We are in a privileged position here at EngLancer towers (grossly exaggerating the extent of our offices), because we see a lot of bids and projects delivered through either outsourcing or offshoring, and in many situations, a combination of the two.
I think (UK based) engineering companies are still a little wary of quality issues when sending work beyond the borders of our sunny isle. That said though, we see a great many projects successfully delivered overseas (via India mainly). It’s no secret that these projects are successful because all of the companies involved are committed to adopting good quality assurance mechanisms and checking procedures. Such processes are also, of course, just as imperative when adopting more traditional ‘outsourcing’ to UK based companies… or even when you are delivering in house.
Traditionally of course, offshoring (again, primarily considering India) has been considered to offer significant cost savings. As Bob Dillon says though “the times are a changing”.
The cost difference between outsourcing and offshoring is becoming increasingly narrow
Please appreciate that we are using a broad brush to paint the picture of the industry, but what we are seeing is that the cost difference between outsourcing and offshoring is becoming increasingly narrow. This is due to a number of factors. Firstly, India has been very successful in growing its economy and, as in the UK, engineers and engineering companies play a key role in this. It stands to reason then that the greater the demand for appropriately qualified, skilled and experienced staff the greater the salaries – meaning costs go up. Outsourcing centres in India (and elsewhere) also need to overcome similar challenges to UK companies. Rents, rates, software costs, training and tax. While, we have also seen efficiency improve and a reduction in costs due to reworking, the savings have not been enough to limit price inflation.
Conversely, in the UK, engineers, draughtsman and modellers are becoming increasingly able to work in a more lean manner. That is, a steel detailer working from a home office on a smaller job is likely to be very competitive when compared to what can be delivered offshore.
Where Indian organisations can still offer real value though, is in situations where a rapid turnaround of information is required and your usual UK supply chain is too busy to meet the required deadlines. Recently EngLancer has been involved in two large UK projects (one a high profile rail project) where a breakdown or gap in the design supply chain has required the production of ‘for construction’ design information in a very short timescale. The ability to expand the workforce at the drop of a hat through our partners played a big part in ‘saving the day’ – doing this offshore, in one case, was much easier and cost effective.
The larger Indian outsource centres also offer value when project scale becomes significant. Again, UK RC detailers offer great value on messy, tricky and fast turn around projects. For lengths and lengths of RC retaining walls, standardised precast units or repeatable floor slabs in concrete towers, offshoring saves you money. The larger consultancies recognise this, setting up their own design, drawing and modelling centres. As an SME or a micro organisation though, such cost and investment isn’t feasible. Should this stop you working in this efficient manner though? Why not achieve similar (if not improved) cost savings through EngLancer. This is possible because the outsourcing platform aggregates the available offshore design resource, enabling you to achieve an effective price, regardless of the fact that you are only delivering one tower block or one section of retaining wall.
Another interesting trend we are seeing is the growth of new outsourcing powers in the engineering industry (Structural, Civil and MEP mainly). Pakistan, Vietnam and the Philippines are popping up on our radar with increasing frequency and are offering costs savings comparable to the Indian market of the late 90s / early 00s. It’s also interesting to note that a lot of these companies have been built on the back of their founders and engineers gaining exposure and experience on the large scale and rapid development in the Middle East, most commonly within the UAE.
It will be really interesting to see how both Indian and UK companies react to the changing market of ‘offshoring’. Can quality be a differentiating factor for both existing markets? Can Indian companies work as flexibly and in as lean a manner as seen by some of our partners in the UK?
Whether you want to outsource or offshore, whether you want to rapidly scale your supply chain to meet that tight deadline, or to find that specialist you need to deliver that unusual project… EngLancer is the place to establish, grow, refine or improve your engineering design supply chain. It’s re engineering the way we engineer.