Product development of any kind is a complex and resource-intensive process. While developing a product from start to finish in-house may seem like a brilliant idea, the reality is far from it. Consider the cost of hiring highly skilled experts in every aspect of the product development lifecycle and the time and resources required to learn on the go. When you take these factors into account, it is evident that it is next to impossible to keep up in a cutthroat, volatile, and ever-changing market.

This is where Engineering Services Outsourcing (ESO) comes in, where you outsource specific processes to dedicated professionals while you can focus on your core competencies and business goals.

The product engineering services industry is fast-growing. The global market size for these services was estimated to be $1085.8 billion in 2021 and is projected to rise to $1610.6 billion by 2031.

Table of Contents:

What is Engineering Services Outsourcing (ESO)?

Engineering Services Outsourcing (ESO), by definition, is the practice of hiring external sources to work on specific non-physical engineering functions of the product development lifecycle. These can include processes such as design, prototyping, or testing.

ESO is by no means a new concept. It had its roots in the early 2000s when the automobile and aerospace industries outsourced engineering services for the development of telematics, advanced navigation, and infotainment systems to third parties.

Today, however, ESOs are essential to almost every sector of the globe and are expected to grow to a USD 8,126.49 billion industry by 2029.

What is Product Engineering?

To fully grasp ESO, it’s essential to understand the core process it supports: product engineering.

Product engineering is the process of innovating, ideating, designing, developing, and testing a product, device, software, or system that is then produced for sale. It is an extensive process that deals with quality, performance, production, reliability, serviceability, and other features. These product features are intended to make the resulting product more attractive to its targeted audience.

Product engineering entails the entire product life cycle, from the innovation phase to the production and user acceptance testing phase. Product engineering services aim to create new products designed to appeal to changing customer preferences and evolving societal trends. It is not an easy task, as every product must be prototyped and pass through multiple quality testing rounds.

Phases in the Product Engineering Process

Outsourcing can occur at any stage of the product engineering process. Understanding these phases helps companies identify which functions are best suited for partnership with an external provider. The process mainly consists of the following steps.

Phases in the Product Engineering Process

1. The conception of the idea

This is the first stage wherein the idea for a specific product is conceived. It is then described in terms of its specifications and requirements. The idea is then analyzed to check whether it is feasible and worth pursuing. Not every idea that seems exciting in the beginning might be commercially viable.

2. Design

Once an idea has been finalized, the next step is to start designing it so that it can be converted into a commercially viable product. Engineering designs are created keeping in mind the hardware, software, and industrial design specifications. Improvements and changes are made in this phase to create the final product design.

3. Development

The next step is to bring the product idea to physical existence. This is a very significant phase of the product engineering services process. This step includes mechanical computer-aided design (CAD), printed circuit board (PCB) design, system software development, and other processes. The modifications made at the design stage are also implemented in this phase.

4. Prototyping

A prototype is an early sample of a product intended to be produced on a large scale for commercial consumption. Prototypes help test and validate several features envisioned in the earlier phases of product engineering. They are deployed in controlled environments where they are monitored and analyzed. The prototypes are checked for compliance with quality and environmental standards.

5. Production

Once the prototype has been approved and accepted, the product is deemed ready for production. The product engineering services process includes production support to ensure the seamless production and effective release of the final product.

6. Product Lifecycle Management (PLM)

PLM is an important part of any business that deals in physical products. The company has to stay competitive by continuously enhancing the products it supplies to the market. PLM helps in the timely enhancement of the concerned products and is also involved in obsolescence management. Periodic enhancements and updates are mandatory to keep the products relevant in the market.

What are the Benefits of Employing Engineering Services Outsourcing?

Outsourced Product Engineering Services today have evolved to become a strategic part of the product development process. This is because a simple cost vs benefit analysis shows that engineering outsourcing services, when judiciously employed, can be of great benefit to both the organization itself and its clients.

The benefits of ESO are as follows:

What are the Benefits of Employing Engineering Services Outsourcing?

1. Companies can focus on Their Core Competency

The most significant benefit of ESO is that it allows companies to dedicate and pour all their resources into their core competencies or what matters the most. This includes research and development, digital transformation, or a focus on expanding their portfolio.

Imagine automobile manufacturers pouring millions into research and development to develop Infotainment systems in-house and trying to compete with industry leaders with decades of experience behind them. It is an exercise in futility.

The added benefit of ESO is the overall improvement in the quality of your product as you are now tapping into the expertise of global engineering talent who have significantly more domain expertise.

2. ESO Presents Significant Cost Benefits

Outsourced product engineering services can help save companies significant sums of capital expenditures. The principle behind this saving is the conversion from fixed costs to variable costs.

When a company outsources its product engineering services, it converts fixed costs into variable costs. This means that the company only pays for the engineering services that it uses, which can lead to significant cost savings.

In addition to this, companies can further cut costs, such as overheads and taxes, by outsourcing their engineering tasks to low-cost locations. ESO also helps companies achieve economies of scale to increase their profitability.

3. ESO Helps Accelerate Time-To-Market

ESO can help companies speed up their product development cycles by reducing the time spent on designing, prototyping, testing, and launching their products.

Engineering services outsourcing companies can perform all of the above tasks a lot faster and more efficiently, and to a higher standard when compared to companies trying to do it all themselves. The sooner a company brings a new product to market, the higher its competitive advantage, and ESO excels at helping them do just that.

Best Practices in Product Engineering & Outsourcing

To provide value to your clients and get the most from your outsourcing partnership, it is mandatory to implement certain best practices. Here are a few practices every business must follow:

1. Focus on aspects that matter

Instead of focusing on adding more and more features to your products, figure out what matters to the customers and work on implementing these. A good outsourcing partner can help provide an external perspective on what features are truly valuable.

2. Define clear goals

Defining clear goals is an essential part of product engineering services. Define the target market and set clear, measurable product goals. If the goals are well-defined, the company and its outsourcing partner can prioritize them and effectively allocate resources to achieve them.

3. Focus on continuous re-engineering

Successful companies focus on the continuous re-engineering of their products. Customer preferences are ever-changing, and only those businesses that constantly improve can stay relevant and profitable in the competitive market. An ESO provider can bring new insights and technologies to this ongoing process.

4. Foster a culture of collaboration

Effective product engineering, especially when outsourced, entails collaboration and communication at every stage. Teams often comprise diverse skill sets and are spread across geographies. There must be effective and clear communication between all team members so that everyone’s effort is aligned with the group objective.

5. Use agile methodologies

Agile methodologies involve breaking down a project into phases and focusing on cross-functional collaboration. These methodologies promote quick and flexible product development and allow marketing teams to rapidly improvise product designs based on feedback from the target audience. Businesses and their partners should use agile methodologies for rapid designing, prototyping, testing, and product development.

Conclusion

Engineering Services Outsourcing (ESO) is a powerful solution you should capitalize on to gain a competitive edge in the market. It helps companies gain access to the latest technologies, tools, methodologies, and specialized expertise at a fraction of the cost of building them in-house.

However, ESO is not a one-size-fits-all approach. A careful assessment must be done before deciding which engineering services to outsource and which service provider to partner with. Working with an experienced partner can go a long way in assuring that your business can launch successful products in quick succession while navigating any challenges effortlessly.

If you are looking for a reliable and experienced partner to outsource your engineering services, look no further than Hurix Digital. We are industry leaders in digital engineering and technology solutions with over two decades of experience.

We can help accelerate your product development process with top-notch quality and have an extensive track record of successful projects delivered for clients across various industries, such as automotive, aerospace, industrial, consumer electronics, medical devices, and more.

Contact us today to learn how we can help you achieve your product development goals.