Automotive engineering services firms are important partners in the automotive sector’s tech-driven transformation. However, many firms are operating on an expensive fixed-cost model that squeezes profits. A new approach is needed.
Research and development in automotive is a complex process with several actors along the development chain. It usually starts with requirements of automotive OEMs, which sell vehicles directly to consumers, or integrated application providers needing extra support.
Sometimes, OEMs decide to do the development internally using internal full-time employees or individual contractors (e.g. through the Hashlist contractor network).
Usually, though, the requirements are then given to a Tier 1 supplier (the first chain of suppliers directly to the OEMs). Sometimes, here, the project development starts or is further delegated to Tier 2 suppliers.
However, most often, the project eventually ends up with automotive-specialised engineering services firms, which either specialise in automotive development or are general IT firms with automotive divisions.
The business model of automotive engineering services firms can generally be boiled down to 3 steps:
1. Bid on projects:
2. Gather the right resources for the project:
3. Start project work
The main challenge of the engineering services firms’ business model is keeping the right amount of talent resources onboard at every stage in the process.
Major risks:
Sometimes, engineering firms face the unfortunate case that the project ends early. Then, resources need to go quickly since there’s no project work remaining, and no billable hours to pay for their salary. If the majority of your pool is permanent employees, this can often prove to be a challenge due to long notice periods constituted by local labour laws.
Other times, employees leave in the middle of the project, leaving a gaping hole that needs to be filled. If the position is not filled quickly, it could delay the entire project and cause extra costs.
In conclusion, optimising resources across these stages & risks is extremely important to maximize profits.
Winning the bid: We already know that winning the project bid comes down to having:
The more available CVs you have, the easier it will be for you to win project bids. E.g. Hashlist has 30,000 available individual contractor CVs across 40+ automotive roles that you can use to win projects.
Managing fixed costs before the project starts: As explored earlier, onboarding a large number of permanent employees too early is costly, so you’d ideally want to wait with onboarding until the date of the project starts.
This is usually only possible with individual contractual resources since permanent employees cost you money every month, whether they perform any work or not.
Onboarding the right people when the project starts: The faster you can get people to start delivering, the faster you will start billing, the faster the project will get done, and the happier the end client will be.
What in the unfortunate case of the project ending earlier than expected? If you work with individual contractors on a favourable arrangement, you can stop the engagement much sooner compared to having a large permanent employee workforce.
What if the employee leaves in the middle of the project? In this case, you need to urgently fill the position. If onboarding an employee takes too long, Hashlist’s pool can always be at your disposal as a remedy.
As we notice, all of these stages seem to favour using individual contractors rather than an expensive fixed-cost workforce. The large challenge, however, is to keep a pool of reliable independent contractors large enough to always cover your project needs.
That’s where Hashlist comes in.
Hashlist is a network of 30,000+ registered independent contractors, 100% focused on the automotive industry. They can be engaged flexibly, either individually, or in teams.
Hashlist takes care of the entire staffing & payroll service in 80+ countries for all engagements in the backend. You are free to focus on growing your business by winning more bids, handling projects, and delivering profitably.
With Hashlist, you will always have the right resources for your projects, at the right time, without the fixed cost.
Automotive engineering services firms face more competition than ever and need to reinvent their talent resourcing model to continue growing and maintaining their profits.
Nowadays, optimising for cost across the project bid and delivery is crucial, as well as managing the risks of projects ending early or employees leaving the middle of projects creating big gaps
Hashlist’s pool of 30,000 qualified independent contractors is a solution that helps automotive engineering firms to win more bids, keep fixed employee costs low, and bill more project hours, quicker.
Contact us to find out why ⅗ of the world’s largest OEMs already use Hashlist for their projects, and how the Hashlist automotive tech talent network could be equipped for your organisation.
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