Insourcing is Critical to the success of a business: Hence Proved?

It still remains a mystery as to how a company renowned for meticulous designs made seemingly basic software mistakes leading to a pair of deadly crashes. Longtime Boeing engineers say the effort was complicated by a push to outsource work to lower paid contractors, according to the media reports.

The Max software was plagued by issues that could keep the planes grounded months longer after the US regulators this week yet again revealed a new flaw. This was developed at the time when Boeing was laying off experienced engineers & pressing suppliers to cut costs.

Increasingly Boeing has been relying on temporary workers making as little as $9 an hour to develop & test software often from countries lacking a deep background in aerospace.

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airplane flying in the air and perfect example of insourcing and outsourcing

As per Media Reports, In offices across the Boeing HO in Seattle, recent college graduates employed Indian software developer HCL Technologies Ltd occupied several rows of desks. The coders of HCL were typically designing to specifications set by Boeing and it’s a bit controversial with regards to efficiency as compared to Boeing engineers just writing the code. It took many rounds back & forth because the code was not done correctly.

Boeing has decades of experience working with suppliers & partners around the world. Boeing’s primary focus is always ensuring the products & service are safe to the highest standards with quality & compliance to all applicable guidelines.

Recent Test simulated by the FAA suggests the software issues on Boeing’s best selling model run deeper. The Company’s shares fell this week after the regulator found a further problem with a computer chip that experienced lag in emergency response when it was overwhelmed with data.

Outsourcing of a business is like an internal combustion Engine which has lived its life whereas Insourcing is like the new Electric vehicles which has just started its life and existence and will go a long way forward.

But is it paying the right kind of dividend to Boeing? The software glitch which Boeing 737 Max Planes have been facing off late is creating a negative marketing for the Boeing corporation along with its shares prices dipping to an all time low.

Insourcing is a business practice in which work that would otherwise have been contracted out is performed in house. Insourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced.

The reasons to in-source the businesses

  • Business Agility
  • Transformation needs strong integration with the business
  • Knowledge is now available & increasingly democratized
  • Cyber Security threats & the promise of digital
  • Providing platform to nurture talent
  • Maintain & protect your IPR

 

 

In case of Boeing here outsourcing of the software part proved to be a biggest blunder and this could be proved by the following aspects

  • Outsourcing to third parties like HCL & Cyent who have handled software projects in the past but have very limited experience & exposure to aviation & aerospace technologies is something which had to be considered right from the start.
  • Boeing management was of the opinion that they did not need senior engineers as their products are quite mature and most of its senior engineers were laid off owing to aspects related to cost cutting.
  • Basically turning on the large portions of work to suppliers who basically follow the design blueprints would be less functional than an in house engineer who basically has designed the system from scratch & has the total functionality in his DNA.
  • The Boeing rival also relies in part on offshore engineers. In addition to supporting sales, the plane-makers say global design teams add efficiency as they work around the clock. But outsourcing has long been a sore point for some Boeing engineers, who, in addition to fearing job losses say it has led to communications issues and mistakes.
  • S.-based avionics companies in particular moved aggressively, shifting more than 30% of their software engineering offshore versus 10% for European-based firms in recent years.

Owing to all these failures in understanding the process repercussions, Boeing basically has got the math wrong and this has led to serious miscalculations with respect to safety & security of their flagship 737 max airliners. Boeing 737 was considered the most successful short to medium haul airliner in the world with record sales of 15,161 aircrafts worldwide as of May 2019. But the software glitch in its 737 Max aircrafts is something which cost Boeing millions of dollars of losses with most countries grounding the aircraft after two fatal crashes to Lion Air & Ethiopian Airlines on Oct 2018 & March 2019 respectively.

Boeing should seriously consider insourcing its software development system by training its in-house engineers who basically have lived with the system and the design specs and have a better understanding of the integration of both at large By doing this some of the positive aspects that could be gained are

  • Better communication & integration among team members ensuring a proper bridge between the design specs & requirement gathering exercise to ensure proper flow of communication
  • More in-house control of processes & project ensuring proper & complete control of costs & escalations which could be controlled intrinsically by the employees.
  • Using the existing engineers could make the job cheaper than outsourcing as they have the required resources, skills & equipment to do the same.
  • Insourcing can have customer satisfaction and reputation management benefits. You may find, for example, that consumers view your company more favorably if you employ U.S. workers to provide services or goods.
  • Also insourcing could ensure your employees are satisfied and have the security needed at the workplace which will boost the productivity of the business at large.

The insourcing industry is slowly becoming the integral part of the IT and tech industry with organizations realizing the importance of in-house capabilities development and creating intellectual property in the process. We need to understand that we are in the golden age of technological advancement and progress. There is breakthroughs everyday and these happen in the organizations the workforce of which are motivated enough to take the responsibilities in their own hands and consequentially lead to creation of value and intellectual property. We are already seeing a lot of traction with a huge number of organizations adopting insourcing and we are certain that we will see the growth of insourcing in the coming year at a faster pace.  Insourcing enables the people of organization to handle its business better as increased operations budgets are a major challenge in any business today. It provides a highly transparent business model with a direct return on the investment (ROI) of the clients with an impeccable “internal rate of return” (IRR).

incsourcing vs outsourcing
insourcing vs outsourcing insourcing is better than outsourcing

Hence owing to all these aspects, Boeing should start insourcing its Software development so as to ensure better control of resources(Both man & machine) and also improves the productivity y of its processes to a great extent by ensuring proper channel of communication of the system at large. And when it does we are sure to see Boeing becoming “the queen of the skies again”

Hence it is proved that, “Insourcing is Critical to the success of the Business”.

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Story Conceived & written by

Sumit Peer, Founder Insourcing Multiplier

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