Captive Design Center versus Service Providers

This conversation was started when my friend (fellow mechanical engineer turned IT consultant) and I were discussing the pro and cons of a US based company to have a captive design center in Bangalore or hire engineers from a service provider to perform their tasks. Bosch, ABB, Siemens, GE, all have had their setup in India with the dual purpose of entering the Indian market as well as getting some product designs done out of the Indian engineering centers. Since the 1990's though there have been a surge in design centers opening in India, mainly due to the popularity of engineering service providers.

During the course of my career, I have got familiar with the way service providers gain competency and gain the confidence of the "client" companies. I have also seen my company try to transition from a "captive" design center to a "service provider" mode. The key word in the sentence above is "try to", because, having been part of the decision process to shift gears towards providing a skill to a partner company, I have seen how companies can make mistakes and how the employee mindset also needs to shift in the same way. I am presently working in a scenario where permanent and contract employees are working on  he same project side-by-side, giving a clear differential in the way work is done in both the cases.

During my stint at an electronics R&D company as the packaging expert, we explored the possibility of lending our skilled resources to a similar company that needed it. We had a unanimous management agreement, technically, our skills were matching to the T, we had common interests and learning that could benefit both the companies and the money was good. Two main ingredients were missing from the recipe. One was experience to deal with a model where employees are sent to an onsite office at the client's workplace. The behavioral aspects of a employee working onsite must be different from when the employee is working in her/his own office. A specific instance of this is communication. When an engineer, sitting in her/his own office, would end the project, all s/he would do is send out an email saying its done, invite a few folks for a design review, where the model is opened, everyone goes all over it, argue over the problems, make some changes and then move on to the next task. But at an onsite office, the communication has to be much more clear. There has to be no room for any back and forth changes. There has to be a project plan in place with all the milestone dates, interim design review dates preset. The design review must include a crisp presentation, no room for assumptions, and include risk abatement plans.

The other factor is in a company trying to go the service provider way is to have an immediate manager with such an experience who can communicate directly with the employees and mentor them in the way the client company needs to be dealt with.

Without these two ingredients in place, the end result will not be ideal and is bound to leave a bitter aftertaste in on or both the cases. Service providers need to have a robust project management structure in place, companies with their own design centers can afford to go a little easy on the practice of project management. Ont he other hand, offshore design centers do have other management practices in place like product life cycle (PLC/PLM) management, product management and even innovation, information or knowledge management. These companies typically use tools like Teamcenter Engineering, Intralink, Solidworks enterprise, SAP and so on, have a host of features and customization to cater to these innovation management techniques.