17 Jan 6 Reasons Why OEMs Should Outsource ISR Services to a Trusted Supplier
After more than a decade leading deployed Intelligence Surveillance Reconnaissance Services (ISR services) for one of the largest OEM companies in the world, my responsibilities revolved around the seemingly competing goals of running our operations as efficiently as possible to help our business maintain competitive pricing and ensuring the highest levels of quality in our services. When it came time to scrutinize budgets and prioritize spending reductions that would need to be made, almost without exception, labor was always the easiest target. Having crunched the numbers a few dozen times, I came to the realization that would lead me down a path I never would have planned nor imagined for myself at this point in my career – The best solution would be for OEMs to outsource ISR services to a trusted partner..
1 – Cost Reductions. This is the most obvious. Outsourcing FSR Services instantly reduces overhead and fringe costs for the OEM. Most non-OEM FSR service providers operate with much lower fixed and variable overhead cost structures, allowing them to operate with much lower costs throughout the entire FSR employee life cycle.
2 – Competitive Pricing. Partnering with an ISR Service Supplier to provide service (as opposed to supplying internally) provides OEMs the opportunity to factor in significantly reduced pricing while bidding in competition for new government contracts, particularly those evaluated under Lowest Price Technically Acceptable (LPTA) criteria.
3 – Government set-asides. There are really two ways that OEMs can benefit from working with a trusted small business for their FSR services. First, the government mandates that each prime contractor maintain a small business utilization program. Utilizing a small business for FSR services, particularly a Service-disabled, Veteran-owned, Small Business (SDVOSB) such as Invictus Global Services, helps OEMs meet their targets under those programs. Additionally, the government sets aside 3% of its contracts exclusively for Small Businesses such as ours. By partnering with a SDVOSB, an OEM would be able to partner with the small business to bid on contracts that it wouldn’t be able to otherwise due to the size of their organization.
4 — Quality of service. While leading operations for the OEM, we took pride in the fact that we had the best services program in the industry; our FSRs provided exceptional service to our customers. As previously mentioned, labor is always the first and easiest place that most companies (including UAS OEMs) look to cut costs. Our SDVOSB is successful because we are better able to center our business around our people.
- Due to our greatly reduced cost structure, compared to OEMs, we are able to pay salaries that attract and retain quality talent.
- We are able to focus more effectively on our people to instill our service-first culture, and training/operational standards.
- This is what we do – we know more than just how to recruit and hire FSRs; we know how to hire only the right people that can make a positive impact on our customers and their operations.
5 — Ingenuity and adaptability on the service side.
- With our streamlined structure, we are not encumbered by the bureaucracy and constraints of OEMs. We have the ability to adjust our cost structure to remain affordable.
- There are really about a half dozen major cost drivers that determine FSR pricing. We can work with OEMs to tweak one or more of those to provide the best value to their customers.
6 — Opportunity Cost. Every activity that a business undertakes incurs costs. Usually, we think about those in terms of labor, material, and associated burdens. We also need to consider that every time resources are committed to one activity, they are not available for one or more alternatives. In the case of OEMs, whose core business is the development and production of hardware and software, the resources required to maintain a pool of quality FSRs are not available for processes vital to production.
By outsourcing to a trusted partner, supplier personnel are used to manage the FSR workforce, freeing up time and resources for the OEM to focus on their core competency. The OEM will still recognize the revenue and profit associated with the service, without expending effort or financial resources required to maintain the sizable workforce necessary to fulfil their services obligations.
Interested in learning more about Invictus ISR Services? We’d love to hear from you!