Engineering Services in Aerospace and Defense: Meeting the Sourcing Challenge

What are the main drivers that make companies decide to buy engineering services from external suppliers? In which functional areas are these services being used most heavily? What are A&D companies’ goals, challenges and priorities in using them? And what does experience suggest are the key success factors when buying and using such services?

To answer these questions and more, Accenture commissioned an in-depth qualitative study among senior executives involved in engineering sourcing decisions in 31 leading A&D companies worldwide. We interviewed each of these key decision-makers about their aims, expectations, challenges and practices in this mission-critical area. This paper presents the key findings of this study, supported by Accenture’s analysis of the resulting implications and opportunities.

The findings of this study raise profound implications for A&D companies worldwide. Clearly, external engineering services will continue to play an increasingly important role in the industry. Yet companies are quite wisely committed to keeping much of their core engineering expertise in-house. Our research and client conversations confirm that companies have four overarching expectations and priorities in their sourcing of engineering skills, capabilities and services:

• Quality and reliability of sourcing;
• Competitive pricing;
• Keeping core competencies in-house; and
• Accessing deep industry expertise.

In using external engineering services to pursue these priorities, companies need to address four potential areas of concern:

• Confidentiality;
• Impact on quality;
• Flexibility and availability of skills; and
• Loss of in-house competency.
  
  

To overcome these barriers, and align their use of engineering services with their priorities, our survey respondents recognize that they need to take a number of transformational steps. The most important of these changes is the development of new competency to manage engineering services more effectively — a priority highlighted by 90% of executives. Also required are reengineering of upfront processes and redeployment of a standardized ‘engineering toolbox’.