Design Outsourcing

10 Reasons to Outsource Product Design & Development
By Robert R. Andrews, Medical Division Manager, Foster-Miller, Inc.

The highly competitive medical industry requires firms to utilize every possible resource, both
internal and external, to stay ahead of the curve. While many medical device companies have
been capitalizing on the benefits of outsourced labor and manufacturing for years, only recently
have upstream functions such as product design and development become a major part of the
outsourcing trend. Medical device manufacturers are realizing that they can capitalize on external
engineering expertise to gain several advantages, such as market leading products and reduced
time-to-market, without jeopardizing trade secrets or intellectual property.

There are many factors that must be considered to determine if outsourcing product design
and development is a strategic fit for your company. Outlined below are 10 key benefits that
medical device manufacturers can realize by contracting these functions.

1. Leverage Multidisciplinary Expertise
Two heads are better than one, as the adage goes. This is particularly true for product design
and development, where truly innovative products rely on a multitude of concepts and theories for
differentiation and market leadership. A design team with industry-spanning expertise can apply
the best technology to the product concept. A team of engineers confined to one industry does
not have this pool of knowledge from which to draw, and this can impede finding the best
solutions to complex problems.

There are many cases of breakthrough products that were a result of fresh ideas and cuttingedge
technologies from unrelated disciplines. For example, when doctors were finding it
increasingly difficult to obtain high-resolution internal imaging of their patients due to the growing
obesity epidemic, a defense industry technology provided the solution. To meet the doctors’ need,
a technology based on military sonar mine detection was developed. This enabled imaging devices
to resolve objects at twice the distance of current systems. In addition, the same sonar technology
used by the navy to detect enemy submarines was applied to fetal heart monitoring. Many leading
medical devices were results of technological innovations from an unrelated industry.

2. Quickly and Easily Expand Internal Engineering Capabilities
Some projects require rapid scale-up of manpower for short-term assignments. Hiring fulltime
employees is not economical and adding temporary help is time-consuming and presents
confidentiality risks. Outsourcing, on the other hand, allows you to assign your partner’s full-time
staff to device development projects quickly and cost effectively. The proper amount of the
targeted expertise can be applied at the right time. Companies can therefore avoid paying for
excess labor and engineering costs. The various staff scale-up options are presented in Table 1.

3. Capitalize on Technology Forecasting
Experienced partners have foresight as to what future technologies can play a role in
developing products and how these advancements will impact your business. These firms have the
time and resources to survey the field and look at what is coming down the pike. They also have
networks to rely upon for up-to-date information. Larger engineering firms have the ability to test
emerging technologies in their laboratories, providing an additional benefit to the outsourcing
relationship.

Due to a growing aging population and rising healthcare costs, the need to monitor patients
from their homes has become more urgent. The advancement of wireless technology made
possible the development of cost-effective devices for convenient and efficient patient home care.
Now, patients with low mobility can be diagnosed and treated inexpensively in the comfort of
their own homes.

4. Manage Project Timeline
Many medical device design projects fall victim to mismanaged or unmanaged timelines. With
internal engineering and management resources stretched thin, it is often hard to fully commit
resources to product development projects. Outsourcing partnerships offer an advantage because
the engineering firm not only assumes project time management responsibilities but also assigns
and manages resources. The partners will agree on a program timeline at the start of the
agreement and schedule periodic meetings for status updates. A contract with established
deadlines and deliverables for each party helps to keep projects on track.

G.D. Searle realized this advantage when working with an outsourced partner to develop its
trandsdermal nitroglycerine patch to treat patients with angina. The company’s engineering
partner designed the product and manufacturing process and completed the production facility in
53 weeks. A project timeline was established by the product development firm, detailing project
stages from first sketch through product release along with corresponding timeframes. Scheduled
meetings and deadlines rapidly advanced the project, enabling G.D. Searle to beat competitors to
market.

5. Control Project Costs
Similar to providing project timeline management, external engineering partners can help
medical device companies keep product development costs within budgeted goals. At contract
signing, the project budget is set and resources allocated, with written approval required for any
changes. Reports are developed and delivered on an agreed-upon periodic basis to keep all
parties abreast of current expenditures versus budgeted amounts. As opposed to internal product
development, during which it can be difficult to account for time and resources, outsourcing
relationships provide clear dollar values for each project stage. This will prevent costs from
unknowingly spiraling out of control. An example of a project cost sheet is illustrated in Table 2.

6. Reduce Time-to-Market
End-to-end solutions are another benefit of working with external design teams. Qualified
partners can provide complete guidance from concept development to product development
through equipment design, build and installation. Having one point of contact for all aspects will
lend efficiency to the project. Additionally, experienced firms can apply knowledge of similar
projects and technologies to enhance productivity and overcome technical obstacles that can delay
product introductions.

The design challenges posed by C.R. Bard’s one-hand biopsy tool called for knowledge of
several disciplines. Since a timely release was critical to the product’s success, the firm turned to
an outside engineering team. This third-party applied expertise in medical product design,
materials, and mechanism development to create a proprietary process for a more ergonomic
biopsy tool. This device, operated with one-hand, satisfied C.R. Bard’s objectives, including a
speedy market introduction.

7. Maintain Confidentiality
One of the major misconceptions about outsourcing product design and development is that it
will compromise corporate trade secrets. However, working with a third-party engineering firm
can actually provide stronger protection for a company’s proprietary position than would internal
development. First, outsourcing engineering functions can reduce the threat of an employee
takeover by competitors because engineering partnerships provide anonymity. Competitors will
not be able to track down the engineers responsible for the development of your market leading
medical device if the design was outsourced. In addition, reputable and well-established design
firms sign confidentiality agreements and provide competitive exclusivity to their clients.

Velcro® Group of Companies experienced first-hand the power of confidentiality in its
outsourced engineering relationship. The company worked with a partner who designed the
innovative and proprietary production process for its molded hook and loop fasteners, and
consequently assigned patent rights and competitive exclusivity to Velcro®. When Velcro’s
design firm was approached by a major U.S. diaper manufacturer with a project that conflicted
with its Velcro® partnership, the project was declined by the design firm because it posed a
possible client conflict. However, the engineering firm was able to establish a connection between
Velcro® and this company, leading to a prosperous and profitable business relationship. This
result of this relationship was the development of a truly market-dominating product – a diaper
with Velcro® resealable closures.

8. Create a Proprietary Market Position with Innovative Products
To gain market ownership, companies must develop medical devices that provide an
innovative solution to some unsatisfied need. An experienced partner will be fluent in industry
trends and up-to-date on current happenings and can therefore gauge which niche your company
can effectively fill.

Innovative products are also difficult to replicate, leading to complete and lengthy market
ownership. Medical device manufacturers can get caught up in the modification maze, making
small alterations to existing products and re-launching them. However, these types of projects do
not command price premiums. Relying on external sources for product design and development
brings novel ideas and wide-ranging expertise to the table, leading to innovative products.
Becton Dickinson leveraged the multidisciplinary expertise of an engineering partner to
develop a superior and convenient insulin delivery device that earned a market leading position.

This partner applied insight on ergonomic design, injection molding and materials to the project.
The result was an innovative insulin injector pen, superior due to its ease of use, audible dosage
delivery indication for visually impaired users and low cost.

9. Protect Intellectual Property Rights
Medical device manufacturers can outsource upstream product development functions
without compromising intellectual property by working with partners that agree to assign IP
rights after the program’s completion. This means that the engineering company will either
cooperate in preparing patent applications or will maintain the development process as a trade
secret.

Nova Biomedical lacked a high-volume production capability for its innovative and
proprietary disposable strips. Part of the sub-micro liter glucose monitoring system selfadministered
by diabetics to check blood sugar levels, these unique strips contain a miniaturized
biosensor to convey blood to an electronic reader. Nova Biomedical recognized that an
experienced equipment-engineering firm was needed to design and build customized
manufacturing equipment to fit their unique product requirements. But, involving a third-party
could jeopardize trade secrets. To solve the problem, Nova Biomedical chose an outside design
firm that guaranteed the security of its intellectual property and agreed to assign intellectual
property rights once complete.

Within nine months, two units were designed, built, and installed in the manufacturing facility,
with ownership assumed by Nova Biomedical. Nova Biomedical now possesses the necessary
capacity to meet market demand and maintain its competitive edge.

10. Because the Competition is Outsourcing R&D

Medical device manufacturers are increasingly allocating funds to outsourcing product design
and development functions. This is supported by the growing budget percentages allocated to
R&D. For example, in 2002, the medical industry spent 11.4 percent of its sales on R&D, higher
than any industry except that for drugs and medicine.1 And in 2003, medical companies increased
the R&D portion of their budgets by an average of eight percent.2 Whether their strategy is to
maintain or gain market leadership, an increasing number of medical device companies are
recognizing that outsourcing product design and development is a critical strategic tool.

Answer true or false to the following statements to find out if your product design and
development process can benefit from outsourced engineering.
1. Internal resources are stretched thin.
2. Medical device development projects often run over budget.
3. Product launches are often delayed, costing the company a significant dollar amount due
to lost sales and extended expenses.
4. My company has not released a market-dominating product in several years.
5. My engineering staff’s expertise is concentrated in a few core industries.
6. Our R&D department has several new ideas, but we cannot develop efficient
manufacturing processes.
7. It is difficult to keep up with the competition in terms of new product development.
If any of the above statements hold true for your company, outsourcing product design and
development may be the solution.

About the Author
Robert R. Andrews is medical division manager for the commercial group at Foster-Miller,
Inc., a QinetiQ company. He has more than 25 years of medical device experience managing
product development and operations. He has 11 issued U.S. medical device patents. He received
an MBA from Bryant College and Bachelor’s and Master’s degrees in plastics engineering from
The University of Lowell. He can be contacted at (781) 684-4639 or randrews@fostermiller.com.

Some interesting tweets about “outsourcing”:

chris_heiler @ldesigngurl I hear ya. I’ve been outsourcing my bookkeeping to a virtual bk in Canada for about the last 10 months. I’ll never go back…

nlitenmebabe China investor finalizes deal on NBA’s Cavaliers (Reuters) : Reuters – A Michigan in.. http://bit.ly/7UWBhp [outsourcing sports??]

ttdotcom Join Matt Makowicz for ‘Everything You Ever Wanted To Know About Outsourcing” webinar on Dec16th, 09 at 10am PST. http://ow.ly/M4wv

pass0614 New blog post: Outsourcing Tips: 5 Profitable Ways To Outsource To Multiply Your Earnings http://bit.ly/7×5ISe

MFM_GlobBusNews UK aerospace outsourcing, http://www.myfeedme.com/article/5833670.html

arcgateinc Trends and Opportunities in the Knowledge Process Outsourcing (KPO) space – http://bit.ly/8U6RvG

Brian_Zimmerman What’s up with outsourcing? Does anyone have this figured out yet?

thecommoncents Why Should You Outsource: http://bit.ly/7EWi1f

starcomsystems Accenture dumps the Tiger: It’s the biggest story in town that consulting and outsourcing giant Accenture has dumpe… http://bit.ly/712vkI

Does this sound ridiculous?! American workers outsourcing their own personal work (and their life)!
Is this the future?

This is quite an interesting article from Time magazine about the quality of college education in the US, and how it impacts the job market. Do you think this has a direct relation to companies that outsource jobs overseas?

by Kristi Oloffson

Employers and career experts see a growing problem in American society — an abundance of college graduates, many burdened with tuition-loan debt, heading into the work world with a degree that doesn’t mean much anymore.

The problem isn’t just a soft job market — it’s an oversupply of graduates. In 1973, a bachelor’s degree was more of a rarity, since just 47% of high school graduates went on to college. By October 2008, that number had risen to nearly 70%. For many Americans today, a trip through college is considered as much of a birthright as a driver’s license.

Marty Nemko, a career and education expert who has taught at U.C. Berkeley’s Graduate School of Education, contends that the overflow in degree holders is the result of many weaker students attending colleges when other options may have served them better. “There is tremendous pressure to push kids through,” he says, adding that as a result, too many students who aren’t skilled become degree holders, promoting a perception among employers that higher education doesn’t work. “That piece of paper no longer means very much, and employers know that,” says Nemko. “Everybody’s got it, so it’s watered down.”

Read more: time.com

Do you think that just because your business is small you can’t outsource? There are ways to send your writing, IT tasks and other needs overseas to add efficiency to your enterprise. By doing some prior planning and following some pointers, you can get the quality help you need.

Starting Out

Here are some pointers for launching your outsourcing operation.

1. First, define your core: Don’t hand over the core functions of your business. Consider outsourcing other operations that are not as strategic.

2. Evaluate a service provider like you would a full-time employee: Ask questions, check references and ask for feedback from other clients who have used the provider’s services.

3. Clearly define the scope and schedule for your project: Be up front about your project requirements so that service providers know about schedules and deliverables.

4. Don’t choose a vendor based solely on price: Discard the highest-priced and lowest-priced bid. You want a balance of good value and quality results.

5. Review portfolios and samples: Consider asking the provider to do a quick mock-up or provide a basic outline of a work plan.

6. Look for specific experience fit: You want a company with specific experience with the type of project that your company is undertaking. This is important when outsourcing complex technical projects such as software development.

7. Tie compensation to clearly defined project milestones: Define a work plan for your outsourced project, with clearly defined milestones.

8. Negotiate ownership of the work up front: Make sure that you are clear about who owns the resulting work product and any important components of that product. Make sure that the service provider understands how you intend to use the deliverables that they are agreeing to provide.

9. Don’t forget about support after the project is complete: Draft a support clause that ensures you’ll get continuing support from the vendor after the project is complete.

10. Get it in writing: Keep a written record of project goals, pay schedules and any changes.

11. Start small: Start with a project that is relatively small and simple in scope to give you a better idea of the provider’s style and capabilities.

12. Move slowly and commit incrementally: Don’t sign a five-year contract before testing performance and the relationship. Move slowly and commit gradually.

13. Get specialized and expert help: Browse a site that provides access to professionals around the world in your business’s field.

Skills to Consider Outsourcing

You may be able to outsource these job functions to make your small business run more smoothly.

14. Public-relations services: Most small businesses cannot afford a full-time public-relations pro.

15. Virtual assistants: Virtual assistants, or independent entrepreneurs, provide administrative, creative or technical support by handling tasks like scheduling and filing.

16. Outsource brokers: These brokers, exchanges and networks can recruit, interview and manage the services your company needs.

17. E-commerce solutions: Hire a provider that can turn your business’s Web site into a cash cow.

18. E-mail marketing: Your contractor can be thousands of miles and seven time zones away, but they’ll market your business like they’re in the same room.

19. Writers: Writing can be done from anywhere.

20. IT Professionals:Consultants are cheaper than hiring someone in-house.

Outsourcing Dos and Don’ts

Keep these tips in mind as your orientate yourself to outsourcing.

21. Carefully evaluate what can really be outsourced: Self-contained tasks or projects are more suited to outsourcing, while team tasks are not.

22. Consider management costs: Don’t end up squandering the savings in training and oversight costs.

23. Be prepared for challenges: Even from across an ocean, personalities can clash, and schedules can take a while to sync.

24. Don’t walk in blind: Get guidance in choosing a vendor and keep knowledgeable tabs on performance.

25. Consider having a staff employee(s) act as a liaison: Consider entrusting an in-house manager to oversee the outsourced help.

26. Watch out for hidden costs: Consider everything from layoff-related expenses and telecommunications costs for remote workers.

27. Know the outsourcing ABCs: Alignment: Is outsourcing the right move for your business? Business case: Have you taken all costs into consideration? Culture: Can you bridge the cultural difference between your company and the outsourcer?

Where to Find Outsourcing Candidates

Here are some sites that include professionals who can fill your small business’s needs.

28. Elance Inc.: You’ll find tons of freelance writers and designers on this site.

29. FreelancerNow.com: You’ll get services quickly on this site.

30. Guru.com: Post individual projects on this site and have professional bid on them.

31. SHARPSourcing.com: SHARPSourcing.com is an Indian HR outsourcing service that provides Web-development and Web-design outsourcing services to companies across the globe.

32. RentACoder: You can literally rent a Web coder from this site.

33. my pajamanation: Powered by an India-based blogger, this site offers insight into outsourcing, from events to related news from around the world.

34. ScriptLance: You can post a project on this site, which lists bids in a neatly organized list.

35. Integra Global Solutions:Outsource to this firm to expand your business.

36. GetAFreelancer.com: This site can help you find freelance programmers, Web designers and copywriters in India or any other country.

37. Kasamba: Find experts in a number of different fields on this site.

38. GoforFreelance.com: This site works for both freelancers and employees.

39. osLance.com: Post open-source projects here.

40. Sunday LLC: According to the company, “Sunday gives busy people the resources of a 24/7 personal assistant, travel agent, project assistant and tech-support pro, available via both telephone and Internet.”

41. oDesk Corp.: Outsource and manage programmers, Web designers and more.

42.Get Friday: A virtual-assistant resource that undertakes any task or business that does not require a physical presence.

43. DoMyStuff.com: This site is as simple as posting a task, selecting an assistant and getting stuff done.

44. Amazon Mechanical Turk: This Amazon.com-powered site offers companies ‘artificial’ artificial intelligence.

45. craigslist inc.: Post a job under “gigs” or any of the industry sections, and you can outsource work anywhere.

46. Workaholics4Hire.com: Find people 24/7 on this site people by “a team of workaholics who have a compulsive need to work at odd hours, drink too much coffee, and love meeting impossible deadlines.”

47. BrickworkINDIA: Get a remote executive assistant operating from an India to do your work through email.

48. iFreelance.com: Post your project for free to receive bids from hundreds of professional service providers.

49. Agents of Value: This Webmaster staffing company specializes in finding full-time programmers, graphic designers, journalists, researchers and link builders to help your business grow.

50. Netgear Solutions: Netgear Solutions is an IT-based solution organization with a strong crew of software professionals and Web professionals.

Tips for Outsourcing to a Personal Virtual Assistant

Virtual assistants can do your grunt work without taking up office space.

51. Minimize the kickoff effort: Set up a single inbox where your tasks will be dropped for quick assigninment.

52. There’s no such thing as too small: Even five-minute tasks can become cumbersome when they add up. Your assistant can get them done by “batching” them in meaningful ways.

53. Set up recurring tasks: You can have your virtual assistant perform tasks like keeping tabs on the blogs and newsletters of your business’s fans and competitors.

54. Empower the assistant to take further action: Clearly lay out the next steps of tasks and projects.
55. Revisit the to-do list: Basically, hold on to important tasks that you should do and give the support and research tasks to the virtual assistant.

Tools for Tasks and Projects

If you want to keep track of exactly what work an employee needs to do and when they must do it, check out these task organizers.

56. Backpack: Backpack is an information-management and to-do list organizer that can help your outsourced talent get the job done.

57. Wiki.com: Wiki.com features project tracking; searchable discussions; shared calendars; Word, Excel, PowerPoint and PDF file support; and 256-Bit SSL encryption.

58. Ta-da Lists: Ta-da Lists is the “Web’s simplest and fastest to-do list maker,” and even works on the iPhone.

59. CellTell: Send voiceNotes from your outsourced help from any of your phones straight to your Backpack page

60. Jott: Jott will act like your own personal assistant by supplying free voice-to-text service.

61. Campfire: Especially great for remote teams, Campfire is like instant messaging optimized for groups.

62. VIP Task Manager: VIP Task Manager lets multiple users manage tasks and access the common database.

63. Task Manager: Track personal and shared tasks, jobs and projects with Task Manager, which lets you quickly view all of the duties so you can prevent missing deadlines.

64. Excel: The Multiple Daily Tasks Excel spreadsheet assigns up to 50 tasks, shifts or clients to up to 20 employees.

65. Employee Task Chaser: Develop the execution abilities of your work team and get things done with this tool.

66. Shift Schedules: This tool lets you assign your people to daily shifts, tasks or locations in 30 minute increments.

67. Employee Project Clock: Employee Project Clock is ideal for companies that are involved in control engineering, manufacturing and automation, as well as tool-and-die shops.

68. OfficeView: This Web application includes a messaging system and software to track consultant information.

69. Personnel Organizer Deluxe: Personnel Organizer Deluxe provides an easy way to gather, organize and manage information about all consultants in your company.

70. VIP Simple To Do List: Tell your consultants what they need to get done when with VIP Simple To Do List.

71. Project Tracker: This extensive database program contains suppliers and purchase and estimation modules.

72. Employee Planner: Plan consultant work, schedules, travel, events, vacations, projects or meetings with this easy-to-use tool.

Web Sites

Check out these Web sites, which feature time sheets and scheduling software for overseas employees.

73. Atlas Business Solutions Inc.: This site features inexpensive downloads for consultant scheduling, HR needs and business plans.

74. InTime Solutions Inc.: InTime Solutions provides software downloads, as well as information and news about the automation sphere.

75. i-Staff: This site provides Web-based employee scheduling software.

76. TimeFox: Web-based time- and project-tracking tools make this site a smart place to go.

77. WorkPlace Systems: This treasure trove of business solutions and services features free downloads for workplace management.

78. Kronos Inc.: Choose from a host of time and scheduling software on this site.

79. Celayix Inc.: Scheduling and attendance solutions are available on this site.

80. WorkBuddy Solutions Pyt. Ltd.: WorkBuddy Solutions is your pal for automated workforce-management solutions.

81. Valiant Solutions Inc.: According to the company’s Web site, “Valiant brings Web-enabled, real-time automation through a centralized database to every phase of your workforce management lifecycle.”

82. AceProject: This site provides project-management tools, Web-based time sheets and free time-sheet software.

83. Personnel Scheduling Software: You can choose from a plethora of scheduling software on this site.

84. Michael Greer’s Project Management Links: Michael has taken it upon himself to post dozens of project- management tools on his site.

85. Advanced Time Reports: This whole Web site devoted to time report software is a must-see.

86. Microsoft Office Project 2007: This site gives you the lowdown on Microsoft Office Project 2007 software.

87. Basecamp: Set up headquarters at Basecamp, which lets you log hours and keep track of projects.

88. activeCollab: This site’s motto is “Eliminate Stress. Manage Success.”

Information

These sites offer information about the Indian market and can help you navigate the outsourcing realm.

89. U.S. Department of State Background Note: The Bureau of South Asian Affairs provides information on India’s geography, people, economy and relations with the U.S.

90. The Outsourcing Weblog: Stay on the up-and-up on outsourcing news from around the globe.

91. Doing Business in India: Find information here on investing in India, the country’s economic policy, government and more.

92. Doing Business in India: A Cultural Perspective: Read up on cultural differences between the U.S. and India.

93. Outsourcing to India: Get your legal, logistical and practical questions about doing business in India answered.

94. Country Information About India: Read through reports, surveys, papers, publications, news and more information about India.

95. A Buyer’s Guide to Offshore Outsourcing: Browse a worldwide comparison of prices, risks and other factors you should consider before outsourcing overseas.

96. Center for Global Outsourcing: For $85 per year, you’ll get resources that underscore the benefits of global outsourcing to businesses.

97. Current Realities in Global IT initiatives: This research, conducted by Zinnov Management Consulting, looks at the issues associated with offshore IT initiatives.

98. Outsourcing FAQ: Get all of your outsourcing questions at this Everest Partners LP-sponsored site.

99. Outsourcing Center: Read white papers, articles and research about outsourcing.

100. Offshore Outsourcing: Making It Work: InformIT, a Pearson Education Informant subsidiary, provides you with eight points to consider before moving business operations offshore.

By keeping costs low and intensely evaluating the potential and the plan, you can outsource to help your small business thrive. In no time, your company will be competing with the delivery capabilities of larger organizations, but you’ll still be your own boss.

Source: HR World

If you are involved in product design, you need to understand how a product impacts on the environment. To develop truly sustainable products, you must be able to assess which design solution is environmentally preferable.

10 Guidelines for Ecodesign

1. Do not design products, but life cycles
2. Natural materials are not always better
3. Energy consumption: often underestimated
4. Increase product life time
5. Do not design products, but services
6. Use a minimum of material
7. Use recycled materials
8. Make your product recyclable
9. Ask stupid questions
10. Become an O2 member!

To read the full article, visit Product Ecology Consultants.

Outsourcing has become a “charged’ word. It is an important concept to understand because of its business applications (both for corporations and for small businesses) and because of its political implications. The following is intended as a primer on the main topics related to outsourcing. We have included a (hopefully) balanced summary of the “offshoring debate” without a definitive conclusion as we do not intend to take a political stance on this issue.

Definition of Outsourcing
Outsourcing is the act of obtaining services from an external firm.

Business Process Outsourcing
In the corporate environment, the term “outsourcing” often refers to a particular type of outsourcing, business process outsourcing (BPO). BPO occurs when an organization turns over the management of a particular business process (such as accounting or payroll) to a third party that specializes in that process. The underlying theory is that the BPO firm can complete the process more efficiently, leaving the original firm free to concentrate on its core competency.

Roots of Outsourcing
The concept of outsourcing was first made popular by Ross Perot when we founded Electronic Data Systems (EDS) in 1962. EDS would say to a potential client, “You are good at designing and manufacturing widgets, but we are skilled with managing information technology. We will sell you the IT services that you require, and you can pay us periodically with a minimum commitment of two years.” Today, EDS is a multi-billion dollar company with over 70,000 employees and is only one of many global BPO firms.

Offshore Outsourcing
Offshore outsourcing, or “offshoring”, refers to outsourcing to firms in foreign countries, often to take advantage of labor arbitrage. In the past 10 years, business process outsourcing contracts have increasingly been given to firms in developing countries. Typically educated workers in developing countries, such as India or China, work for a much lower wage than do similarly educated workers in developed countries, such as Japan. Savings from the lower wage rate must exceed the increased costs of management and risk associated with offshore outsourcing for it to be economically viable.

The Politics of “Offshoring”
Offshore outsourcing has recently become a hotly-debated issue in the national media. When the American economy began to pull out of recession in 2001, unemployment did not decrease as expected. Offshore outsourcing was blamed as a contributing factor to this “jobless recovery”. Information Technology was a particularly soft sector, and many American programmers lost their jobs to lower-paid foreign counterparts. Many economists however have recently conjectured that the higher-than-expected unemployment numbers were not the result of offshore outsourcing, and that offshore outsourcing has actually had a positive impact on the American economy. Undoubtedly the debate will continue into the presidential campaign.

Source: The Outsourcing Times

Just about every business uses promotional products of some kind. Everything from pens, coffee mugs, caps and calendars is used to print a business logo and contact info on. You can get a little experience by working for an established promotional product design company or make the best money and start your own with a few of these tips.

Step 1
Join the Advertising Specialty Institute (ASI), since it’s the only way you can order items for customers directly from the vendors. You must be a member. It’s a high fee, more than $1,000 a year. However, if you are serious about making good money, it’s the only way to go.

Step 2
Know the benefits. As an ASI member, you will receive 50 percent off everything you order from ad specialty companies. If you work under some else’s membership, you split the 50 percent profit.

Step 3
Get a good supply of samples and catalogues from the ASI vendors. They have plenty of free samples available for new and existing members.

Step 4
Order a nice give-away for yourself. When you call on customers, you want to make a good, creative first impression. The owners and salespeople in the promotional products industry are typically the designer of the clients’ promotions. Larger ad specialty shops may keep an artist/designer on staff, but you will do all your own designs.

Step 5
Hire a professional artist to work on special jobs. Many commercial artists work freelance. Use her to work up spec samples when you’ve landed a big appointment.

Step 6
Take a year and learn the business while working for a larger ad specialty firm before you start your own. Find one that does not require you to sign a non-compete contract, so that when you leave, you can get right to work on your own company.

by Megan Dorn

As Director of Design for Cincinnati-based product development firm Kaleidoscope, Demetrius Romanos leads a team of multidisciplinary specialists in design, strategy and research. Over the past seven years his team has worked with clients that include Motorola, Procter & Gamble, International Trucks, Staples, Evenflo and Ethicon Endo-surgery.

Demetrius recently answered some questions for us on the process of working with a product development firm and on today’s consumer market.

Q: What kinds of details should your customers keep in mind when conceptualizing their products?

A: Different yet similar to the real estate world’s mantra of “location, location, location,” with a product it’s all about positioning, positioning, positioning. Even more basic than that is just being honest enough with yourself to look at your product idea and ask a very blunt “so what?” What’s so great about my product, and why would anyone spend hard earned money for it?

Q: Do you ever have to turn people down and say, “This will never work?”

A: Well, not so much turn down, but try to open their eyes a bit. As consultants we’d be doing our clients a disservice if we didn’t offer solutions to their problems, since that’s what we’re paid to do. A lot of time it’s getting back to the core question of what is their product trying to solve, which you could likely accomplish several different ways.

Q: What are today’s consumers looking for as opposed to consumers 10-15 years ago? How are they different and how should your customers’ product ideas adapt to their changing needs?

A: The biggest difference we’ve seen is that consumers are seeking to make a connection with their products. This makes designing products far more challenging because a gadget alone that does what it says is not good enough. Whether it’s an MP3 player or a toothbrush, a product now also needs a soul.

Q: What effect does a downturning economy have on consumers, and therefore also have on you as a product development firm and the number/type of customers you get?

A: With consumers it comes down to choices. If there is any money left after housing, energy and food costs are covered, what will people spend their money on? That’s a big part of why the connection with a product becomes so critical. As for us, the number of clients can remain the same but will vary in the type of work. The focus shifts to more recession-proof industries like consumer goods and medical equipment.

Q: Is there anything at all that you are doing differently to compensate for or adapt to the current economic situation, or is it business as usual?

A: It’s not quite business as usual for many companies right now so you have to be really focused on what your goals are as an organization. We’ll tend to focus on two areas to grow our business: 1) Recession-proof industries like medical equipment and consumer goods, and 2) development of our own intellectual properties.

Q: At what point in the process do your customers come to you? Do they already have a prototype, or are they just sitting on an idea?

A: Our clients span the range from one side, where they don’t even know what it is they need yet, all the way to other clients having an item that they may just need help getting manufactured. We’ll engage at any point in the process, which is why flexibility and adaptability are so critical in consulting.

Q: Once your customers come to you, where does the process go from there?

A: This depends on where we’re engaged, but the primary point of entry is that a client needs to enter a market with a product. We’ll do research and strategy to define the consumer needs, positioning and business opportunities, with the outcome driving design concepts. We’ll then start broad then focus in on the design and engineer of those concepts, working our way down to the direction for manufacturing. At that point we may even assist in selecting the appropriate vendors and may serve as a liaison during the manufacturing process to maintain design integrity.
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Outsourcing — the practice of using outside firms to handle work normally performed within a company — is a familiar concept to many entrepreneurs. Small companies routinely outsource their payroll processing, accounting, distribution, and many other important functions — often because they have no other choice. Many large companies turn to outsourcing to cut costs. In response, entire industries have evolved to serve companies’ outsourcing needs.

But not many businesses thoroughly understand the benefits of outsourcing. It’s true that outsourcing can save money, but that’s not the only (or even the most important) reason to do it. As many firms discovered during the outsourcing “mania” of the early 1990s, outsourcing too much can be an even bigger mistake than not outsourcing any work at all. The flat economy caused many companies into huge layoffs and subsequently outsourced functions that were better kept in-house. Wise outsourcing, however, can provide a number of long-term benefits:

Control capital costs. Cost-cutting may not be the only reason to outsource, but it’s certainly a major factor. Outsourcing converts fixed costs into variable costs, releases capital for investment elsewhere in your business, and allows you to avoid large expenditures in the early stages of your business. Outsourcing can also make your firm more attractive to investors, since you’re able to pump more capital directly into revenue-producing activities.

Increase efficiency. Companies that do everything themselves have much higher research, development, marketing, and distribution expenses, all of which must be passed on to customers. An outside provider’s cost structure and economy of scale can give your firm an important competitive advantage.

Reduce labor costs. Hiring and training staff for short-term or peripheral projects can be very expensive, and temporary employees don’t always live up to your expectations. Outsourcing lets you focus your human resources where you need them most.

Start new projects quickly. A good outsourcing firm has the resources to start a project right away. Handling the same project in-house might involve taking weeks or months to hire the right people, train them, and provide the support they need. And if a project requires major capital investments (such as building a series of distribution centers), the startup process can be even more difficult.

Focus on your core business. Every business has limited resources, and every manager has limited time and attention. Outsourcing can help your business to shift its focus from peripheral activities toward work that serves the customer, and it can help managers set their priorities more clearly.

Level the playing field. Most small firms simply can’t afford to match the in-house support services that larger companies maintain. Outsourcing can help small firms act “big” by giving them access to the same economies of scale, efficiency, and expertise that large companies enjoy.

Reduce risk. Every business investment carries a certain amount of risk. Markets, competition, government regulations, financial conditions, and technologies all change very quickly. Outsourcing providers assume and manage this risk for you, and they generally are much better at deciding how to avoid risk in their areas of expertise.

Source: allbusiness.com