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Outsourcing Rules of Engagement

by Randy Speed, © 2009

One area that both my colleagues and my clients are trying to get their arms around is the subject of outsourcing. Specifically, I am referring to design and engineering services.

Today it seems more than anytime in the past, engineers are going out on their own. Industry message boards often include freelancers asking each other for advice on the subject. Regardless of the reasons for this trend, there is an opportunity for companies to gain a competitive advantage by utilizing and partnering with these individuals.

You may not agree with all of my observations, but I hope that you can at least take away a perspective or two that will enhance your existing outsourcing practices or perhaps bring some reassurance to your next subcontracting opportunity.

There are many advantages to partnering and engaging with other organizations outside your company. Conversely, small businesses rely on large companies to provide work and to help them grow. Outsourcing design and engineering services is an area that deserves study and strategy for best practices. It stimulates commerce. In fact it is a vital component of the business strategy of product development companies.


To be specific, I am referring to the following:

  • Highly specialized and/or experienced independent engineer, or designer
  • Independent consultant with specialized skills
  • A small group of the above mentioned individuals
  • Small design firm or consultancy
  • Small division of a larger corporation

Some may refer to these resources as (slang) shops, or houses. To be specific, this group is not to be confused with temporary worker, or contractor. For the purpose of this article, we will refer to them as an “outside resource”.

These folks are passionate about their profession and highly motivated to excel in sharing what they have to offer. The advantages to your company are numerous.

  • The apparent size and diversity of capabilities of your company is greater by creating a team of experts that you can rely on
  • You can have access to specialized talent that you would otherwise not have internally
  • They bring you experience from working for some of your competitors
  • You can keep the size of your permanent staff at a minimum which corresponds to a level matching your lowest level of work, and gain the ability to respond and ramp up quickly

Additional hidden benefits exist in, for example, avoiding the cost of hiring and maintaining health benefits for permanent employees. Most of these highly motivated entrepreneurial types are investing in their own software, which further justifies their use and the value to your company. Government agencies are taking steps to encourage industry big brothers to partner with small businesses via the Mentor Protégé programs. If you have not yet dealt with this subject, perhaps you should.

Indeed, your Rolodex (or PDA) should include a list of these valuable and talented people. Embracing this trend, many managers even consider these contacts part of their professional network. Your Rolodex stays with you by the way. You can take these relationships with you to your next project, or employer.

But how do you go about utilizing outside resources? What’s the best way to hire and manage them? This is an article to help both you and the outside resource, but mainly you.

Getting to Know You

Let’s assume that you have already located a prospective outside resource. But you have not yet signed an agreement. You are interested in using this resource and they are interested in working for you. It is at this point in the relationship that many people get queasy. They don’t know how to begin, or are not sure how to start. Cautious courtesy is good at this point. Vetting is somewhat subjective and not all people are comfortable with it.

You should at least take steps to ensure that the company is credible. Ask for, and check, the person’s or company’s references. If they have no references, then consider looking elsewhere or at least approach them with a bit more caution. Ask to see some work they have completed for other similar clients. References alone however do not guarantee competence. They may very well have done a great job for someone else, but you must decide if they can perform the job that you need done.

You will know early on, even without checking references, whether the resource is competent or not. Over time, your confidence should grow in the outside resource. Don’t be fooled by big-company names either. Big companies can go sour over time. Just because they’ve been around a long time or have a recognized name doesn’t mean that you are dealing with a competent group of people.

Web Presence

Check out your prospective vendor’s website. They do have a website. Don’t they? Website development is a skill very much removed from design and engineering. The website was most likely created by someone else so you cannot rely too much on it to gauge the reputation and quality of your prospective partner. However, I will offer a token word of thought here.

Personally, I would feel much more comfortable with a company that has a professional-looking website than one that looks like it was put together by a brother-in-law. Conversely, too much flash and too much talk on a web site makes me a little suspicious.

Unless a website is offering valuable information, I believe it should be brief. And it should reflect the level of professionalism that you expect from all the other impressions from your interaction with them. Bottom line, other than purpose and function, a website is basically a statement of credibility. However, you should be tolerant of a flaw here and there in their website. It is difficult to maintain a website totally free of broken links or missing images.

Image and Marketing

Don’t write off a prospective outside resource simply because their website or business card doesn’t appear professional. Great engineers are not great marketers. The two skill sets occupy different hemispheres of our brain. For individuals or small firms, don’t expect them to be able to afford professional marketing. Look for the things that count; experience, education, etc.. The same reasoning does not apply to resumes. A good consultant should at least be able to have a professional looking resume.

On the personal face-to-face level, I firmly believe that professional courtesy and humility should be qualities engendered by independents. Whether they possess these traits should play a role in your selection criteria. If someone is putting themselves forth as an independent, or consultant, then they are held to a higher standard. Their value to your organization is not necessarily dependent upon their possession of these traits, but they should want to give it their best and be mindful that no matter how great they are at their specialization, there are people a lot smarter than they are. Humility will carry them much farther than technical bluffing will.

What’s your Prefix?

Time Zones and Geographic Proximity. The two topics are moot when your resource is on-site. This is not to suggest that being on-site is necessarily better than being off-site. More important than distance and time is the quality of the work.

There is no doubt that being in the same time zone is easier for all, but it is not the most important concern. Being in the same time zone basically corresponds to the ability to have overlapping working hours and being able to have real-time interaction. Less significant is location. Being close geographically boils down to a matter of minimizing travel costs, when travel is required.

On-site Versus Off-site

Ideally, you should not need or require the outside resource to work on-site 100% of the time. If you feel it is important for them to be on-site, decide why you feel this way. It could be trust, control, or that you don’t feel that they can be as efficient working off-site (see Shirt Sleeves Up).

Remember that you must provide office space and resources (e.g. computer, phone, etc.) to a worker who is on-site. The reason you are going to an outside resource in the first place is because you do not have, or do not want to maintain, the talent or manpower internally. The outside resource will also incur travel expenses.

Who pays for travel expenses? The quick and obvious answer to the travel expense topic is that ultimately, the money comes from your client. It's the financial food chain; from your client to you to your outside resource.

Bottom line I believe is that travel expenses are, as they say in real estate, “negotiable”. If there is no clear answer, then I believe that they should be shared. You are both in business and taking risks. Just get it all in writing at the onset of the project.

Shirt Sleeves Up

A very important element in getting off on the right foot is to clearly communicate expectations. This is especially important in situations where a turn-key objective is being undertaken and the scope of the project is well-defined.

If your resource is an outside company, then a statement of work (SOW) should be prepared and clearly communicated. Any questions about the requirements should be discussed and clarifications/interpretations documented. Not all details can be known up front in every situation, but you should take the time (devote the time) to write down what you want and what you expect your outside resource to provide.

Do not underestimate the importance of preparing a clear SOW. If you did not specifically communicate your requirements, you should not be disappointed with results that are not what you wanted. Be as specific as possible. Likewise, a vendor’s proposal should respond to each point in your SOW. If the resource is an outside company, the SOW is used to prepare a quotation.

As you get underway, the SOW is like a roadmap for the project and should be reviewed as the final deliverables are being prepared to ensure that every point has been addressed.

If you feel things are not going well, then do not ignore your feelings. Act early. Be prepared to ask difficult questions, elevate your concerns. If your concerns are not allayed, you may need to consider other sources. Trusting your instincts and taking action early can prove to be a smart move. Remember that a small course correction not taken early in your journey takes you farther away with time from your intended destination.


Use the telephone. Most people seem to have an aversion to using the telephone. I cannot explain or understand it, but there is absolutely no excuse to not use the telephone as often as you need to. Imagine that your outside resource is sitting right next to you.

Be careful not to overuse email. It is a great tool for communication, but I try and limit email for documentation and quick notes. According to Modern Marvels, 2 million emails were sent every second in 2007. Before writing an email, ask yourself if a phone call would be more appropriate. Many times however, my email states “Tried calling you, please give me a call.”

This brings me to a very important point. Both you and your outside resource owe it to each other to return calls and emails as quickly as possible. Aside from cost and efficiency, it is simply the professional thing to do.

Managing Your Assets

Manage the resource. If you are at a high level within the program where managing the resource would be done by one of your reports, then assign a competent person to manage the off-site resource. The level of the manager in charge of the resource is in direct proportion to the size of your company, but must be at a high enough level to carry out the task with authority. The point is that someone from within your organization must take responsibility and be the point of contact to the resource. It helps if this person has some skin in the game – that is that they risk losing something if things go wrong.

As the resource manager, make sure that you know who your internal counterparts are for the outside team’s people. Each discipline, or team player, involved needs a counterpart – even if the same person occupies more than one role. This means that you must know when to rely on others within your organization for their special knowledge. This objective serves two purposes. Your offsite vendor needs access to the right people within your company in order to better serve you, and your internal specialist will also be able to help you gauge whether your vendor is competent or not. They should be able to “speak the same language.”

You must be available to the outside resource and be willing to respond quickly to any and all requests. If you believe that a request or question from your resource is not important, that does not mean that the resource thinks the same thing. Treat every question or request with urgency. You should understand that every minute waiting for a response is costing your company money.

Have a backup person for the times when you are not available. Make sure to communicate the contact information for your backup to the outside resource. Give them authority to contact your backup if they cannot contact you. Let your resource and your backup know when you will not be available by utilizing a temporary voice mail greeting or an “out-of-office” email reply.

If you are aware that both you and your backup will not be available, then provide a backup for your backup. Just make sure that your resource can always contact someone who can make decisions and keep them going. You may even be so inclined as to provide your cell number or home phone number in case the resource has urgent needs that can impact your program.

Accountability Contact

An accountability contact, or project manager, must be established prior to getting underway. Ask who will be your primary contact before project go-ahead. Email address and telephone number, and preferably their mobile telephone number, should be provided to you. The project manager must be expected to be held accountable.

You must have a single point of contact who takes responsibility and who manages the project. They must have the ability (and visibility) to spot issues before they get out of hand – like unanswered questions in an email that linger for days.

You must have a direct line of communication to your accountability contact. Make certain that your contact has the necessary power and authority to do what it takes to ensure program success. As an added measure of safety, you should also know who your accountability contact reports to.

Maintain Control

There is a line you do not want to cross – and that is where you relinquish too much control to your outside resource. If you get off schedule, whose fault is it? How much do you stand to risk in the event of negative outcome with your resource? Decisions have to be made quickly. Additional internal resources may be required.

The manager in charge of the outside resource has to be able to bring the necessary internal people together when necessary and to be able to make the types of decisions that keep the outside resource working and productive.


There is a bounty of talent available for companies to take advantage of. Do not turn down a job simply because you don’t have the talent in house. First seek to locate outside resources and vet them properly before commencing with a firm contract. Above all, be wise about your business, minding the details of the promises you have made to your clients. Ultimately you are responsible to deliver. But there is more to be gained in numbers. Managed properly, your business can offer more, deliver more, and grow as a result. I wish you best practices in your coming outsourcing engagements.