Outsourcing in the AEC Industry

To Outsource or Not to Outsource?

The economy is good, unemployment is low, construction spending is up, and this means more IT (information technology) projects being supported by AEC (architecture, engineering, and construction) firms. Couple this with technology playing a larger role in operations as each year passes, and there are simply more components to manage than ever before.

 

With the maturity and marketing of the outsourcing industry, many AEC companies have decided to buy versus build for their core applications as well as integrations. Enter the age of some American construction companies taking a serious look at offshoring future software projects. Since it does seem inevitable, here are a few factors to consider as your curiosity walks you down the outsourcing path. 

 

Getting Started

You can do this one of two ways. The choice primarily depends on how many projects you have and the opportunity cost of performing the work in house. You can start your own office, taking on the same accountability you have stateside, or work with an established company that is already familiar with working with Western companies. This article will focus on the more conservative approach of working with an existing company.

 

One of the best ways to start is to run a pilot project to test the waters. This is the most probable way to get the luxury of accountability and a fixed cost. Pick a priority-two project that can stand to absorb some cost and schedule impact. Plan on keeping core technology close to home until you new method is proven. Search out a minimum of three vendors for the pilot, like bidders on a construction project, and be equally diligent in vendor selection. The following categories are some priority discussion points to consider:

 

Costs

Don’t get caught in marketing and sales hype of huge savings and miss the big picture. Take the time to evaluate not only the project cost, but also to plug some numbers related to the other conditions that are mentioned below.

 

Resource Availability

It is true you may be tapping into a greater resource pool. However, make sure that the resources are available to your project. Be sure to solidify progress milestones associated to payments.

 

Accountability

Depending on the country where the work is being performed, make sure that you can actually enforce agreements should there be a need. Much of this work is sent to developing nations. The laws are different for nearly every aspect of handling business and enforcing protection of your property in these countries.

 

Domain Expertise / Core Competency

You stand to make substantial gains by working with a company that has expertise in the field of your project requirements. Don’t be blindsided by the savings and forget to evaluate domain expertise.

 

Quality Control

Quality Control (QC) is a developing science state side, which generally means it is ahead of the curve compared to other parts of the world. The definitions of QC that you are used to may not match the ones of an outsourced company or its employees. Make sure there is at least a process in place and time allotted in the schedule.

 

Language

Most of the outsourcing providers will speak English. Language, however, goes beyond vocabulary and sentence structure. Make sure you are comfortable with the terminology being used, the way it is used, and the sensitivities of team members that will be monitoring the project.

 

Culture

There will be many cultural differences. Some factors to be aware of are etiquette, traditions, religious influence, educations systems, male and female roles, hierarchies, and respect for authority and accountability. Remember it is always easy to just say yes to everything.

 

Security

This is part of the reason for picking something that is not mission critical for a first project. Although people are generally not interested in what you are doing for personal gain, the flipside is their culture may not have the same perspective on intellectual property that you do. Make sure to review the systems they will use to handle your work and investigate how they manage internal confidentiality. The country of choice itself should have a well developed national policy for deterring such breaches.

 

Team Morale

There is a good possibility that outsourcing will not be popular with your entire company.  Make sure you understand why you are doing it, and be sure to communicate the specifics of the process to your employees as soon as possible in order to avoid speculation. 

 

What’s Next?

In the same way the Internet has enabled us to outsource our IT, it is now enabling us to outsource the management of entire technology projects and related resources. Business process outsourcing might be next. Think about it, document management is just a step away. Not to worry though, keep in mind that American companies are already chasing work all over the world. Chances are high the software you use today is already heavily outsourced. These are just more options that still require diligent process and cost/benefit analysis. 

 

Technology is just the toolset enabling us to investigate the options. If managed in the same way as our core business, outsourcing can be a pleasurable experience with substantial gains and minimal disruption to your organization. Good luck.

 

Wes Smith is principal and cofounder of The Cram Group, www.thecramgroup.com, New York, N.Y., a provider of software implementation services and multivendor, open application service provider (ASP) solutions. For more information, please call 212-505-0381.