In conclusion

For executives under pressure to drive sustainable profitability,
the question isn’t whether to optimize core engineering
– it’s how.

Engineering Factories offer an industrialized solution, ensuring ongoing cost control, quality, and innovation, without the risks of in-house reinvention.

Whilst some critical activities must always stay in house, we estimate that 80-90% could be safely outsourced. Most of these are highly inefficient, thanks to pile ups of legacy systems, and so can be done better elsewhere, with no risk to competitiveness.

Outsourcing legacy product management and standard business processes can reduce costs, whilst freeing up your talented engineers to work on the future of the business, instead of managing the past. In fact, in our survey, many companies acknowledged that core engineering is too costly, and demands too much time, distracting from more innovative business activities (see Chart 4).

As companies do so, they would do well to consider moving beyond the traditional approach of outsourcing a defined work package to a dedicated team. A better strategy is to harness newer outsourcing models to deliver ongoing innovation and cost control – both for products, and the processes and technologies used to create them. Doing so allows businesses to grab the cost benefits of outsourcing, whilst staying at the cutting edge of innovation and production technologies.

The success of the new wave of innovators in EVs and other engineering domains is significantly due to technology-led production efficiencies that long-established engineering companies did not think possible. Much of this is because these new companies had the advantage of starting from scratch - designing factories from the ground up around new technologies and cross-functional collaboration to achieve both high efficiencies and an innovative engineering culture.

Years of trying have shown that most established engineering companies cannot deliver this sort of transformational core engineering innovation in house. The legacy and cultural barriers are too high. But they can outsource this transformation to factories that can.

Authors

Deepak Gupta
Senior Director of Global Core Engineering, Capgemini Engineering

Idriss Elasri
Chief Core Engineering Officer, Capgemini Engineering

Idriss Elasri has over 25 years of experience in industry and services, driving transformative growth and innovation across Europe and Africa. As Chief Core Engineering Officer, Idriss oversees 24,500 engineers and scientists across 20 countries, leading initiatives in Product & Systems Engineering, Manufacturing, and Operations.

Deepak Gupta is a strategic leader with 18+ years of global experience delivering growth and transformation across energy, automotive, space & defence, and manufacturing. As Senior Director of Global Core Engineering, he drives business success while leveraging his industry expertise with a unique ability to bridge India-France business cultures.

References

1 - Why Are Chinese Electric Cars So Cheap?
https://ibexpub.media/why-are-chinese-electric-cars-so-cheap/

2 - The Recent Large Reduction in Space Launch Cost https://ntrs.nasa.gov/citations/20200001093

3 - Engineering and R&D trends
https://www.capgemini.com/insights/research-library/engineering-trends/

4 - Once dominant, Germany is now desperate
https://www.economist.com/europe/2024/11/20/once-dominant-germany-is-now-desperate