4 Reasons Why Component Design Outsourcing is Affordable
Is it here yet? Have we finally ended the dreaded housing market down cycle? Most indicators point to yes. Most analysts loyal to the real estate market say yes. Most analysts loyal to investors caution the future. No one has a crystal ball. So as new construction begins to increase you must ask yourself, Is it a fluke or a trend? As a successful component manufacturer, you have survived the last six to seven years by making carefully evaluated, sometimes tough decisions. Do not let your guard down yet! You need to continue your current business process which probably borrowed from the ‘hope for the best, plan for the worst’ model. One or more of the following options would probably be the path you choose:
- Rehire seasoned professionals and re-train
- Start fresh with new-to–the-industry employees
- Employ a recruiter
- Look to outsourcing
- Stay with current staffing and hope you can keep up
So many seasoned designers were forced to leave the job market years ago. There have been several versions of software and new building codes implemented since many of them designed a truss. It would not take too long, I would imagine, getting these employees back into the swing of things. I just wonder how willing some might be to re-enter a field that ultimately abandoned them in the past. They might tread slowly, a little night and weekend work to re-familiarize them to the software and get up to speed with all that has changed since they left.
A new employee costs between 125% and 140% of their annual salary to hire and outfit with benefits. Then there are the costs associated with training the employee. Research concludes that is around $1200 in real costs, plus the cost of managers and key coworkers. A new employee is functioning around 25% of potential productivity for the first month or so. Weeks five through twelve show a 50% productivity level. Weeks thirteen through twenty usually bring the employee to a 75% productivity rate. The break-even point is around five months down the road.
A recruiter in the component industry today is like an ice cream salesman in the desert. If they have anyone available, it will cost top dollar. If the market is about to take off again, then what is to say this employee might not use your company as a stepping stone to another, more lucrative deal in a short time frame? Headhunting is a little too unscrupulous of a business tactic for some employers and may not even be a viable option.
If you have traveled this far down the list, you are left with only a few options. You can stay at your current staffing, roll with the punches and hope you can keep up. If the market does start to improve then hopefully you don’t burn out your current staff to the point they start to look to some of the other companies that are starting up or expanding, offering good incentives for qualified employees. Or you could look into outsourcing.
While the above is theoretical, it is certainly plausible. Why spend more than a few minutes even contemplating all of the time, money and effort involved in any of those solutions. Outsourcing has none of those costs associated in it. Depending on your costing model, it could have zero cost. There is a real and tangible cost associated with paying an employee while production work was standing by to design a quote, isn’t there? That is just the cost of doing business. If you were to outsource quotes, your design staff could spend all of its time on sold jobs. This alone could increase your production capacity without changing one design practice. There are the same costs incurred when designing a job that has been sold. What if you outsourced the design and you passed that cost right on to the customer?
Here are 4 reasons to consider this viable option:
- Outsourcing has no overtime
- Outsourcing works nights and weekends
- Outsourcing doesn’t bog down your design department in some huge quote or design while the shop is sitting idle waiting for more production work
- Outsourcing is as big or small as you want it to be
A quality, vetted outsourcing company is where the truss designers who did not want to leave the industry, but had to leave their former workplace have gone to thrive. They are working on the latest software in the current codes helping companies like yours through this time of uncertainty in the construction market.
One final thought on outsourcing. Some may feel uncertain about it. It is new to them, they don’t want to relinquish control of managing the design staff, they wonder if the company will truly perform and meet expectations? Plato said “Necessity is the mother of invention.” The invention already exists and it is here to stay. There was a day when people carried beepers and quarters. I have not seen a payphone in years. And I am not going to start looking for one either!
Jim Turner – Design Manager
Gould Design, Inc.