Local Outsourcing

In the last decade, we've seen outsourcing skyrocket, then drop off somewhat.  Offshoring work to India has become so expensive and difficult that many companies have abandoned the practice altogether.  Additionally, offshoring brings complications of communication, retention, management, etc.  However, let's not confuse outsourcing and offshoring.  While we are not proponents of offshoring in general, we find great benefit in outsourcing to local firms.

DataScaler is a hardware company that, under the covers, is really a software company.  We build an appliance which installs in a data center and fulfills a particular role.  The appliance is a very complex system and is not just a PC motherboard in a box with a logo on it.  There are FPGAs, ASICS, and lots of custom circuitry that make the box tick.

When we founded the company, the core concepts were a business problem that needed to be solved and an overall architecture to solve that problem.  The architecture requires custom hardware and software.  That is a lot to bite off for a startup, so we partitioned the problem into what was core / differentiating technology and what was non-core.  The core items are:

• Our overall architecture
• Our processing engine (implemented in an FPGA)
• Our software.

Hardware products involve a bunch of things outside of this core, such as:

• Chassis / mechanical design
• Industrial design (look & feel)
• Board-level design
• Cooling design
• Manufacturing & assembly.

Each of these areas is a specialty and requires experts.  If we did these tasks ourselves, it would mean hiring experts, giving them stock, managing them, giving them offices and computers, etc.  The cost and effort add up quickly.  Also, finding experts in each of these fields who are ready to jump into a startup takes a lot of time and may not even be possible sometimes.

Thus, we decided to outsource the non-core aspects of our product.  We do the system architecture, FPGA design, and software in-house.  We outsource the rest.  This has been one of the best decisions we've made at DataScaler.  Prabhat, our SVP of Engineering and Operations, deserves the credit for this one.  By outsourcing to local firms, we've gotten top-notch engineers who could start immediately on the project.  The results have been great, and we have saved both money and time.

I also think there is value in having engineers who work on lots of other companies' products.  This diversity of experience fosters new ideas and a continual exposure to different ways of doing things.  Another advantage is that hardware projects are bursty: they require a lot of people at once, then go into maintenance mode for a while.  This burstiness is difficult to handle when your engineers are all on your payroll.  By outsourcing, we can ramp staff up and down as needed during the lifecycle of a particular product.

The trick in all this is choosing the right outsourcing partners.  Again, Prabhat deserves the credit here, but I couldn't be more happy with the set of partners we have at DataScaler.  Prabhat has been in the business for 25 years and has a very broad network.  By tapping that network for referrals and vigorously vetting the candidates, we ended up with the dream team of hardware design:

• Arira Design in Sunnyvale does the electronic part of our hardware design. This includes everything from translating our high-level architecture into schematics and PCB layouts, to component selection, to bringing up and debugging the first systems.  Arira has done lots of complex products like ours and got great reviews from Woven Systems, who used Arira to design their 10G switching platform.  Arira also acts as the project manager, coordinating the activities of the other partners.  We couldn't be more pleased with the results.
• Studio Red in Menlo Park does the mechanical and industrial design.  I had worked with Studio Red in a prior company and was impressed with their skill and strong design sense.  Having been at this for 25 years, Philip Bourgeois and his firm have done thousands of designs. That experience comes in handy when time to market and execution are critical.
• Electronic Cooling Solutions handles the airflow and thermal issues of the design.  These are difficult problems that often get neglected until a design is done.  Having specialized expertise involved at the outset saves lots of money in redesign costs, etc.  Bill Maltz and his team have consulted for the who's who of Silicon Valley and work very quickly.  I admit that although I took a basic thermodynamics course in college, I am pretty clueless when it comes to how to manage the airflow and cooling of a complex, high power density appliance.  Having ECS involved allows me to sleep well at night knowing there won't be thermal issues.
• Mike King is a guru of the black magic involved in handling all the Electro-Magnetic Interference  (EMI) issues inherent in a system of our type.  With a plethora of 3-10 GHz signals running all over inside our box, the EMI challenges are difficult, to say the least.  Mike has been doing this work for over 30 years and is the best there is.

To any company contemplating a hardware design, I highly recommend taking this outsourcing approach.  It enables our company to focus on our core and differentiating technology while taking advantage of the deep experience of our partners.

Comments

[Henry Cate]

I read somewhere in the last week that the weakening of the dollar has turned a lot of the offshoring calculations upside down.