Outsourcing R&D

Using R&D Outsourcing as a Competitive Tool. Outsourcing R&D can be a valuable part of a company's business strategy, so long as the partnership is constructive and mutually satisfying.

A growing number of telecommunications companies are outsourcing R&D. They are doing so to reduce time and money expenditures, to free up resources for other endeavors, and to reduce financial risk. As evidenced by performance in telecommunications market, product innovation is a major driver of top-line growth. To succeed in this competitive environment, today's companies must develop authentic and meaningful relationships with their clients, leverage existing assets, continually and quickly develop better products, and increase their market share, all while controlling costs. When properly planned and executed, outsourcing of product development and research can help to maximize innovation and overall company performance.

WHY OUTSOURCE R&D SERVICES?

Companies choose outsourcing to reduce costs, minimize business risks, and hasten product market entry. The cost reduction may result from improved organizational effectiveness, shorter product development cycles, greater access to high technology, or restructured and improved use of resources. Outsourcing often leads to enhanced effectiveness by permitting the company to focus on core competencies and lessen its demands on tangible resources.

Organizational Effectiveness

Outsourcing can be used to redistribute internal resources from noncore to core activities, and can increase the firm's flexibility in responding to changes in the marketplace. Outsourcing is also used by some firms as a way to accelerate organizational change by eliminating out-of-date or inefficient assets.

Fast Market Entry

Outsourcing can help a manufacturer meet temporary product development needs without imposing a long-term commitment. It can also be used to pursue multiple projects with a limited staff, thereby yielding a richer product pipeline.

Access to Capabilities

Outsourcing allows companies to access technological and process innovations when size and/or time constraints prevent them from establishing these capabilities in-house. Obtaining the necessary expertise and skills outside can help a company move ahead of its competitors. In some cases, less-manageable functions are outsourced to more experienced firms.

Resource Utilization

Outsourcing can help reduce companies' up-front capital requirements and control their operating costs. Often, startups and companies with inexperienced or small staffs, limited facilities, or insufficient equipment outsource the projects they lack the time or funds to develop.

PRINCIPLES FOR SUCCESS

By adhering to the following four principles for success, companies can increase the likelihood that their outsourcing relationships will succeed.

Establish Common Objectives

Firms should link their success to their providers', and should project themselves as the preferred client.

Build Trust and Respect

Throughout the outsourcing process, firms should always deal openly, honestly, and fairly with their providers. A trusting relationship is built on shared information, the avoidance of surprises, quality time spent with the provider, the establishment of clear rules, and integrity.

Communicate Professionally.

Manufacturers must document all agreements and any changes made in the pursuit of issue resolution, and never mislead their outsourcing partners.

Begin early. OEMs should start the outsourcing process as early as possible during product development.

OUTSOURCING ISSUES TO CONSIDER

Typical situations for outsourcing include:

• Our customer needs help meeting schedules
• Our customer is inexperienced with the necessary technologies
• Our customer lacks the facilities and equipment needed to complete the job
• Our customer lacks ressources needed to complete the job

Our Customers should also consider to have

• the project management skills that will be required for R&D outsourcing.
• the staff willing to support the decision to outsource the work
• the management willing to share concepts and confidential information