To anyone outside the industry, design and development sounds straightforward. In practice, taking a product from prototype to production means coordinating electrical engineering, mechanical design, thermal management, compliance, sourcing, testing, and manufacturing, often at the same time.
For US-based Original Electronics Manufacturers (EMS) companies, building all of that internally is becoming harder. The challenge isn't just finding engineers. It's maintaining the depth of specialist expertise needed across multiple product lines while keeping development timelines moving.
That's why more companies are looking offshore. Not simply to cut costs, but to access engineering capacity, specialist skills, and manufacturing expertise without having to build every capability in-house.
For years, the case for offshoring was mostly financial: lower labour costs, full stop. Today, OEMs are asking a broader question. Does it make sense to build and maintain every engineering capability in-house at all? For US-based OEMs, that question comes down to three things.
3 reasons US OEMs are looking offshore for D&D support
1. Speed to start
Recruiting a specialist design & development team from scratch takes time, from sourcing niche talent to running interview loops, and then onboarding. In the US, that search now runs against a shrinking talent pool. Electrical engineering enrolment has fallen sharply relative to computer science over the past few decades, and many graduates capable of this work are drawn into often higher-paying software and AI roles.
An EMS partner with an established design & development bench skips that process altogether. Scoping and a statement of work can lead straight into kick-off within weeks rather than months or years.
2. The capacity to run more than one project at once
Even strong in-house design and development teams have finite capacity. Run two or three product programmes alongside supporting products already in the field, and priorities start to compete.
The traditional fix was to size the team for the busiest quarter and carry the extra cost for the rest of the year. That's an expensive way to plan, and it still leaves gaps when several programmes peak at once. The specialist skills needed to fill those gaps, EMC design, embedded software, mechanical engineering, are exactly the ones hardest to hire for a short-term surge.
Working with an external design and development partner lets OEMs add capacity when they need it, without hiring for peak demand in a tight labour market or carrying a fixed headcount for the rest of the year.
3. Specialist capability
Some capabilities are concentrated in a handful of specialist hubs. Expertise in areas such as EMC-optimised PCB layout, embedded systems architecture, and mechatronics integration can be difficult to find locally, regardless of budget.
This is particularly visible in the US today, where reshoring investment is increasing demand for specialist engineering at the same time the domestic talent pipeline is shrinking.
Established offshore partners have often spent years building these capabilities across multiple customer programmes. Replicating that depth internally takes time, investment, and access to talent that may not be available locally.
Cost hasn't disappeared
Offshore partnerships aren't only about lower labour costs. They also give OEMs more flexibility in how they build design and development teams.
An in-house design and development function is largely a fixed cost, whether the product pipeline is full or quiet. External support can expand or contract alongside demand, letting companies access specialist expertise without permanently increasing headcount.
What good cross-border partnerships look like
The OEMs getting the most from offshore design and development don't treat engineering and manufacturing as separate activities. They choose partners where the design team and factory floor sit under one roof.
Keeping design and development close to production shortens the feedback loop between prototype and mass manufacture, helping teams catch issues that only emerge on the line before products reach customers.
This shows up in practical ways:
- Design for manufacture: layouts built for automated production from day one, protecting yield.
- Strategic sourcing: components selected against live supply chain data so single-source or end-of-life parts are identified before designs are finalised.
- Design for testability: products developed with inspection and validation in mind, reducing problems later in production.
We talk about this in more detail in our blog post: How DfX eliminates hidden costs in product design and development.
It also means OEMs can bring in support for specific disciplines, whether that's embedded software, mechanical design, prototyping, or testing, without separating design from manufacturing.
Geography matters too. For US OEMs, Europe won't count as nearshore in the way Mexico does, but it still offers more working hours overlap and easier site visits than Asia. Yet Asia offers greater scale and lower cost. Many EMS providers force customers to choose between the two.
A partner with sites across multiple regions, operating under one contract and one quality system, gives OEMs more flexibility to choose the right model for each product line.
Why communication determines whether this works
Most failed outsourcing relationships aren't failures of technical capability. They're failures of communication: a partner that agrees to everything and quietly misses the detail, or feedback loops so slow that small issues become expensive ones.
Clear ownership, regular reviews, and early escalation matter as much as technical expertise. A named point of contact and frequent milestone check-ins help ensure problems are identified and addressed before they affect schedules or budgets.
Get the sourcing decision right
Before an external engineer touches a design, be clear about ownership and deliverables. Contracts should state plainly who owns the resulting source code, design files, mechanical drawings, and manufacturing data. We talk about this in more detail in 9 critical checks for OEMs outsourcing design and development.
Be wary of partners that keep design data closed off. Without access to that information, changing manufacturing partners later can become difficult and expensive.
If you're weighing up where to find design and development capacity for your next product, get in touch with the ESCATEC team. We can discuss how our global footprint across the UK, Switzerland, the Czech Republic, Bulgaria, and Malaysia can support your roadmap.
Frequently asked questions
1. What does a full design and development engagement cover?
A full design and development engagement covers system architecture, electronics design, embedded software, and mechanical design, all built around Design for Excellence principles so that the transition into manufacturing is as smooth as possible.
2. Is offshore design and development still mainly about labour cost?
No. Cost still matters, but many OEMs are now driven by speed, engineering shortages, and access to specialist expertise.
3. How do OEMs protect their IP with an offshore partner?
Established EMS providers typically use secure product lifecycle management systems, access controls, and contracts that give clients ownership of source code, design files, and bill-of-materials data.
4. Should OEMs choose nearshore or offshore design and development?
That depends on priorities. Near-shoring to Europe can simplify collaboration and site visits. Offshoring to Asia may offer greater scale and lower costs. Providers with operations in multiple regions allow OEMs to choose the right model for each product line.
5. Is the engineering talent shortage unique to the US?
No, but the challenge is particularly acute there. Most major economies face shortages of experienced engineers, but the US is also dealing with a long-term decline in electrical engineering graduates, a smaller domestic manufacturing ecosystem, and rising demand driven by reshoring investment.
