Trusted Thinking Partnership between OEMs and ESPs (Engineering Service Partners)
Blog: NASSCOM Official Blog
Trusted Thinking Partnership between OEMs and ESPs (Engineering Service Partners)
Author: Dush Reddy, Global Business Head, QuEST Global
The first half-year has been extremely uncertain with the COVID-19 virus breakout impacting the global economy and causing large scale disruptions. Industries with heavy engineering dependence have been hit at large because of travel bans and lockdowns worldwide. Results are evident – worried businesses, volatile stock prices, and an uncertain future.
Customers across verticals are facing common challenges of supply chain interruptions while also managing remote engineering teams. Other challenges include reducing costs, becoming lean and agile while continuing to invest in current and new programs that are important to succeed in the changing business landscape. As a result, the needs of customers are dramatically shifting.
So, what are the evolving needs of customers?
In the present context, the key focus of OEMs is to become lean and agile by not only reducing costs but also shifting from a fixed cost to variable cost model. This shift enables workforce/cost flexibility while not losing the capability to deliver on current and future projects. Almost all OEMs are currently faced with a similar requirement, and it is a massive transformation to manage.
While managing cost is the top priority for business sustainability, customers also have to ensure that they fulfil engineering commitments and business obligations as per the current demands. Despite their necessity to fulfil these engineering commitments, they are faced with the roadblocks of internal hiring freezes and planned headcount reductions. Even when cost optimization is important, they have to explore ways to invest in innovation and exponential technologies.
The role of ESPs in partnering with customers
To enable customers to encounter their challenges, ESPs must reform their strategies to be on par with their customers’ changing needs. These challenges could vary from issues of cost reductions, fragmented and underperforming supply base, large pool of tactical suppliers (contractors), or a lack of strategic partnering mind-set. In such a scenario, a strategic ESP works with the customer to co-create a joint strategy for solving similar challenges. Such collaborative models can include engineering realignment, consolidation of suppliers, and best cost country strategies. Scope consolidation is also critical for end-to-end ownership and moving away from an ineffective piecemeal approach, which is also high-drag on the customer.
Such partnerships can result in more optimized engineering offloads (less staffing, more work-packages, co-developed solutions, co-investing, technology adoption), enhanced operational efficiencies, increased market competitiveness, enhanced delivery throughput, and much more.
The Strategic Partnership driving innovations
This pandemic has paved the way for ESPs to play a more vital role with joint plans for working towards a shared vision. The future strategy requires an integrated, holistic approach to maximize savings and optimize value to build stronger strategic relationships. Both the customer and ESPs are required to provide strong sponsorship in order to ensure the necessary change management. This will ensure that their plans are implemented in a seamless, impactful way. It also requires establishing a dedicated partnership team comprising of key people from both ESP and the customer.
This kind of strategic partnership will not only reduce cost but free-up bandwidth across the customer’s organization. Today, customers are looking for cutting-edge transformations in the form of shifting from staffing to managed services, from multi-vendors to few preferred partners (supplier consolidation), accelerating innovation through technology adoption and engineering partners who take ownership of more work-scope (core/non-core realignment) – this is the new reality.
As the world is quickly transforming, ESPs have a crucial role in partnering with customers to advance society. Customers are looking for partners with leading-edge transformational ideas, solutions and not just engineering resources support. They are also looking for ways to leverage ideas and commercial innovation from other industries that can help solve their challenges. The opportunities are in abundance and I am confident that ESPs will get a larger share of the pie in this changing world. The key is to become the Trusted Thinking Partner to your customers.
About the Author
Dush Reddy, Global Business Head, QuEST Global
Dush has more than 20 years of experience in building and scaling engineering services partnerships with Fortune 100 companies. He specializes in scaling partnerships, building best-in-class technology hubs, and providing progressive engineering value to customers. As a Global Business Unit Head, Dush drives company’s business growth by building highly efficient customer centric teams. He spearheads engagements with customers, and has been leading the efforts to nurture and scale them to establish delivery centers across US, Europe, and Asia. Developing customer-centric Product Lifecycle solutions and building long-term, Trusted Thinking Partnerships are his core strengths. Over the years, Dush has sharpened his expertise in integrating high-technology local engineering companies with the global best-cost engineering teams to deliver a comprehensive, unique Local-Global solution that addresses the innovation requirements of customers in various industries.
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