newsletter/cad_manager/0903_2.html

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Read Other Career Articles by Robert Green on CADENCEWeb.com

Issue #88, CAD Management Career Questions (Final Thoughts): www.cadenceweb.com/newsletter/cad_manager/0703_1.html

Issue #87, CAD Management Career Questions (Part 3): www.cadenceweb.com/newsletter/cad_manager/0603_2.html

Issue #86, CAD Management Career Questions (Part 2): www.cadenceweb.com/newsletter/cad_manager/0603_1.html

Issue #85, CAD Management Career Questions (Part 1): www.cadenceweb.com/newsletter/cad_manager/0503_2.html


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