Unleashing Business Growth: Unmasking the Outsourcing Paradox

Are you considering expanding your business but need more internal capacity, resources, or funds? Have you pondered seeking help externally or even overseas? Navigating such waters can be a complex process. However, managing carefully could be the key to your success.

Right off the bat, I want to underscore this in no uncertain terms: Entrusting your intellectual property's creation - the very lifeblood and value of your business - to external developers, especially those operating as "one-man bands", should be avoided at all costs. Equally, within your internal team, you can just avoid a monopoly of knowledge. Critically no individual must hold a full understanding of the design.

A comprehensive documentation process should be established for all development work. This safeguards your business from a potentially catastrophic situation where, if team members depart or are incapacitated, you risk being unable to replicate your work or substantiate your IP ownership.

This is not a recommendation but a strategic imperative demanding severe attention.

In my experience, businesses often feel compelled to develop new software solutions internally. This is primarily driven by the perception that in-house resources are free and readily available. However, unskilled and untrained staff can often mean a steep learning curve, resulting in a higher cost in terms of time and efficiency. I've seen firsthand that outsourcing to external developers can be more cost-effective, especially when the specifications for the project are well-documented. Utilizing internal resources for project management to provide a single point of contact with external developers is a strategy that has yielded successful results.

It's not just software development; I've transferred hardware production from Europe to China, aiding European businesses to remain competitive. It's crucial to ensure the product design is stable and all processes are thoroughly documented. Misunderstandings can arise easily, so never make assumptions about mutual understanding.

If your business needs more capacity or funds to establish high-volume production, it's vital to understand the product lifecycle. Local manufacturing may be the best option for innovative or new products. Once the rate of change slows down and the product stabilizes, consider moving to offshore production, such as in China. However, consider the logistical challenges that may come with it, such as 24-hour delays in resolving technical issues.

I've had clients express their concerns over poor-quality goods following a move to offshore production. Evaluating their experiences invariably boiled down to a need for more detailed instructions. Sending design drawings and a product sample is not enough. I would say that clear, detailed communication is essential.

This sentiment also applies to outsourcing software development. I have heard numerous stories of businesses outsourcing to India to reduce costs but experiencing quality issues similar to those encountered in hardware manufacturing in China. The key to success, whether dealing with Indian developers or Chinese manufacturers, is to provide clear, detailed instructions and ensure they fully understand the project requirements.

In conclusion, here are some points to remember when using external development or manufacturing resources. First, never make assumptions. Could you provide as much detail as possible and regularly check the development team's understanding? Second, don't take affirmations at face value. Test the team to ensure they truly comprehend what needs to be done. Third, use external resources at the right time and location for your business's growth trajectory. Finally, it's crucial not to outsource your software or hardware development, which fundamentally represents your intellectual property (IP). By adhering to these principles, your company will be better positioned to leverage external resources effectively and enhance competitiveness.

Author:

Andy Hamer

I’m an accomplished sales and management professional with over 10 years of global experience in the Architecture, Engineering, Construction, and Owner sectors. Throughout his 40 year career, he has held senior positions at prominent companies such as Codebook, Xinaps, Invicara, Bentley, XYZ Reality, and Archdesk. Andy holds a BA (Hons) in Marketing Engineering and is a certified BIM Information Manager. He has authored a book on structured data management in BIM He is a Fellow of the Chartered Institute of Marketing (FCIM).