When it's time to develop your product, do you go to a design firm, or an independent contractor? The answer is: It depends. Both are good solutions, but meet different needs.

"I like to use the lawn analogy. If you need your lawn mowed, you hire the kid next door. But if you also want someone who has the expertise to determine what fertilizer to use, what kinds of plants will grow in your yard, and when to trim the trees, you hire a landscaper," says Alex McKay, president of ARMA Design.

Outsourcing began as a cost-effective manufacturing solution. Then, in the 1990s, the concept expanded to include full-service product design. Today, many companies are less likely to have in-house electronic engineering capabilities and are more likely to outsource. They either hire an independent engineer with a specific expertise or go to a design firm they can rely on to be, essentially, their "virtual" electronic engineering department.

When faced with an outsourcing decision, which should you choose? Here are some important issues to consider before committing your resources.

1. Cost may not be the differentiator.

Firms go to independent contractors for budgetary reasons as well as their expertise. With no overhead, a "freelancer" will typically charge less by the hour than a firm will. But, at closer look, the two resources could very well cost the same. Take into account that the contractor charges the same rate for engineering as he does for say, testing. A design firm charges at a lower rate for non-engineering tasks. Consider your projects needs and the resources available for your best value. With a design firm, the hours you pay for are roughly equivalent to those of a contractor's and may even be lower when the value of engineering support services of a firm are taken into account.

2. Is your project simple or complex?

You have an in-house product development team but have a specific task beyond your resources that need to be executed. It makes sense to find an independent contractor who specializes in that discipline. Contractors are usually very good in a particular area, whether it's mechanical, software or hardware engineering. However, when you need expertise in more than a single discipline, your best choice is a design firm, where the team includes experts in all areas required by your project.

3. When time is a concern, think about the big picture.

One distinct advantage a firm offers over an independent contractor is that different aspects of the development project can be managed simultaneously. The mechanical design can be developed at the same time as the electronic design, while another team member designs the software. This cohesive team can readily consult with each other, which saves time and helps avoid costly 'do-overs'. Also, while a job may be sidelined with a consultant, a firm has some degree of redundancy so that, if one expert is out, another can take on the task. If time is money, you certainly don't want to lose any.

4. Who is the project manager?

If you are the project manager on a design job, then working with one or various contractors could be a good option. If a contractor also becomes the project manager he will be communicating with a team of contractors each working independently. On the other hand, you may just want to hand over that headache to someone else. With a design firm, team members are working together and in established communication under local management, so the development process can run smoother. You receive the benefits of access to expert contractors combined with a single contact point of project management.

5. When it's time to manufacture you may be able to look to your design firm.

Before outsourcing internationally for very large production volume, you'll want to stay close to home for prototypes and smaller production runs. A recent trend for some design firms is to offer in-house manufacturing capabilities. "ARMA has been manufacturing in support of its electronic product development services for many years," says McKay. Manufacturing at the same design firm with ongoing engineering consultation has assured client projects can be manufactured and decreases product time-to-market. McKay adds a note of caution: A design firm that claims to have manufacturing capabilities may, in fact, sub this out increasing your cost, so do your homework. Also, if you've used an independent consultant and need to outsource your manufacturing, choose carefully and try to go with one that's been referred. The further into the design process you have to make a change, the more expensive it is.