Engineering Service Outsourcing (ESO) Project Procurement, RFPs and Quotes in India

By – Outsourcing CAD/CAM/CAE Projects in India
Engineering Service Outsourcing (ESO) for CAD drafting, engineering services and offshoring projects can be accomplished through online RFP services such as Engineering Service Outsourcing (ESO) is the process of contracting operations and responsibilities of specific business functions critical to organizations, to be handled by a third-party service provider. In simpler terms, ESO is the process of hiring another company to handle business activities for you. The trend of outsourcing was first witnessed in the manufacturing industry when Coca-Cola outsourced large segments of its supply chain to third-party vendors. The advent of outsourcing in the service sectors occurred with the dawn of the information technology revolution. Business Process Outsourcing is generally categorized as CAD, CAME, CAE, drafting, raster to vector conversions and engineering procurement services. Back Office Outsourcing relates to outsourcing support functions like Human Resources or Finance and Accounting. Front Office Outsourcing refers to outsourcing processes like Customer Care and other processes involving direct contact with the customer. When any business process is outsourced outside a company’s country, it is called offshore outsourcing. Given the relevance of the ESO industry to the Information Technology industry, another name of this industry has been termed Information Technology Enabled Services (ITES). A vital sub-segment of this industry is Knowledge Process Outsourcing (KPO), in which knowledge-related and information-related work is carried out by workers in a different company or by a subsidiary of the same organization, which may be in the same country or in an offshore location to activate labor arbitrage. Unlike outsourcing for manufacturing, KPO typically involves work of high caliber and value being executed by highly skilled staff. KPO vendors, in addition to providing expertise in the processes, often make many low level business decisions—typically those that are easily undone if they conflict with higher-level business plans.

Reasons for Outsourcing
There may be numerous reasons why any organization, or any business entity for that matter, would think about outsourcing. The following are primary reasons why outsourcing is deemed important in numerous areas of business.

Cost Arbitrage- Outsourcing creates a huge opportunity for the outsourcing business entity to reduce costs on certain processes that have been marked for outsourcing. This will involve reducing scope, defining quality levels, re-pricing, re-negotiation, and cost-restructuring. Further, the outsourcing destination will create a “labor arbitrage” generated by the gap between industrialized and developing nations.

Change Agents- The third-party vendor who accepts a function outsourced by the principal company will enable the principal to use the vendor as a catalyst to bring about a sea change in the functioning of the entire organization, which otherwise cannot be achieved easily. Hence, the third party vendor to whom the process is outsourced acts as the change agent.

Reduce time to market- Outsourcing enables instant acceleration of reception of deliverables relating to the outsourced function which is brought in by the additional capability of the vendor.

Focus on Core Business- There is a practice that principal companies only outsource support functions or processes to third-party vendors, as outsourcing process relating to the core business may flatten out uniqueness of the principal’s products. Hence, outsourcing business critical support functions and processes will help the principal concentrating ont eh core business rather than wasting time and other tangible resources on support functions and processes.

Threats in ESO (Engineering Service Outsourcing)
One notorious threat the EPO (Engineering Process Outsourcing) scene across the globe has been facing since its advent in the service landscape is the security risk it brings along with it. When any simple process is outsourced, it brings along with it risks in security both in the communication as well as the privacy aspects. Stating an instance, data from a North American or a European company implies more difficulty in maintaining security when accessed or controlled in the Sub-Continent. From a knowledge perspective, a changing attitude in employees, underestimation of running costs and the major risk of losing independence, outsourcing leads to a different relationship between an organization and its contractor. It is imperative that the risks and threats of outsourcing be managed by both the principal and the vendor by way of a constructive partnership. In order to provide a structure to outsourcing management, maximizing positive outcome, and minimizing risks and avoiding any threats, a Business Continuity Management (BCM) model is setup. BCM consists of a set of steps, to successfully identify, manage and control the business processes that are, or can be outsourced.

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