Mastering Engineering Service Outsourcing in the automotive industry
Mastering Engineering Service Outsourcing in the automotive industry
Mastering Engineering Service Outsourcing in the automotive industry
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21 |<br />
<strong>Master<strong>in</strong>g</strong> <strong>Eng<strong>in</strong>eer<strong>in</strong>g</strong> <strong>Service</strong> <strong>Outsourc<strong>in</strong>g</strong> <strong>in</strong> <strong>the</strong> <strong>automotive</strong> <strong>in</strong>dustry<br />
When it comes to more complex tasks or tasks related to core competencies,<br />
<strong>the</strong> question of extend<strong>in</strong>g capabilities or mak<strong>in</strong>g resources more flexible is<br />
only a temporary one. OEMs and suppliers will have to decide whe<strong>the</strong>r or<br />
not to foster such competencies <strong>in</strong>house by enabl<strong>in</strong>g <strong>the</strong>ir own eng<strong>in</strong>eers,<br />
even <strong>in</strong>corporat<strong>in</strong>g new, experienced eng<strong>in</strong>eers (which will require a dedicated<br />
know-how transfer process to be <strong>in</strong> place), or rely<strong>in</strong>g on external<br />
resources to appropriate <strong>the</strong> know-how generated.<br />
E. <strong>Eng<strong>in</strong>eer<strong>in</strong>g</strong> outsourc<strong>in</strong>g is conducted accord<strong>in</strong>g to different operat<strong>in</strong>g<br />
models<br />
Two typical types of eng<strong>in</strong>eer<strong>in</strong>g service contracts can be dist<strong>in</strong>guished:<br />
a) Contract<strong>in</strong>g of "time and material" ("body leas<strong>in</strong>g"): <strong>the</strong> eng<strong>in</strong>eer<strong>in</strong>g<br />
workforce is put at <strong>the</strong> OEM's/supplier's disposal to support/conduct<br />
an <strong>in</strong>ternally coord<strong>in</strong>ated and developed project<br />
b) Contract<strong>in</strong>g of services: <strong>the</strong> entire development process and<br />
responsibility for def<strong>in</strong>ed work packages is handed over to <strong>the</strong> ESP,<br />
which does <strong>the</strong> eng<strong>in</strong>eer<strong>in</strong>g mostly autonomously<br />
Currently, <strong>the</strong> majority of ESO contracts are based on "time and material",<br />
mean<strong>in</strong>g that providers are not remunerated based on <strong>the</strong> results <strong>the</strong>y<br />
deliver, but ra<strong>the</strong>r on <strong>the</strong> cost <strong>the</strong>y <strong>in</strong>curred dur<strong>in</strong>g <strong>the</strong> development phase.<br />
This is a double-edged sword: while ESO providers don't bear <strong>the</strong> risk if<br />
<strong>the</strong> development of a product takes longer than expected, <strong>the</strong>y also don't<br />
profit if <strong>the</strong>y are able to deliver results faster than anticipated.<br />
As a result of this situation, <strong>the</strong> entire ESO <strong>in</strong>dustry is see<strong>in</strong>g a shift from<br />
a predom<strong>in</strong>antly work- and labor-oriented approach to service contract<strong>in</strong>g,<br />
<strong>in</strong>creas<strong>in</strong>gly transferr<strong>in</strong>g cost and result responsibility to service providers.<br />
This is also supported by OEMs/OESs, who are becom<strong>in</strong>g more and more<br />
will<strong>in</strong>g to hand over responsibility for complex work packages or entire<br />
component development to <strong>the</strong>ir ESO providers. This shift is expected<br />
to cont<strong>in</strong>ue <strong>in</strong> <strong>the</strong> future as providers become even more experienced<br />
<strong>in</strong> specific doma<strong>in</strong>s and general project management.
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