Global R&D models take hold
April 01, 2008
As global R&D models become part of several organizations' engineering strategies, managers are beginning to discover the nuances of offshore operatio...
While looking at the bottom line and searching for new ways to compete globally, company executives are now realizing that being competitive in the international marketplace not only requires global products, but also a global engineering workforce.
Offshore development evolves
Since 2002, U.S.-based software and hardware product companies have increased offshore outsourcing work to India, China, Russia, Ukraine, and other countries. Total offshore engineering product development has significantly increased in recent years. While cost is still a motivating force, time to market and access to talent and growth are on par with cost as drivers toward R&D globalization. As global R&D models become part of several organizations‚Äô engineering strategies, managers are beginning to discover the nuances of offshore operations.
Many companies looking to offshore models have moved beyond the initial hourly rate charged. If not for the cost savings, there would be little impetus to move resources from one location to another. In fact, in today‚Äôs venture capital-driven economy, this labor arbitrage is what allows new companies to scale quickly while coping with limited cash.
Besides cost, businesses must consider the implications when selecting a partner. Like any other purchase, you get what you pay for in terms of quality and efficiency. This is especially true when recruiting smart engineers to help bring a product forward. Simply employing the cheapest staff may cause productivity and quality to suffer and release dates to slip.
Today, many engineering managers use other methods to evaluate offshore development: Total Cost of Ownership (TCO), quality, and productivity. TCO takes into consideration everything relevant to increased costs including logistics, control, intellectual property, and communication. Quality refers to the final deliverable‚Äôs perfection as well as documentation, clarity, maintenance, sustainability, scalability, bug fixing, and version control. Productivity requires companies to analyze the effects of time zones, including speed, travel, code integration, team interaction, and company culture.
During the past several years, pure offshore development users have highlighted the major challenges surrounding their engineering work. The most important issues that delay or in some instances doom an offshore development project include:
- High cost of re-creating capital equipment requirements offshore
- Building a tightly integrated team
- Managing projects in different time zones
- Additional energy required to manage an offshore operation
- Logistical issues and time it takes to get work done
- Employee resentment of reducing local staff
- Increasing dependence on offshore resources
Overcoming offshore challenges
Companies encounter these and other difficulties while implementing and managing offshore projects. Many struggle when first starting to work with offshore teams. The problem is common, but the diagnosis is often wrong. The following discussion provides advice on how to avoid the usual pitfalls.
Don‚Äôt throw it over the wall
The worst thing a company can do is treat its offshore team as a black box, sending them specs and waiting for the work to be completed. This is often where the wheels fall off the project. Instead of a one-way client/vendor relationship, businesses should create an environment where everyone feels like they‚Äôre part of one seamless team. Both onshore and offshore teams must work on common deliverables and timelines and clearly understand how their performance is being measured.
Apart from internal discussions, firms should keep the remote team informed about the business, not just the local team. This will keep them motivated to focus on meeting release dates and other development milestones. Also, creating the one team dynamic will reduce any offshore versus onshore tensions that can fuel mistrust and lead to poor results.
Look for a global provider
Many firms say they‚Äôre global, meaning that they have U.S. salespeople and offshore delivery. But there‚Äôs value in looking for a provider that can provide engineering resources on-site as well as offshore.
Dual-shore outsourced engineering provides numerous advantages. The initial dual-shore benefit is realized during the analysis and specification stages. Instead of having an engineer halfway around the world nail down the most difficult technical details of a project, local engineers in a dual-shore team can get fully involved in defining and specifying the work to be delivered. By taking over some of the project management responsibilities, the dual-shore solution allows for increased productivity without overtaxing the engineering manager‚Äôs already full plate.
The science of managing distributed teams
It‚Äôs true that managing distributed teams is complex. However, having strong processes for transferring knowledge, breaking up tasks, and managing interdependencies between teams can be critical to a global R&D strategy‚Äôs success. This can be tricky for managers who have never worked in a distributed environment, so companies should seek their partners‚Äô advice on how to solve the problem together.
Constant communication is key
One of the most important aspects of a successful outsourcing strategy is having a communication plan that ensures frequent dialog. The goal is to create a collaborative work environment that replicates informal hallway conversations in a more formal way. Being 10 hours ahead of New York and 13 hours ahead of California creates some interesting challenges for teams based in India.
Today‚Äôs multitude of collaboration and communications technologies can help businesses deal with the time difference and create an approximation of hallway discussions and learning opportunities. Office branches can use blogs, wikis, Skype, and desktop videoconferencing to keep each other apprised of activities, accomplishments, and problems. These actions can help strengthen personal and professional bonds and ensure that fewer messages get lost in translation.
Evaluating project success
The promise of highly skilled, low-cost engineering talent is luring many companies to begin offshoring a large portion of their core and noncore engineering projects. Firms are beginning to implement a more robust method of evaluating project success by looking abroad to meet their engineering workforce needs.