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Engineering services outsourcing_unraveling myths

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Engineering Services or Product Engineering services is one of the fastest growing segments of Indian IT exports. It consist of services across mechanical, embedded, software and VLSI capabilities. It works on the product or product ecosystem of a technology company, accelerating time to market or enabling new technologies/features, or adding value in terms of R&D cost optimization.

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Engineering services outsourcing_unraveling myths

  1. 1. Engineering Services Outsourcing Unraveling Myths June 2014
  2. 2. Table of Contents Abstract 3 Global R&D Spending and ComposiƟon 4 EvoluƟon of the ESO Industry 5 Perceived Barriers and RealiƟes 6 Which engineering funcƟons can be outsourced? 7 ESO Levers for Business Impact 8 Type of ESO Engagements: Business Models & RelaƟonship 9 ESO ProposiƟons by Product Porƞolio 12 Summary 15
  3. 3. Abstract TradiƟonally, in a product centric world, R&D has always been perceived as intellectual property and hence treated with utmost confidenƟality. There was no room for collaboraƟve or complementary R&D. However, of late, there is a shiŌ away from products alone, to an ecosystem of services around the product focusing on end user experience. There is need for development of the product, associated plaƞorms, and industry and geo specific variants for companies to go to market. Global compeƟƟon and reducing product lifecycles are forcing companies to leverage their value chains to retain market share. Cost and labor arbitrage are no longer the primary drivers and many engineering engagements are being recast as win-win partnerships to leverage collaboraƟve growth opportuniƟes. Many OEMs and ISVs are collaboraƟng with engineering service providers to accelerate Ɵme to market, extend product lifecycles, develop plaƞorms, enter emerging and adjacent markets, and opƟmize R&D operaƟons. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  4. 4. Global R&D Spending and Composition The engineering services spend by industry verƟcal has been led by the automoƟve sector, which accounts for a quarter (26%) of the global spend. This is due to automoƟve OEMs and suppliers being driven by the conƟnuous need for superior performance, safety, reliability, convergence, and fuel economy. Consumer electronics and telecom-munica Ɵons firms seeking shorter product lifecycles and technology innovaƟon are the next largest spenders on Engineering Research & Development(ER&D). The proporƟon of spend on ER&D by verƟcals is expected to remain stable Ɵll the end of this decade. In terms of geography splits, the US dominates with two-thirds of the global ER&D spend, and with the resurgent economic scenario, it is expected to grow impressively in absolute terms. Japan, with 27% of the share is the second highest spender, though growth has been halted by the slowdown in 2008-09. The third highest spender is Europe, in which Germany remains the largest, and perhaps the only one showing consistent growth. France, United Kingdom, Italy, The Netherlands, and Sweden consƟtute the other major spenders in Europe. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  5. 5. The Outsourced R&D Market Size & India’s Share According to NASSCOM, the enterprise outsourced R&D market in 2013-14 is around $75B, with the US, Japan and Germany being the top three markets. India’s share of the Engineering Services Outsourcing (ESO) industry can be esƟmated to be around 16-17% in 2013-14, and it competes with countries like the US, France, and Germany for onshore delivery and Mexico, China, Eastern Europe, Vietnam, and Philippines for offshore delivery. NASSCOM esƟmates that India will capture 35-40% share of the global market by 2020. Evolution of the ESO Industry For over three decades, Original Equipment Manufacturers (OEMs) and Independent SoŌware Vendors (ISVs) have leveraged Engineering Service Providers (ESPs) for tacƟcal engineering support by using staff augmentaƟon models for cost and labor arbitrage. Given the plethora of technologies used across hardware and soŌware, it was easier for customers to get access to the global talent pool by using ESPs to provide scale whenever and wherever needed. Project execuƟon was limited to basic acƟviƟes like scanning and digiƟzing of engineering drawings to engineering change order management. Product engineering was considered to be a core acƟvity and IP-centric and therefore off limits for outsourcing. Post 2003, capacity augmentaƟon came to the fore and customers required ESPs to help them reduce their Ɵme to market and scale only when there were requirements. This helped them accelerate their product development process and manage opera- Ɵonal expenditure. AŌer 2010, access to emerging markets also acquired importance for customers as consumer spending rose in these markets. Today’s businesses, driven by cost reducƟon and product lifecycle pressures, are increasingly focused on developing effecƟve outsourcing strategies that drive significant improvement in global engineering and R&D operaƟons. Of late, the engineering services outsourcing market has witnessed substanƟal growth, and has evolved to encompass a broad range of new product development, value engineering and product support funcƟons. Gradually, the future growth of ESPs will lie in how well they are able to drive product innovaƟon for customers and put their skin in the game by sharing investments. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  6. 6. Perceived Barriers and Realities Barrier 1 – Fear of lack of control over product development Most companies are quite cagey when it comes to their R&D work and do not show willingness to disclose details of their next generaƟon products and soluƟons for the fear of plagiarism in this Internet era. This leads to a fear of outsourcing parts of work which are related to product devel-opment. Reality If the onion is peeled, it can be realized that there are mulƟple aspects of engineering which can be complementary and hence, not so confidenƟal. Typical product development cycles are quite elaborate with detailed processes, majority of which are domain neutral. Over 70% of the engi-neering effort is on acƟviƟes which are domain neutral while only 30% of the effort is on differenƟ- ated domain centric feature funcƟonality. Barrier 2 – Products that are created by third party vendors will not adhere to quality stan-dards It is believed that when outsourcing is performed, there is a loss in complete control over labor and process, which results in lower quality products. When interacƟon is not done directly with people making your products, they may be less loyal to the company and have a reduced incenƟve to produce good work at a reasonable pace. Reality ESPs, as much as the outsourcers themselves, have an incenƟve to focus on quality. There is a conƟnu-ous effort on the part of ESPs to create organizaƟon management systems which define comprehensive processes to ensure that high quality is delivered at all stages for any engagement. ESPs are also compli-ant to ITIL, ISO, and CMMI and consider these as standard processes which have to be rolled out mandatorily for customers. Barrier 3 – Geo-poliƟcal reasons The geo-poliƟcal barriers that are perceived include cultural barriers, physical distance, Ɵme difference, and poliƟcal instability. SomeƟmes, there is a lack of comfort level while dealing with a person who is accustomed to a different cultural environment. For example, when an American is providing require-ments to an Indian, the Indian does not having enough confidence to say that a certain require-ment cannot be implemented due to architectural challenges. There are also instances where resolu- Ɵon to a problem gets delayed due to the ESP working in a different Ɵme zone. Reality It is true that cultures are different in different countries, but outsourcing has evolved over a period of Ɵme and there are defined processes © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  7. 7. which ensure that these barriers can be overcome easily. Cross-cultural training programs are under-taken by ESPs to ensure that at an early stage employees are comfortable dealing with customers from different parts of the world. Also, ESPs set up delivery centers at both offshore, nearshore and onshore locaƟons which provide support to customers 24*7. When it comes to poliƟcal insta-bility, ESPs help protect clients by building clauses in the contract to manage it. research and analysis, change management, tool selecƟon etc. are possible outsourcing candidates, but based on the situaƟon at hand. AcƟviƟes like IP management, technology planning, strategic planning, and architecture design can be retained as they are core acƟviƟes and therefore do not have to be outsourced. Which engineering functions can be outsourced? There is a lot of consulƟng around idenƟficaƟon of Core vs Context in terms of acƟviƟes which are undifferenƟ- ated and hence, which can be outsourced. Proper planning in terms of arriving at the scope of work for effecƟve outsourcing can help companies drive signifi-cant improvement in global engineering and R&D operaƟons and allow them to focus on their key differ-en Ɵators and retain their market share and compeƟƟve advantage. The graph shown here illustrates the possibility of outsourcing a certain engineering funcƟon. It is clear that within a product development lifecycle, acƟviƟes like soŌware development, tesƟng,manufacturing support etc. are strong candidates for outsourcing as the complexity of interacƟon is not high. As one moves higher up the value chain, in the technology develop-ment area, acƟviƟes like © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  8. 8. ESO Levers for Business Impact Companies are increasingly turning to outsourcing as a strategy to improve their global ER&D opera- Ɵons. The key levers and growth drivers include the following: Cost: Over the years, the R&D intensity in terms of R&D spend as a percentage of sales has been constantly reducing. The shrinking R&D budgets have led to companies looking to expand their footprint in Low Cost Countries (LCCs) through partnerships with ESPs or through the establish-ment of capƟve centers to leverage the cost differ-en Ɵal in engineering effort. Typical engagement is either through Time & Material or Fixed Bid type of project execuƟon. Labor: Given the complexiƟes of the technologies involved in end to end product engineering, it is quite difficult to get a flexible pool of engineers with the relevant capabiliƟes and competencies. Access to a global talent pool can go a long way in providing scale to ER&D operaƟons. Time: The free flow of real Ɵme informaƟon across geographies and markets thanks to the Internet has resulted in shortened product lifecycles and release cycles. Companies need to be constantly on their toes to be ahead of the curve, or else they will end up losing market share. In the Online industry, there are some products which have become obsolete even before going to market. Service providers who are able to provide ready-to-use components, frameworks and methodologies to accelerate Ɵme to market are much sought aŌer. Technology: Another key factor is the quantum of technological convergence across varied verƟcals thanks to the advent of disrupƟve technologies like Mobility and Smart Products which are driving customers to a more connected world. ESPs with a footprint across industry segments are in a beƩer posiƟon to adopt best pracƟces and technologies from hitherto unrelated industries. Revenue: The shortening product lifecycles ensure that companies do not have the luxury of addressing markets in a phased manner as global compeƟƟon might quickly enter white space market segments. Access to global markets with an ability to address emerging and adjacent markets in simultaneous launches will ensure maximizaƟon of revenue as well as market share retenƟon. Partnership with global service providers with a large geo spread and foot-print across mulƟple markets, currencies and languages can help manage this risk. Ecosystem: The world is becoming more of a connected world with consumers expecƟng a seam-less experience more than devices with advanced features and funcƟonaliƟes. OEMs need to ensure that there is a plaƞorm around the product which integrates the services around the product to provide a phenomenal experience. ISVs on the other hand need to ensure that their services are easily consumed by mulƟple devices with different form factors and consumed in different manners (touch, voice, video etc.). All of this has increased the impor-tance of embedded soŌware as a means to merge the device with the applicaƟon to provide a seamless experience. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  9. 9. Types of ESO Engagements: Business Models & Relationship TacƟcal ESO Engagement – Project Centric Most companies prefer to begin engineering services outsourcing iniƟaƟves with a project-centric engage-ment. Mostly, such projects are specific to a parƟcu-lar release of a parƟcular project. A typical project could include some of the following: VerificaƟon & validaƟon and release manage-ment of a parƟcular release New product development of a parƟcular version of a product/sub assembly Proof of Concept to test out adopƟon of a new technology/feature set Support and sustenance of a parƟcular product The business model of the engagement is either on a staff augmentaƟon model where the ESP provides engineers with the relevant competencies while the outsourcer is responsible for project and program management, or, on a Ɵme and material model where the ESP handles project and program man-agement along with the engineering work with associated rate cards for the effort involved (rates differ based on the role and experience level of the engineers). In both these cases, companies prefer to scruƟnize the engineers involved themselves in terms of their capabiliƟes. In a few cases, companies also outsource projects on a fixed bid model where the ESP is completely responsible for the deliverables of the project with complete ownership on the resource mix of the project team. Typically, engineering services conƟnue to be delivered primarily through hourly, daily, weekly or monthly rate-based pricing models, staff augmen-ta Ɵon relaƟonships or Ɵme and material (T&M) projects of various forms. These less mature resource-based pricing models reflect the conser-va Ɵve nature of the client base; specifically, the lack of sourcing maturity within the engineering services community. However, of late, buyers of engineering services are shiŌing towards more mature and advanced sourcing relaƟonships that provide more predictable, stable, and higher quality of services and deliver the anƟcipated and contracted value to them. Chances of product success are higher if the service providers also have financial incenƟves to achieve business outcomes and hit target service levels and performance metrics. We will now look at the various engineering services outsourcing engagements in detail: © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  10. 10. While this is a good model to start with, it gets quite detrimental if the company does not migrate to more mature engagements with their long standing ESPs. This is primarily because of the addiƟonal overheads of commercial negoƟaƟons and project oversight for every project. Companies need to compute the total cost of outsourcing including the oŌen neglected travel overheads of their execuƟves to arrive at a proper cost benefit analysis. TacƟcal ESO Engagement – Procurement Centric Once they have tasted iniƟal success with their engineering services provider, most companies migrate to a procurement centric Offshore Develop-ment Center model. Over here, procurement aggre-gates the resource requirements across mulƟple departments and divisions and arrives at a commer-cial model for engineering effort. (Ɵme & material rate cards basis the tech competency, role and experience of engineers). Given the volumes involved, procurement can work with ESP’s to obtain volume based discounts. As a result, the company now has a dedicated pool of engineers who are competent on the technologies relevant to them. AŌer execuƟng a few projects, the engineers become familiar with the tools and engineering processes of the customer as well. In many cases, an ODC is treated as an extended R&D arm of the company. One big advantage for Engineering and R&D teams in this model is that the decision of choosing the right ESP and negoƟaƟng the rate cards etc. is taken out of the equaƟon. They just need to define the scope of work with the preferred ESP and get an esƟmate (with assumpƟons) on the effort involved for a given project. Once the effort esƟmate is approved on both sides, the project is quickly executed by the dedi-cated pool of engineers. This process is repeated for different departments and steering commiƩees of execuƟves on both sides oversee the allocaƟon of the engineers to different projects. This commiƩee meets on a quarterly basis and takes strategic deci-sions like increasing or decreasing the pool of avail-able engineers, invesƟng on specific tech trainings, tools, labs etc. Again like the previous model, one needs to audit the total cost of outsourcing by evaluaƟng hidden costs of execuƟve travel (internaƟonal travel in most cases) vis-à-vis Ɵme spent on negoƟaƟons over rate etc. Most successful long term engagements are those where companies treat the ESP as an equal partner with an atmosphere of trust and transparency. Top down, customer-vendor relaƟonships (a.k.a manufac-turing) tend to be skewed, and hence they do not last long and eventually fail. Companies which prefer staffing centric engage-ments tend to culƟvate mulƟple ESPs as a hedging tacƟc. This is to ensure that they get the relevant engineers with the relevant competencies from as many ESPs as possible. This can get detrimental in terms of vendor management when they migrate to more mature models of engineering services outsourcing. Strategic ESO Engagement – PDLC Centric A strategic engineering services outsourcing engage-ment is one that is truly aligned to the business needs of the customer. Rather than focusing on the technology competencies and capabiliƟes alone, one © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  11. 11. also needs to align with the business pain points or hot buƩons of the product manager. This is dependent on the stage of development of the given product (Product Development Life Cycle stage or PDLC stage). Here we elaborate it further in terms of the stages: At the introducƟon stage of a product, it is all about “Time to Market”. Services which can “Accelerate” Ɵme to market are what maƩer the most. AcceleraƟon services from the ESP in this area include competencies at scale, end to end product engineering, test automaƟon, release management etc. In the growth phase, suddenly the number of customers grows exponenƟally from the introduc- Ɵon phase. One is no longer able to provide the kind of aƩenƟon one used to shower on the early adopters in terms of new feature addiƟon, defect fixes, customizaƟon etc. Here, the presence of a plaƞorm can go a long way in providing uniformity of services to the exponenƟally growing user base. Hence projects around plaƞorm engineering development can act a strong foundaƟon for the growth of the product. In the maturity phase, the product has a large customer base comprising of risk averse and mature customers. CSAT becomes extremely criƟcal as any defect or issue can result in a huge backlash. For example, all of us remember airline mishaps despite air sƟll being a far safer mode of transport than rail or road. Ideal engineering services outsourcing projects in this stage would be independent verificaƟon & validaƟon, product cerƟficaƟon & compliance, managed services for product support etc. In the decline phase, one tries to shore up revenues for the product by focusing on emerging markets and adjacent markets. One also tries to squeeze out profits by cuƫng cost, and raƟonaliz-ing processes. The project candidates at this stage include value engineering, should cosƟng for emerging markets, customizaƟons for adjacent markets, BOM opƟmizaƟon etc. In the last (End of Life) stage, the primary objec- Ɵve is to extend the life of the product. One can look at integrated sustenance and support projects to combine teams and resolve high volume defects as part of minor releases to opƟmize operaƟonal costs. In addiƟon to these projects, technology adopƟon of disrupƟve technologies should happen at any stage of the PDLC, as these technologies can make a product obsolete, irrespecƟve of the stage of the product. Can we think of a refrigerator which is not frost free? Or a smartphone with no touch feature? © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  12. 12. ESO propositions by product portfolio Based on the product porƞolio of a customer and the stage at which they lie in the product development lifecycle, ESPs can create specific proposiƟons as detailed below. Strategic ESO Engagement – End of Lifecycle Support Most OEMs and ISVs, over a period of Ɵme, develop or acquire a fairly complex set of products in their porƞolio. As per the BCG matrix, around 20–30% of these products are ‘Dogs’, and are at the fag-end of their lifecycle and about to be wound up. However, due to historic reasons like powerful customers, strong niche markets and organizaƟonal dynamics, they end up supporƟng these products with expensive resources including Subject MaƩer Experts (SMEs). Technology-centric organizaƟons also end up acquir-ing mulƟple startups to bootstrap their products with latest technologies. Unfortunately, these acquisiƟons come with their own set of products which have to be reƟred smoothly while ensuring that the key SMEs end up working on the next generaƟon product porƞolio. Typically, these products contrib-ute around 15–25% of the product revenues while consuming 25-30% of the R&D spend (most customers have given the feedback that their product audit results are preƩy revealing as quite a few products are bleeding). Even organizaƟons that are fairly mature in terms of engineering services outsourcing end up having a blanket outsourcing strategy across products and departments. Hence, even end of lifecycle products get outsourced to the tune of say 30-50% only. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  13. 13. Ideally, the quantum of outsourcing should be the maximum for Dogs as they are no longer strategic to the organizaƟon. Such products are ideal candidates for outsourcing of end-to-end product engineering (over 80% of outsourcing). ESPs can easily help bring down the R&D spend on such products by 25-50% with a planned strategy. ESPs can focus on integraƟng the sustenance and support teams and manage these acƟviƟes through a ‘Managed Service’ mode. Focus on high volume Ɵckets in minor releases can ensure opƟmized operaƟonal costs while extending the life of the product. If properly mapped, one can easily ensure savings up to the tune of 7-8% of the overall R&D spend of an organizaƟon resulƟng in mulƟ- million dollar savings.AlternaƟvely, companies can also have a risk reward sharing model with the ESP wherein rewards in terms of savings from the Annual Maintenance Contract (AMC) revenues can be jointly shared. This provides further monetary incenƟve for the ESP to manage the integrated sustenance and support in an efficient manner within the AMC revenue of the product and ensure product lifecycle extensions. More importantly, end users typically tend to get quite annoyed with the stoppage of support and invariably switch to compeƟƟon resulƟng in loss of future revenue streams. Ensuring that the product is kept alive with minor releases ensures that end users can migrate to the next generaƟon products at a Ɵme of their convenience. HCL Case Study HCL created a well-established governance model to manage the program and assumed product manage-ment ownership. We also created specific teams which were focused on driving value and innovaƟon to assist the customer. In the process, HCL was able to reduce the install Ɵme by 150% for a parƟcular acƟvity through a parallel install mechanism. We also reduced the requirement of 3rd party tools for traffic generaƟon, lowered the build creaƟon Ɵme, and reduced the cycle Ɵme through test script opƟmiza- Ɵon. Strategic ESO Engagement – Industrialized Engineering If one were to analyze the product porƞolio of any OEM or ISV, the ‘Stars’ and ‘Cash Cows’ typically contribute 60-85% of the overall revenues while consuming 50-70% of the R&D spend. These are the key product lines of the organizaƟon and garner all the aƩenƟon and focus of execuƟves. However, while they may be important, there are sƟll some horizon-tal aspects of the product and plaƞorm engineering which can be outsourced without reducing the importance of these product lines. Ideally, these products are apt candidates for opera- Ɵonal efficiency and effecƟveness as they are anyway bulk of the operaƟonal R&D spend. Simple programs like test automaƟon, regression tesƟng and release management, interoperability tesƟng, product cerƟficaƟon etc. can easily improve producƟvity by 15-20% resulƟng in a business impact of up to 7-8% of the R&D spend of the organizaƟon. In addiƟon, programs like value engineering and customizaƟon for emerging and adjacent markets can result in addiƟonal incremental revenues with a huge business impact. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  14. 14. HCL Case Study For a leading consumer electronics company, HCL was responsible for the ownership of soŌware develop-ment and tesƟng for a full range of HDTVs consisƟng of all TV ranges from 19” to 84”. In the process, we were able to achieve 15% operaƟonal efficiency through various acƟviƟes including value engineering for the customer. Being a long term partner (over 17 years) with the customer, we have been able to influence 23% of the customer’s business which is close to $18B. Strategic ESO Engagement – Supplier Sourced InnovaƟon Lastly, coming to the area of New Product IntroducƟon (NPI), every organizaƟon would like to spend much more than what is budgeted by senior management. However, nobody wants to risk plagiarism by going the engineering services outsourcing route. By disintegraƟng the product engineering acƟviƟes, companies can idenƟfy aspects of engineering which are not domain- centric and differenƟated. There are mulƟple cases of companies collaboraƟng with their value chain around the overall customer experience and using innovaƟons from their value chain partners. Supplier sourced innovaƟon is quite common in Hi-tech, Consumer Electronics and other verƟcals which are characterized by extreme compeƟƟon and IP centricity. Typically, ESPs set up InnovaƟon Groups and focus on Context rather than Core areas for innovaƟon. InnovaƟon happens in the ecosystem around the product, plaƞorms to extend services of the product, and emerging and adjacent market feature sets. There are even instances of engagements wherein there are contractual obligaƟons on the ESP to innovate and come up with IPs. Joint investments on collaboraƟve innovaƟon have resulted in over 10X ROI for some customers in terms of potenƟal revenue streams. HCL Case Study For a North American office automaƟon OEM, HCL envisioned a strategy by launching an innovaƟon campaign and also puƫng together a negoƟaƟon approach to stabilize revenues and significantly reduce the cap in service level credits. As a part of the innovaƟon campaign, monthly ID workshops were setup, innovaƟon champions were idenƟfied, innovaƟon hubs were created, and a review and improvement board for invenƟons was established. Through this process, HCL was able to generate over 70 patentable ideas in 12 months for the customer in various areas like color accuracy improvement, inverse half-toning, augmented reality based form processing, image compression algo-rithms, and NFC. These patents ulƟmately have the potenƟal to impact over $500M of revenues for the customer. Strategic ESO Engagement – Plaƞorm & Ecosystem Engineering It is now being observed that products and soluƟons also need to be part of an overall ecosystem to succeed. The ecosystem ensures that end users are provided with a seamless experience which encour-ages them to sƟck to the product. To achieve this, plaƞorms have to be built which encompass the products and soluƟons. For example, the iPhone wouldn't have been as big a success as it was without the App Store plaƞorm. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  15. 15. While the primary requirement of a plaƞorm is to create a marketplace for service moneƟzaƟon, the way in which plaƞorms are implemented for different funcƟons differ as follows: 1. Product management - User group plaƞorms to assist prioriƟzaƟon of features and funcƟonaliƟes as part of the product roadmap 2. Sales - eCommerce plaƞorms to facilitate service moneƟzaƟon 3. Procurement - Partner portal to facilitate easy collaboraƟon across the value chain 4. R&D - Enterprise portals to manage digital assets and facilitate product development 70% of plaƞorm engineering acƟviƟes are around basic elements of single sign-on, mulƟ-tenancy, orchestraƟon, metering & billing, data migraƟon etc. which are typically domain agnosƟc. The use of pre-built components can go a long way in the acceleraƟon of plaƞorm development and deploy-ment. Similarly, most plaƞorms these days need to support a high amount of concurrent usage and need to be highly secure as vulnerabiliƟes can result in a huge market backlash. Plaƞorms also need to integrate with best-of-breed enterprise packages to incorporate domain centric business rules and control logic (without reinvenƟng the wheel) which are essenƟal for business. Hence, if the product is integrated well with the plaƞorm and subsequently the ecosystem, it can go a long way in exponenƟally improving product experience resulƟng in increased service revenues essenƟal for business impact. Summary There are mulƟple engagements which OEMs and ISVs can leverage with ESPs to ensure boƩom line and top line impact on their businesses. While the potenƟal savings and revenue impact are known, oŌen Ɵmes, the challenges are mostly within an organizaƟon. Even a simple exercise like product porƞolio analysis can go awry as most of the stake holders would not agree to a negaƟve categorizaƟon of their product due to personal stakes. Programs iniƟated in good faith by senior management can be completely botched by high handedness of execuƟves in dealing with the ESP as a vendor rather than a partner. Cultural differences between the company and its supplier can also impede collaboraƟve success. It is imperaƟve that organizaƟons take the help of Engineering Sourcing Advisors to plan the statement of engineering services outsourcing work across products, geographies, funcƟons etc. in a phased manner. Effort spent in planning and preparaƟon can never go waste and goes a long way in ensuring success for R&D organizaƟons. © 2014, HCL Technologies. Reproduction Prohibited. This document is protected under Copyright by the Author, all rights reserved.
  16. 16. For more details contact: Email : ers.info@hcl.com TwiƩer : www.twiƩer.com/hclers Website : www.hcltech.com/engineering-rd-services Blog : www.hcltech.com/engineering-and-rd-services HCL Technologies is a global IT services company, working with clients in the areas that impact and redefine the core of their businesses. HCL focuses on ‘transformaƟonal outsourcing’, underlined by innovaƟon and value creaƟon, and offers an integrated porƞolio of services including soŌware-led IT soluƟons, remote infrastructure management, engineering and R&D services and BPO. HCL leverages its extensive global offshore infrastructure and network of offices in 30+ countries to provide holisƟc, mulƟ-service delivery to customers. HCL's Engineering and R&D Services (ERS) business unit enables technology led organizaƟons to go to market with innovaƟve products and soluƟons. We partner with our customers in building world class products and creaƟng associated soluƟon delivery ecosystems to help bring market leadership. We develop engineering products, soluƟons and plaƞorms across Aerospace and Defense, AutomoƟve, Consumer Electronics, SoŌware, Online, Industrial Manufac-turing, Medical Devices, Networking and Telecom, Office AutomaƟon, Semiconductor and Servers & Storage for our customers. Author Information: ViƩal Devarajan ViƩal heads MarkeƟng for the Engineering and R&D services line of business at HCL Technologies. Some of his contribuƟons at HCL include implementaƟon of a decentralized Sales KM system for HCL and Sales of Engineering services for the CIO community. Ramesh Natarajan Ramesh is a Deputy Manager at HCL ERS. He manages content, web analyƟcs, digital, and business markeƟng acƟviƟes in the HCL ERS MarkeƟng team. Akash Jauhari Akash Jauhari is a part of HCL ERS’ strategy team and focuses on areas like R&D markets, Technology trends, ESO growth drivers, CompeƟtor analysis, M&A and Strategic Planning.

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