The Risks of Off-Shore CAD Conversion
Design executives and manufacturers should take a clear-eyed approach when they consider outsourcing of CAD functions to offshore service providers. On the one hand, the cost savings may appear to be significant, but on the other hand, there are certain risks.We often find that the cost benefits of outsourcing have been over-stated, while the risks generally have been minimized.Too many executives think that if Indian CAD programmers are paid 80% less than U.S. CAD programmers, then they will save 80% of their CAD design personnel costs. They forget that outsourcing introduces an additional management layer and inefficiencies. So, you might save money, but not nearly as much as you think. Moreover, many U.S. based CAD Conversion companies are adept at streamlined approaches that bring their pricing much more in line with off-shore prices, without the added risks, such as:
Lower Accuracy and Performance
A significant risk of outsourcing the CAD conversion function is that the vendor may not be able to perform as promised. This may be as a result of language barriers, differing cultural expectations, delays in response due to time zone differences or lack of understanding of the work involved. For example, Although English is one official language in India, pronunciation, and accents can vary tremendously. In addition, cultural differences include religions, modes of dress, social activities, and even the way a question is answered. Most leading vendors have cultural education programs, but executives should not assume that cultural alignment will be insignificant or trivial.
Offshore Vendors May Not Understand U.S. Government Oversight/Regulation
Most US organizations face various degrees of government regulation and oversight. While at first glance, this may not seem to be an issue when discussing CAD Conversion outsourcing, the issue of transparency is becoming more significant as requirements such as the USA PATRIOT Act and the Sarbanes-Oxley Act place greater burdens of accountability on all American corporations. So whether it’s a building code issue in a CAD drawing to required security measures for sensitive aircraft drawings, If the offshore vendor is not sensitive to industry-specific requirements and the vendor’s ability to: 1) comply with government regulations; and 2) provide sufficient “transparency” showing that it does comply and is thus accountable, then this could create legal ramifications for the US corporation.
Turnover of Key Personnel
Rapid changes among offshore CAD outsourcing vendors have created a dynamic labor market, especially in India. Key personnel is usually in demand for new, high-profile projects, or even at risk of being recruited by other offshore vendors. While offshore vendors will often quote overall turnover statistics that appear relatively low, the more important statistic to manage is the turnover of key personnel. Common turnover levels are in the 15%-20% range, and this usually refers to the most knowledgeable of the CAD specialists. The impact of high turnover can directly affect the quality of CAD conversion work.
Risk of Insecurity and Loss of Intellectual Property.
If you are outsourcing CAD design, and unique designs are important to your business, this is a huge risk. Some countries that are high on the list of outsourcing destinations are the same countries that have an extremely poor track record in respecting copyrights. Especially in manufacturing, you don’t want your uniquely designed widget being manufactured for half the price off-shore.
Your Management Capability
Outsourcing offshore will not work if it is not carefully managed by your internal team. Not getting this right is one of the major reasons that offshore CAD outsourcing programs fail. Signing a contract with an off-shore CAD design company or CAD conversion company doesn’t mean your team can neglect their responsibility to the outsourcer. If the designs are complex and your team doesn’t “mesh” with the off-shore team, the CAD outsources company may need to compensate by putting some of their resources on-site at your facilities, adding cost.
To conclude, there is some risk in outsourcing any CAD project, but the risks involved in offshore outsourcing usually outweigh the advantages. Go ahead and make outsourcing CAD one of your objectives. But don’t do anything until you have carefully planned how to handle the risk factors, and, until you have carefully explored your in-country options before you go off-shore.