THE IMPACT ON THE PRODUCT DEVELOPMENT PROCESS WHEN OFFSHORING OR OUTSOURCING
This paper investigates the impact on the product development process when a company offshores or outsources a part of it abroad. Data was collected through interviews conducted in five companies. The study showed that the impact can be both negative and positive. The key impact was the possibility of a more complex development process due to cross-cultural virtual communication and collaboration. This meant a spiral development process is harder to offshore or outsource than a generic one. However, this complexity can be lessened by making the process or product simpler and by codifying and documenting processes and tasks to provide a common frame of reference.
However, the case companies encountered several problems with implementing these control actions; for example culture, miscommunication, quality and transport time. This seemed to be caused by a brief preparation phase which meant the need for codification, documentation and simplification to counteract the added complexity was not conducted until the company had already moved the function or product part abroad. Furthermore, a thorough investigation of whether this was possible or desired ways to counteract this before mentioned complexity was left as a ‘learning by doing’ experience.
These results suggest that offshoring/outsourcing a certain part of a product is only possible if it involves discrete tasks, and when the company knows where the relevant knowledge resides and how it can be shared. Doing so can even increase product complexity if the outsourcing is done to gain new competences. In the case of offshoring/outsourcing the development of a part of a product, product integration is vital. When offshoring/outsourcing a whole function, separation and codification seem to be the key issue for success. Partial functional offshoring/outsourcing due to cost reasons seems to lead to simpler products due to the before mentioned added complexity. Here integrated processes become the key factor.