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Insourcing vs. Outsourcing in electrical engineering design

By 25. January 2024General

Making strategic decisions: Insourcing vs. Outsourcing in electrical engineering design

Increasing project complexity and shorter development and project times are putting more and more developers and designers under pressure.
Outsourcing – i.e. the transfer of previously in-house company tasks and structures to external service providers – can be a solution to this situation. Outsourcing has long been a popular means of absorbing order peaks and conserving resources.
However, outsourcing engineering tasks is a sensitive issue, especially in electrical engineering, and should be carefully considered. In this article, we’ll show you how to determine when outsourcing makes sense and what you should keep in mind.

Outsourcing engineering services – when does it make sense?

When used correctly, outsourcing tasks to external partners helps to increase efficiency, save costs and increase turnover. However, it is first necessary to be clear about what and how much you want to and can outsource.
In electrical design, outsourcing can mean outsourcing the entire design department or outsourcing individual projects. The difference is enormous!

Project assignment vs. complete outsourcing

Outsourcing (partial) projects, for example in building automation or mechanical engineering, is not uncommon nowadays. The advantages are obvious: you improve your capacity, benefit from expanded knowledge and expertise, and reduce your own calculator risk. The last point is particularly interesting in the event of design errors that have consequences. This is because the supplier is liable in the event of a faulty design. A good partnership with the service providers is essential for mutual success and should go far beyond mere familiarisation.

The complete outsourcing of the design department stands in contrast to the individual commissioning of projects. In this case, the client commissions the supplier, who in turn hands over the order to its subcontractor (in this case the outsourced design department). This procedure is associated with a high level of risk in many respects and is therefore usually not practicable.
Firstly, there is the communication risk. The design plans are passed from the client, via the supplier, to the subcontractor as in a round of silent mail. Misunderstandings are inevitable here. In addition, errors quickly raise the question of who is to blame – did the supplier get it wrong or was it the subcontractor’s fault?
Another point is product liability – because the manufacturer, i.e. the subcontractor, is always liable. It will be difficult for the supplier to sell the product as their own if the entire liability lies with another company.

Conclusion: Outsourcing the construction of (partial) projects can absorb peaks, provide specialised knowledge required at short notice and share the risk. In practice, outsourcing the entire design is very risky and impractical.

Outsourcing – when it can make a difference.

Now that we have a general overview of the possible scope of outsourced tasks, we need to find out which tasks are suitable for outsourcing.
To find out which tasks should remain in the company and which should not, it helps to ask yourself the following general questions.

  1. Does the task contribute to the company’s core business?
    Every time a task is outsourced to a partner, the company takes a risk, as outsourcing involves a certain degree of loss of control. In addition, important expertise may also be lost. Tasks that contribute directly to your turnover and protect your company in times of crisis should remain within the company.
  2. Are there habitual tasks that could be better handled externally?
    There are always necessary tasks that you do out of habit, but which are not directly part of your core business. For such tasks, it can make sense to outsource them to partners.
    One example here is the digitisation of paper and PDF plans, the conversion of E-CAD plans from other manufacturer formats or the creation of digital twins. Electrical engineering documents for machines, systems and buildings should always be up-to-date, reliable and accessible from any location. These tasks are important but can be easily outsourced to partners without jeopardising the core business.
    WSCAD Global Business Services (GBS): Wherever you want or need to transfer data – we are there for you. We help you to transfer data from other E-CAD systems to WSCAD and vice versa, digitise your plans, create all master data and re-establish a 1:1 relationship between your plans and the real buildings, machines and systems.
  3. Are there regularly recurring tasks?
    The more regularly and consistently tasks recur, the easier it is to outsource them to partner companies.
  4. How much effort is involved in partner support?
    If tasks are outsourced, the quality of execution should of course remain at a high level. In most cases, this means that your own involvement is never completely absent. However, the more complex and uneven the outsourced task is, the greater the administrative effort involved in partner support can be. In this case, outsourcing can quickly become an efficiency trap.
  5. Are there internal solutions?
    Before you commission a service provider, you should critically review your internal structures. One or two employees may not be fully utilised or would like to take on more responsibility. If there is a lack of specialised knowledge that will be needed more often in the future, it makes sense in the long term to train employees instead of outsourcing know-how.When it comes to outsourcing, there are no simple black-and-white solutions.

Even if you are unable to answer all questions with yes (or, in the case of question 4, with not very), it may still be beneficial to outsource some tasks. It is important that the benefits outweigh the risks, especially in the long term.

WSCAD Global Business Services (GBS)

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