Is there any shame in component outsourcing?

In early 2019, Adobe revealed that it had considered manufacturing its own custom-processors. In the same vein as Samsung, Google, and Amazon, who all manufacture their own chips.

Although producing your own technology can provide more security and control, there are also clear benefits to outsourcing.

It’s widely known that Apple’s famous Super Retina OLED Display is made by Samsung. But did you know that Samsung is also responsible for producing the iPhone’s battery and capacitors? There must be advantages to outsourcing if one of the biggest names in technology isn't ashamed to use it.

Statista found that, in 2018, the global outsourcing market was worth $85.6 billion. Despite the widespread use of outsourcing in the industrial sector, there are still prevalent misconceptions about the practice. For instance, outsourcing 'leads to thousands of jobs being sent overseas to benefit from cheaper labour costs'.

What are the benefits of companies outsourcing?

1. Outsourcing is good for business

Outsourcing can be beneficial at a range of points during the production process. A company may choose to outsource manufacturing, assembly, design, maintenance, or even software development, like WhatsApp. When the instant messaging app launched in 2012, it outsourced to developers from Russia. The project was clearly a success, as two years later, Facebook bought the company for $19 million.

Contracting out services or having your parts manufactured elsewhere can be especially helpful for growing companies. This is as they frequently have needs that are subject to quick change. Additionally, this may mean that smaller enterprises do not need to make any initial investments in costly equipment. Therefore, it is advantageous for them.

2. Stay focused

In most cases, being a "jack of all trades" indicates that you are not a "master of any trade." Taking on work that is outside your expertise can be an interruption to the company's purpose. Therefore, distracting from the central company mission. Focusing the business within your specific area of expertise means you have more resources available for what matters.

For instance, automotive brands usually will focus on the vehicle’s design and assembly. Meanwhile, they will outsource parts in which they lack expertise. Continental is a leading global automotive supplier. They are responsible for manufacturing the brake systems, tyres, and roller bearings for a large proportion of the world's car industry.

3. Lower Costs

Another advantage of outsourcing is that it enables a company to reduce the amount of money it spends on overheads. It can mean for fewer purchases of machinery, reduce maintenance costs, and lower utility bills. Getting rid of machinery that is no longer needed also gives you the opportunity to free up space in your facility. Alternately, you may use this room to concentrate on expanding the scope of the company.

Working closely with another company can also give you the opportunity to learn from and grow from its knowledge. Manufacturers can share certain processes and ways of working to ensure an even smoother partnership. EU Automation works closely with its customers to ensure that it can supply spare automation parts in record time. Hence, saving another company from having to complete this complex and time-consuming task on its own.

Although Adobe may be keen to manufacture its own processors, it doesn’t put outsourcing to shame. The real skill is knowing which aspects of the production process should be outsourced and when to do so. The financial benefits for your company could be substantial.