Waverley Blog

Not every engineering project is a suitable candidate for outsourcing. Projects that are part of your core competencies, that require significant internal management and coordination, or for which there isn’t a significant cost advantage, may be better tasked internally. But many other projects are either suitable or could be suitable with some forethought and planning. In this article we’ll highlight some of the trade-offs of the make or buy decision for application development and share our experience of working with companies that were making these decisions.

Is this a project that would require a large investment on your part if you did it internally?

This is more than a financing question. There are a limited number of core capabilities in which your organization can develop innovative and operational excellence. If the project you are planning fits within that group of core capabilities, it may only require a modest additional investment and it would be justified to keep it internal. However if it is outside your primary areas of expertise and is not an area that makes sense to make a large investment, then going to an external engineering firm makes sense. For example, you need to make your software available on an additional server platform and your organization is not familiar with this platform. This is a good project to give to an external player that develops and ports on this platform all the time, which has the tools, staff, and methods to do your project quickly and with high quality.

Is this a project that the team can support being given to someone else?

Hiring an external company to do a project for you is likely to have organizational implications. If your organization is going to resist giving the project to an outsourcing company, then you’ll have to consider the trade-offs. If the reasons to go outside are compelling (no resources internally, time-to-market is critical, out of bandwidth), then internal resistance is something to manage through. If the reasons to go outside are valid but not vital, then perhaps there are ways to work around the resistance by putting clear boundaries around the project requirements by making it a black box. Or you could make a concerted effort to build a relationship between the two organizations.

Is this a project which you can put clear boundaries around?

Some projects require more integration with teams and individuals than others. A porting project can be clearly defined and handed off to another group with less need for interaction with your teams. A system integration project on the other hand will require extensive and ongoing interaction and negotiation with your organization. This may be a project to keep internal.

Does it give you more flexibility in managing your resources?

Let’s start at the extreme of a project that you would not outsource. If you have an engineering function that has a predictable workflow, is part of the core capability of your company, and is constant need for making changes and additions to their portfolio, it would not make sense to outsource this function. But as you move in the other direction—projects that are less a part of the core, intermittent needs for resources, and unpredictable workflow, then these are projects for which it would make sense to cultivate an outsourcing relationship to absorb the fluctuating demand for resources.

Does it give you access to expert knowledge and resources that you might not otherwise be exposed to?

One of the benefits of going to an external company is that they can expose your organization to new techniques and practices. The outsourcing company has done many projects of the type you need to be done, they’ve worked with many clients in the industry and seen what works best. They may even be driving industry standards and practices. Asking a company that is at the forefront of a particular technology or practice can be a way to get the project completed at a lower cost and simultaneously expose your organization to cutting-edge practices.