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How Outsourcing Changed the Engineering and Construction Industry

Outsourcing in the engineering and construction industry (E&C) may be less common than in other areas. Areas like manufacturing or service offerings (e.g. e-commerce and customer support) have specialised nature of work. Thus, it has also now become increasingly popular and accustomed as E&C firms across the globe are turning to business process outsourcing (BPO) providers in a bid to save costs, time and obtain a wider pool of talent and technological advancement.

According to Grand View Research, the value of the global engineering and construction outsourcing market boosted from US $411.02 billion in 2020. Additionally, this will still increase to US $24.47 trillion by 2027. This is truly great news for engineering and construction firms. To keep up with the demand for high-quality services, many opted to use the full potential and benefits of offshoring. 

In this blog post, we will elucidate how outsourcing changed the engineering and construction industry, but before that, we will also tackle the imperative details related to E&C outsourcing. 

Keep on reading!

What is Engineering & Construction Outsourcing?

Engineering and Construction Outsourcing involves the process of contracting out certain portions of the design, construction, or management of a project and specific engineering and construction roles to a staff or team based outside of a firm. Outsourced services can include everything from creating drawings and specifications to managing contractors. It can also be done on a project-by-project basis or across an organisation’s entire engineering and construction portfolio. 

These roles are complex, and finding suitable candidates can be quite challenging and costly to a company. Outsourcing offers a practical solution for many corporations to have access to a talented and low-cost offshore market. Many engineering and construction jobs are quite task-heavy and repetitive. So, businesses can focus their efforts on the essential revenue streams in-house by outsourcing these roles. At the same time, transactional tasks are being sustained offshore. 

Countries with a low cost of living are usually the top engineering destinations to outsource. Eastern Europe and Asia have been identified as locations that provide motivated and highly talented engineering specialists for outsourcing. For example, the east European economy offers lower upfront fees than in more developed economies and an increasing number of currently in-demand abilities.

In Asia, there are countless technological experts that are waiting to be tapped for offshored work. There are a huge number of excellent schools and universities in Asia. These schools produce a lot of industry-ready and well-versed graduates every year. In fact, Asia is generating some of the leading engineering minds in the world.

India

India is currently the most famous country for outsourcing too. It has one of the fastest-developing and increasingly stable infrastructures. Its growth rate is at 25 to 30 percent every year. The country also has one of the most high-speed internet connections in the world. This means that communication delays are minimal and hitches are rare.

The Indian government has also heavily devoted a lot of money to technological projects and infrastructure in its effort to create stronger systems. These systems make things better for outsourcing work.

India has a relatively large pool of seasoned engineers that can offer a wide scale and variety of engineering and construction services.

Philippines

Thanks to its engineering and construction prowess, the Philippines is one of the best countries for outsourcing services. The outsourcing marketplace of the Philippine economy comprises as much as 8% of the country’s GDP. That’s why it shouldn’t come as a surprise that many companies are choosing to outsource to this country.

Filipinos culturally subscribe to an excellent work ethic and culture, which can be traced back to their heritage. Most Filipinos are Catholic and are raised to regard integrity, honesty and hard work. 

Engineering jobs in the Philippines, similar to many countries, are considered prestigious, often at par with physicians, lawyers, and accountants. In fact, many students aspire to become engineers. A lot of universities here strive to produce some of the most capable and superb engineering graduates.

Malaysia

Malaysia produces highly-skilled IT professionals and world-class accountants and bookkeepers. Plus, it also produces proficient and highly-experienced engineers, mainly from the country’s capital.

Top Reasons Why You Should Outsource Engineering & Construction Services

  • Engineering & construction projects are generally made up of many components that are subcontracted to smaller entities. Project management is at the core of the work and identifies the success, or otherwise, of the outcome. It’s exactly this multifaceted aspect of daily operations that makes outsourcing so attractive.
  • For many corporations, outsourcing engineering & construction roles is what puts them in a position to bid for larger jobs. Efficiencies can be generated in certain areas, enabling a more strategic concentration of resources and the capacity for expansion.
  • Performance standards at all times are of paramount significance, as are national and corporate security (depending on the project). So it’s imperative to ensure you work with trusted professionals who are aware of the requirements of the industry and can work to the level that you require.
  • Knowledgeable and informative engineers are available when you need them.
  • You can gain access to turnkey solutions to development bottlenecks. 
  • Outsourcing can bring your product to market faster. 

The Most Commonly Outsourced Engineering & Construction Tasks

Research and Development (R&D)

New product development or R&D is the top engineering and construction service that corporations outsource. Almost 40 percent of small and midsize companies outsource this engineering and construction service. The main reason for R&D outsourcing is fast development and introduction to the market, better quality products, access to vast engineering talents, and enhanced regulatory compliance and reporting.

Key players are more likely to be able to provide end-to-end services that encompass all stages of product development life cycles. They are adept from idea to manufacturing. Meanwhile, smaller and niche providers are likely to furnish low-end or custom R&D services. These services include software and hardware development solutions. 

Many R&D services involve conceptualization (converting marketing ideas into concepts, style, and packaging design), design optimization and validation, creation of feasibility studies, value engineering and virtual simulation, simulation and implementation, modelling, product manufacturing and product engineering. 

CAD and Drafting

Computer-aided design (CAD) and drafting are often outsourced as the second-most common engineering and construction service. CAD and drafting tasks comprise converting paper blueprints into electronic drawings for easier archiving, editing, sharing, retrieval, conversion from 2D drawings to 3D format and vice versa, formulation of concept drawings, prototyping and modelling. 

About a decade ago, the outsourcing of CAD and drafting was especially common when engineering services outsourcing was in its early stages. Back then, CAD and drafting outsourcing used to occur in a piece-meal style, but corporations soon began subcontracting more knowledge-driven and core-oriented design work to BPO service providers because they were a more effective and valued use of outsourcing contracts.

Reverse Engineering

Back engineering or reverse engineering is the process of collecting data from a completed product and utilising the data to recreate the original or an entirely new product. Reverse engineering can be applied to a variety of products, including computer software and electronics. The process often includes deducing how the system works by dismantling its components. 

The engineer generates a computer-aided design (CAD) model of a physical object using 3D scanning techniques or by manually modelling features. Scan data is easily converted into a model that fits the original product’s design features flawlessly.

Reverse engineering service providers are able to take the CAD data received from the original component, design new components to match the original parts, redesign components with manufacturing issues, update CAD models based on what was learned, and boost the quality of the manufacturing process.

Building Information Modeling (BIM)

Advanced 3D modelling technology has permitted BPO companies to establish even more complex systems for their customers. One example is Building information modelling (BIM). 

BIM is a 3D model-based procedure that is utilised in the procedure and development design. It produces a precise visualisation of a facility or building and extends building information to five dimensions, including its cost and time.

BIM software also interprets the design as a mixture of model elements, each of which consists of attributes that offer cost estimates and other details. It enables virtual information sharing among all participants in a construction project, including the design team, the BPO provider and the client. Accurate visual representation also allows builders to oversee operations without difficulty and identify the real-world implications of building construction. 

Document Management

Document management is another service that can be outsourced to external service providers. Electronic document management systems (EDMS) software provided by BPO vendors is a complex solution for the operation and management of engineering documentation and office administration. Service providers may also provide document management systems consulting and implementation to enhance data security and process efficiency. 

Product Lifecycle Management (PLM)

PLM is a combination of software technology and business strategy. Corporations outsource the management of development, maintenance, and logistics of a product to an outside expert who oversees the process, from conception, design stage to disposal.

The provider may handle the company’s entire product portfolio, data, and processes, as well as provide consulting services, technical support, and IT services to determine and implement process enhancements. Some third parties may focus on the creation and centralization of data access and the management of technological innovations.

Engineering Consulting

Outsourced engineering consulting enables companies to address challenges by developing roadmaps and strategies and reinventing engineering processes. The goal is to align technology adoption with business results and boost ROI and engineering process efficiency.

Consulting services differ by industry. For instance, in the environmental sector, external providers offer natural resources evaluation, environmental site assessment, HAZMAT studies and groundwater sampling. And in the geotechnical sector, third-party providers offer geological and feasibility studies, materials specifications, review and sample testing and design recommendations. 

Value Management and Benchmarking

Value management and benchmarking are cost-reduction measures that concentrate on value drivers such as time, quality and safety. BPO providers can help businesses extract more value from their implementation projects with value management services that implement projects within budget and time constraints. Value management and benchmarking services can also assist managers to determine the appropriate projects and opportunities, track and optimise progress during execution, and measure performance against industry peers. 

How Outsourcing Changed the Engineering and Construction Industry

Faster turnaround times

Outsourcing engineering and construction services certified businesses with faster turnaround time. External service providers were capable of implementing suitable strategies and completing projects in an agile manner without distractions as trained and skilled engineers employed there are proficient at handling a project from intake to completion and are accustomed to operating under deadline pressures.

Enhanced focus

Through outsourcing, engineering and construction firms were able to comfortably shift repetitive tasks and efforts to third-party service providers and focus on their profitable core business activities, such as developing new products, quality improvement and growing the business.  

Reduction in labour costs

Utilising highly skilled talent in a low-cost country like the Philippines enabled engineering and construction firms to regularly achieve 50 to 70 percent savings on labour expenses while constantly ensuring quality results. The costs saved are then channelled into their new business development or other investments.

Reduction in training time and costs

whether new or existing. Likewise, newly trained staff take time to grasp their full potential and speed with their new skills. But with outsourced engineering specialists who had already tried and tested training programs and had the required skills, they were able to hit the ground running, saving money, time and effort for engineering and construction firms. 

Savings on office space and equipment costs

Through outsourcing, engineering and construction companies now require less office space, furniture and equipment, which resulted in immediate cost savings.

Access to first-rate skills, custom expertise and best-in-class technology

Outsourcing staff made it possible for engineering and construction companies to tap into a pool of highly-skilled and experienced professionals from across the globe at a much cheaper cost than doing it in-house. Moreover, since engineering and construction is a specialised industry and companies under this often require working on a one-off project but don’t have the internal resources to go signal it, outsourcing enabled them to obtain custom expertise from remote staff to manage such specific areas. 

On the other note, as projects usually require the use of a specific technology like sophisticated 3D animation not available in-house, outsourcing providers have leveraged advanced engineering tools and technologies to serve their clients. As a result, engineering and construction firms can now tap into the potential that the latest engineering software and technology have to offer without having to invest in them. With the combination of the best technology and skilled engineers with specialised expertise, corporations are assured of gaining top-notch engineering and construction services.

Scalability

Outsourcing allowed engineering and construction companies to scale up or down according to cyclical demands and changing seasons of projects while also keeping labour costs low, efficient and predictable.

After-hours support

Outsourced teams based at different time zones are made available to assist clients of an engineering and construction firm despite their own local employees clocking off. Furthermore, many outsourcing teams worked 24/7, regardless of the timezone.

Higher client satisfaction

Lower costs, faster turnaround times and the availability of the best talent and technology from around the world enabled higher client satisfaction for numerous engineering and construction corporations. 

Conclusion

In retrospect, outsourcing has revolutionised the engineering and construction industry by providing cost-effective solutions to various challenges and the best talents and latest technologies to make the E&C project planning process productive and efficient. It has also allowed for the development of new and innovative methods, products, services, and processes while freeing up time and resources for companies to focus on their core businesses, leading to increased profits and growth. Outsourcing is here to stay, so companies continuously embrace it to maintain their competitive edge.

If you want to find a specialised offshore solution for your engineering and construction function, partner with an excellent outsourcing marketplace like The Lead Enquiry. Our renowned service providers are equipped with professionals that have custom expertise and skills along with the latest tools and technologies! Contact us today. 

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