Managing offshoring of complex products Strategy and capabilities

University dissertation from Västerås : Mälardalen University

Abstract: Offshoring is a hot topic in the industrial and academic community over the last few years, evolving from a focus on manufacturing to product development and R&D. Offshoring refers to the process of sourcing and coordinating tasks across national borders and can include both in-house and outsourced activities performed by a supplier. There is a lot of research guiding the decision of what, where and how to offshore, but research on how to implement offshoring strategies is rare. The purpose of this dissertation is to contribute to the knowledge on how companies deal with offshoring in practice, relating to strategy, planning and routines. It discusses what type of capabilities that is needed to gain the benefits of offshoring implementations.The research builds on case studies from two multinational companies offshoring product development from Sweden to captive and offshore development centres in India and China through a series of interviews, review of business documentation and other types of active engagements over time.This research highlights how the development and implementation of offshoring can be better understood by focusing on the middle management in the organization and how they relate to the top management directives when implementing an offshoring strategy.  The thesis contributes to existing theory by explaining offshoring as a process, situated in a certain context and time. It defines key routines and capabilities needed to facilitate offshoring of complex product systems. Including context, timing and sequence when analysing offshoring help explain why some organizations fail to implement offshoring initiatives.The companies had an iterative learning process to deal with offshoring, and inclusion of all levels in an organization was highlighted as a key success factor for the implementation of offshoring. The results extend current understanding of offshoring of complex products to Asia and provide useful guidelines for managers on the key issues they need to consider.