Captives vs Third Party Vendors AEC Industry - Making An Intelligent Choice
The AEC Business Trends Survey 2007 conducted by Zweig White identifies the four main challenges facing leading AEC firms today: lack of qualified workers, overall performance of the US economy, providing necessary training and profitability. Smooth, dependable and customer-oriented operations is a key part of the financial equation, this is where AEC firms need to make a choice: setting up a shared services set-up/captive or involve a third-party vendor, which is more lucrative.
The argument proffered in favor of the captives is that if the volume of architectural design, CAD services, engineering design and documentation to be transferred to India, Philippines or any other potential AEC outsourcing hub support a viable business venture why give the business opportunity to some third party. There is also a parallel thinking afloat that captives, better called Shared Services Organizations (SSO), are actually not as efficient, cost or otherwise, as third party providers who are pure players.
Outsourcing models adopted by AEC firms are based on ease of operations at low costs. The rates offered by established well-staffed and equipped Architecture Engineering Outsourcing firms are in many cases 10-15% lower than the price at which the captives perform the task. This has prompted the parent organizations of the captives to seek competitive quotations from third-party vendors. Experience of SSOs in the US has been uncertain. ENR Top 30 AEC firm in the USA, for instance, set up a huge Design Support Center to centrally provide complete CAD documentation and drafting but sold off its facility after some years to a leading third party CAD Outsourcing firm HQ in Chicago and design operations in New Delhi, India, and started outsourcing all its design process needs from the third party supplier. Some of the reasons why the growth of SSO is stymied are governance issues, technology and best practices, investment, human resources, and transfer pricing.
The shift to third party vendors is due to considerable efforts needed to establish captives. The third-party vendor model for architectural and engineering outsourcing is ideal to hand-over repetitive tasks (like CAD drafting services, architectural documentation services, and, engineering design services) to vendors in the global AEC outsourcing domain who are experts in your non-core functions. Outsourcing to a third-party vendor is all about getting superior quality service at lower cost and minimum involvement in a company’s non-core but essential operations.
India has an edge over other outsourcing hubs. Reasons why AEC firms are opting for the third-party vendor model, especially in India, are due to recognized higher education system, technological edge, infrastructure with global standards, English as an advantage, India’s success as a BPO market. Satellier, based in Noida and Kolkata, in India, is a good example of a third-party vendor which caters to top 15 of the 30 leading AEC firms in the world providing innovative, end-to-end design support services for the architecture, engineering and construction industries.
The third-party vendor model is definitely where the market is moving. With the advantages of being able to delegate non-core functions and concentrate on value-addition AEC firms worldwide are opting for third-party vendor specializing in architectural and engineering design, drafting, CAD and Building Information Modeling services that suit their needs. Third-party outsourcing will deliver benefits to the company in the areas of focus, process optimization, and streamlined information processing and most of all cost savings. Captives have several challenges to face and only those who are able to source and sustain a minimum workforce of 300 professionals will be able to successfully run their offshore operations. AEC design services being a specialized highly technical knowledge service, AEC firms must carefully evaluate which model to adopt based on pros and cons of each.
Article Source: http://EzineArticles.com/
The AEC Business Trends Survey 2007 conducted by Zweig White identifies the four main challenges facing leading AEC firms today: lack of qualified workers, overall performance of the US economy, providing necessary training and profitability. Smooth, dependable and customer-oriented operations is a key part of the financial equation, this is where AEC firms need to make a choice: setting up a shared services set-up/captive or involve a third-party vendor, which is more lucrative.
The argument proffered in favor of the captives is that if the volume of architectural design, CAD services, engineering design and documentation to be transferred to India, Philippines or any other potential AEC outsourcing hub support a viable business venture why give the business opportunity to some third party. There is also a parallel thinking afloat that captives, better called Shared Services Organizations (SSO), are actually not as efficient, cost or otherwise, as third party providers who are pure players.
Outsourcing models adopted by AEC firms are based on ease of operations at low costs. The rates offered by established well-staffed and equipped Architecture Engineering Outsourcing firms are in many cases 10-15% lower than the price at which the captives perform the task. This has prompted the parent organizations of the captives to seek competitive quotations from third-party vendors. Experience of SSOs in the US has been uncertain. ENR Top 30 AEC firm in the USA, for instance, set up a huge Design Support Center to centrally provide complete CAD documentation and drafting but sold off its facility after some years to a leading third party CAD Outsourcing firm HQ in Chicago and design operations in New Delhi, India, and started outsourcing all its design process needs from the third party supplier. Some of the reasons why the growth of SSO is stymied are governance issues, technology and best practices, investment, human resources, and transfer pricing.
The shift to third party vendors is due to considerable efforts needed to establish captives. The third-party vendor model for architectural and engineering outsourcing is ideal to hand-over repetitive tasks (like CAD drafting services, architectural documentation services, and, engineering design services) to vendors in the global AEC outsourcing domain who are experts in your non-core functions. Outsourcing to a third-party vendor is all about getting superior quality service at lower cost and minimum involvement in a company’s non-core but essential operations.
India has an edge over other outsourcing hubs. Reasons why AEC firms are opting for the third-party vendor model, especially in India, are due to recognized higher education system, technological edge, infrastructure with global standards, English as an advantage, India’s success as a BPO market. Satellier, based in Noida and Kolkata, in India, is a good example of a third-party vendor which caters to top 15 of the 30 leading AEC firms in the world providing innovative, end-to-end design support services for the architecture, engineering and construction industries.
The third-party vendor model is definitely where the market is moving. With the advantages of being able to delegate non-core functions and concentrate on value-addition AEC firms worldwide are opting for third-party vendor specializing in architectural and engineering design, drafting, CAD and Building Information Modeling services that suit their needs. Third-party outsourcing will deliver benefits to the company in the areas of focus, process optimization, and streamlined information processing and most of all cost savings. Captives have several challenges to face and only those who are able to source and sustain a minimum workforce of 300 professionals will be able to successfully run their offshore operations. AEC design services being a specialized highly technical knowledge service, AEC firms must carefully evaluate which model to adopt based on pros and cons of each.
Article Source: http://EzineArticles.com/
Labels: back office, chat support, data entry, email support, IT outsourcing, outsource, outsourcing, web support
posted by Sharad Saxena @ 11:57 PM
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