There was a time when you developed your product from scratch. You designed the packaging and circuits, developed the board using off-the-shelf components, and programmed it in-house—and you were still competitive.
Today, whether you're building a board for a cordless phone or an embedded controller for a packaging machine, design complexities and short product lifecycles are probably taxing your engineering department beyond its capabilities.
If you've considered contracting out or outsourcing some of the design stages of your latest project, you're not alone. Whether you outsource to an engineering design firm down the street or overseas, your success will be determined by how much effort you put into finding the right contractor.
Even when the process seems to go right, unexpected things can happen, no matter the size of your company. Major computer companies, such as Dell, Apple, and Sony, have successfully outsourced the design and manufacture of system boards for several years. The result has been more affordable computers with the latest technology.
Yet according to a March 21 Business Week article, "Outsourcing Innovation," Motorola selected a Taiwan company, BenQ Corp., to design and manufacture millions of mobile phones. Last year, BenQ decided to sell the phones in the fast-growing Chinese market under its own name. Needless to say, Motorola cancelled its contract. Keep in mind that you needn't go overseas to have the same thing happen to your company.
The benefits from outsourcing your design projects will be determined by the quality of your chosen engineering services firm—and how closely you work with that firm. It's not always easy to determine the quality of services you'll get, but you can start by asking for references.
In addition, rights to intellectual property (IP) are often at stake, making the element of trust crucial in developing a long-term relationship with the provider you select. David Cook, group director of marketing for services at Cadence, suggests that the root of a good customer relationship is trust. Trust develops over time, building from the confidence that a design service team is available in clutch situations, understands your specific needs, helps you understand your project better, and doesn't steal IP or products.
WHEN THINGS GO WRONG Engineers seeking quality design work from an outside contractor should be aware of two dangers. First, unless they have a long-term relationship with a contracting firm, its lack of familiarity with their operation may make it difficult to get things done in a snap at crunch time. Second, unless they prepare adequately (e.g., develop a detailed functional spec) before giving the job to the contractor, they could encounter mistakes and rework. This will certainly add to the project's overall costs.
"Our experience regarding quality has been rather mixed," says a principal IC designer from a semiconductor company in San Diego. "It has taken considerable time to get contract design services up to the standard we expect, and it takes some effort to maintain the standard. We've been somewhat dissatisfied with contract IC layout services and have on occasions had to start again using internal resources. Design and layout contracting requires internal resources to manage the contract, so it's not totally an incremental resource."
According to Glenn Smollinger, principal design engineer at Halliburton Energy Services, all too frequently companies make the decision to outsource based on a short-term reduction in development costs. This decision is often made by those in the company who don't appreciate the technological return on investment for internal development.
"On one of our biggest projects, both the mechanical and electrical designs were outsourced," says a design engineer in the medical science industry. "Marketing decided that we needed this project done quickly, but engineering says it would take a year or two. So marketing went out and found a company that claimed it could take one of its standard products and make a custom board for our device in a few months. The first project schedule planned to have this device in production in December 2004."
From there on, his project went to "hell in a handbasket." On the electrical side, it was as though the design contractor completely ignored the specs. The power supply needed to sustain a 25-ms power loss and hold data in RAM for three minutes. During the first design review, the contractor's design engineers said that the device couldn't handle one in 10 specified requirements.
Fixing this resulted in a serious schedule delay. Once prototypes were built, the software programmer assigned to make the board work went to another job, and it took weeks to find another programmer. Today, the project is over six months late, and the primary project electrical engineer quit the company. On the mechanical side, when asked to move a hole or connector, the contractor typically made a totally unrelated change.
Bob Erko is the chief engineer at Tennant Company, a manufacturer of industrial cleaning equipment, and he offers some advice. He has had reasonably good success with outsourcing circuit board layouts, test fixture designs, PC software applications, and other manufacturing tasks. But he warns that the choice of a contractor can easily add as much risk to a project as stretching to implement unproven technology.
"While it's tempting to use new contractors when implementing new technologies, this is really layering risk on risk," he says. "The results can be unpredictable. I'd recommend proven contractors with new technology or new contractors with proven technology. Layer the new on new, and you could be in for a bumpy ride."
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