Outsourcing
Unraveling Myths
June 2014
Table of Contents
Abstract
12
Summary
15
Abstract
Tradionally, in a product centric world, R&D has always been perceived as intellectual property and hence
treated with utmost confidenality. There was no room for collaborave or complementary R&D.
However, of late, there is a shi away from products alone, to an ecosystem of services around the product
focusing on end user experience. There is need for development of the product, associated plaorms, and
industry and geo specific variants for companies to go to market. Global compeon and reducing product
lifecycles are forcing companies to leverage their value chains to retain market share.
Cost and labor arbitrage are no longer the primary drivers and many engineering engagements are being recast as
win-win partnerships to leverage collaborave growth opportunies. Many OEMs and ISVs are collaborang with
engineering service providers to accelerate me to market, extend product lifecycles, develop plaorms, enter
emerging and adjacent markets, and opmize R&D operaons.
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Reality
If the onion is peeled, it can be realized that there
are mul ple aspects of engineering which can be
complementary and hence, not so confiden al.
Typical product development cycles are quite
elaborate with detailed processes, majority of
which are domain neutral. Over 70% of the engineering eort is on ac vi es which are domain
neutral while only 30% of the eort is on dieren ated domain centric feature func onality.
Reality
ESPs, as much as the outsourcers themselves, have
an incen ve to focus on quality. There is a con nuous eort on the part of ESPs to create organiza on
management systems which define comprehensive
processes to ensure that high quality is delivered at
all stages for any engagement. ESPs are also compliant to ITIL, ISO, and CMMI and consider these as
standard processes which have to be rolled out
mandatorily for customers.
Reality
It is true that cultures are dierent in dierent
countries, but outsourcing has evolved over a
period of me and there are defined processes
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also needs to align with the business pain points or hot buons of the product manager.
This is dependent on the stage of development of the given product (Product Development Life Cycle stage or
PDLC stage). Here we elaborate it further in terms of the stages:
At the introducon stage of a product, it is all
about Time to Market. Services which can
Accelerate me to market are what maer the
most. Acceleraon services from the ESP in this
area include competencies at scale, end to end
product engineering, test automaon, release
management etc.
In the growth phase, suddenly the number of
customers grows exponenally from the introducon phase. One is no longer able to provide the
kind of aenon one used to shower on the early
adopters in terms of new feature addion, defect
fixes, customizaon etc. Here, the presence of a
plaorm can go a long way in providing uniformity
of services to the exponenally growing user base.
Hence projects around plaorm engineering
development can act a strong foundaon for the
growth of the product.
In the last (End of Life) stage, the primary objecve is to extend the life of the product. One can
look at integrated sustenance and support
projects to combine teams and resolve high
volume defects as part of minor releases to
opmize operaonal costs.
In addion to these projects, technology adopon
of disrupve technologies should happen at any
stage of the PDLC, as these technologies can make
a product obsolete, irrespecve of the stage of the
product. Can we think of a refrigerator which is
not frost free? Or a smartphone with no touch
feature?
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Summary
There are mul ple engagements which OEMs and ISVs can leverage with ESPs to ensure bo om line and top line
impact on their businesses.
While the poten al savings and revenue impact are known, o en mes, the challenges are mostly within an
organiza on. Even a simple exercise like product por olio analysis can go awry as most of the stake holders would
not agree to a nega ve categoriza on of their product due to personal stakes.
Programs ini ated in good faith by senior management can be completely botched by high handedness of
execu ves in dealing with the ESP as a vendor rather than a partner. Cultural dierences between the company
and its supplier can also impede collabora ve success.
It is impera ve that organiza ons take the help of Engineering Sourcing Advisors to plan the statement of
engineering services outsourcing work across products, geographies, func ons etc. in a phased manner. Eort
spent in planning and prepara on can never go waste and goes a long way in ensuring success for R&D
organiza ons.
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Author Information:
Email : ers.info@hcl.com
Vial Devarajan
Website : www.hcltech.com/engineering-rd-services
Blog : www.hcltech.com/engineering-and-rd-services
Ramesh Natarajan
Ramesh is a Deputy Manager at HCL ERS. He
manages content, web analycs, digital, and
business markeng acvies in the HCL ERS
Markeng team.
Akash Jauhari
Akash Jauhari is a part of HCL ERS strategy team
and focuses on areas like R&D markets, Technology
trends, ESO growth drivers, Competor analysis,
M&A and Strategic Planning.
HCL Technologies is a global IT services company, working with clients in the areas that impact and redefine the core of
their businesses. HCL focuses on transforma onal outsourcing, underlined by innova on and value crea on, and
oers an integrated por olio of services including so ware-led IT solu ons, remote infrastructure management,
engineering and R&D services and BPO. HCL leverages its extensive global oshore infrastructure and network of
oces in 30+ countries to provide holis c, mul -service delivery to customers.
HCL's Engineering and R&D Services (ERS) business unit enables technology led organiza ons to go to market with
innova ve products and solu ons. We partner with our customers in building world class products and crea ng
associated solu on delivery ecosystems to help bring market leadership. We develop engineering products, solu ons
and pla orms across Aerospace and Defense, Automo ve, Consumer Electronics, So ware, Online, Industrial Manufacturing, Medical Devices, Networking and Telecom, Oce Automa on, Semiconductor and Servers & Storage for our
customers.