The outsourcing market is rapidly expanding and is no longer limited to non-strategic, transactional functions. Product Development joins the list of company functions identified for outsourcing by an increasing number of companies. A recent survey of 100 Global CIO’s and business leaders responsible for corporate technology and spending (conducted by Patni Computer Systems), found that 89% plan to increase outsourcing budgets over the next 12 months, many by a significant percentage.
A review of publications estimates the outsourcing market at $170 B ( IT ) and $28 B (Product Development Engineering). Moreover, Product Development outsourcing is growing at nearly 40% per year, with a number of contributing factors, including:
Need for Cost Efficiency
Core Business Focus
Reduce / Mitigate Risk
Resolve Business Process Issues
Optimize Investment
Reduce Headcount
Reduce Fixed Cost
Increase Variable Costs
Asset Reduction
Access Global Expertise
Derive Incremental Revenue
Access Technology
This environment is challenging, highly competitive and ever-changing. As market share wanes, companies explore new markets, introduce innovative products, and apply the latest product development technology/practices. Time to market has become critical. Firms are increasingly challenged to get products to market faster due to shorter product lifecycles, rapid obsolescence due to advances in design technologies, increased product complexity. Difficult/costly organizational infrastructure changes complicate product development.
These challenges and the requirement to introduce innovative new products have caused development costs to escalate. Consequently, companies have recognized that engaging in an engineering outsource engagement can reduce design cycle times, improve time to market and costs, minimize development risks, access the latest technology without owning it, improve return on product development investment, and, in the process, improve overall competitiveness.
