Recently the Tech SIG of the OC IMC had an on-site look of the opportunities and challenges of R&D outsourcing, as our hosts from DeviceLab shared their successes and problems in providing R&D services for the development of medical devices and other products. DeviceLab, Inc. is a contract design and product development firm which takes products from concept to market. It was established in 1998 as a full-service R&D Company for technology assessment, proof of concept, mechanical engineering, electronics, software, industrial design, prototyping, manufacturing, integration, FDA regulatory consulting, and consumer product design. Their expertise includes user interfaces, medical devices, hospital equipment, lab instrument development, and related industrial design for start-up entrepreneurs all the up to Fortune 500 Companies. The following are the main points brought out during the presentation and discussion:

Why Outsource Product Design R&D?

• The business is new to the Industry and does not understand the regulatory environment, materials and processes, and professional networks in the industry

• The business may have a shortage of staff, equipment, and other resources

• The outsourcing firm may have a specific need for expertise or technologies

• The project has a limited market window and needs a fast time to market

• There is a need to reduce development costs and risks

How do you outsource a project?

• Define specific R&D project development needs and perform "Make or Buy” decisions

• Research for potential outsourcing partner(s)

• Write detailed product requirements document

• Define deliverables in terms of hardware, software, quality standards, etc.

• Plan the project, establish an R&D schedule, and agree on costs

Advantages of outsourcing R&D:

• Allows a company to concentrate on development of their core competencies

• No need to add R&D staff with long-term cost commitments

• Available resources, network , technologies, experience, at one location

• Reduce risks, costs, and time to market by contracting with a firm that has done similar projects before

Disadvantages of outsourcing R&D:

• Concerns with project control, interfacing, definitions, agreements

• Less opportunity to develop new internal know-how and core competencies

• Higher probability of leaking intellectual properties

In summary outsourcing R&D offers distinct advantages for many types of technology based businesses requiring significant R&D. A successful outsourced R&D project requires selection of the right outsourcing partner, experienced product development project managers to carry out the project plans, and an adequate technical staff for quality output. Naturally this assumes the development of an agreement with a clear scope of requirements, list of deliverables, schedule, and effective project reviews. Confidence is built up as milestones are monitored and met. This will lead to a longer term relationship for multiple projects and potential production opportunities.