Managing Global R&D Collaboration

Vinit ParidaETS/Entrepreneurship and Innovation

Luleå University of Technology

LuleåFeb 29, 2012

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Define Outsourcing vs. Offshoring

Outsourcing is the movement of internal business processes to an external company. A company who subcontracts the business process in the same country would be outsourcing, but not off-shoring (wiki).

Offshoring is the relocation of business processes to foreign countries to take advantage of skilled but relatively cheap labor” (Doh et al., 2009)

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Emerging Global Trends Saab India Technology Centre invigt i Hyderabad i samarbete med Mahindra Satyam21 okt, 2011 11:53 CET I samarbete med Mahindra Satyam invigde Saab India Technologies Pvt. Ltd. idag Saab India Technology Centre, ett nytt centrum för forskning och utveckling i Hyderabad

Volvo Aero IndiaBangalore har Volvo Aero sedan några år ett produktutvecklingskontor. Volvo Construction Equipment to invest Rs 90 Cr in Indian facility Wednesday, 12 May 2010 Bangalore: Volvo Construction Equipment, a wholly owned subsidiary of AB Volvo, has announced a strategic investment of about INR 90 Crores in its existing facility in Bangalore, India for the production of Excavators.

Percept Activ launches Sandvik Coromant’s ‘The Yellow Truck’ CampaignFri, 21 Oct 2011  Percept Activ, the Strategic Business Unit of Percept Sports & Entertainment, recently organized ‘The Yellow Truck’ roadshow campaign for Sandvik Coromant - a Swedish giant and a market leader in the metal cutting industry. This unique outreach programme kick-started on 3 October, 2011 in Pune will be traveling to 49 cities covering 20,598 km in 115 days for their valued customers.   

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Emerging Global Trends

Source: Duke University/Archstone Consulting Offshoring Research Network 2004 and 2005 U.S. Surveys and Duke University/Booz Allen Hamilton Offshoring Research Network 2006 U.S. Survey.

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Emerging Global Trends Changing Importance of “Access to Qualified Personnel” as a Strategic

Driver of Offshoring Decisions

Source: Duke University/Archstone Consulting Offshoring Research Network 2004 and 2005 U.S. Surveys and Duke University/Booz Allen Hamilton Offshoring Research Network 2006 U.S. Survey.

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Offshore-site Challenges

Interface Challenges

On-site Challenges

R&D Offshore Challenges

65 Interviews in eight Global companies

3P

List of more than 20-30 prominent challenges

Fear of job losses

Global working experience

Intraorganizational commitment

Operational routines

Retention of talent

Access to talent

Knowledge sharing and building

Cultural diversity

Information technology

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R&D Offshore Challenges

Top 3 Challenges

Top 2 Managerial Challenges

Top 2 Operational Challenges

60 respondents from two Global companies

Operational Routines

Retention of Talent

Knowledge Sharing and Building

Cultural Diversity

Fear of job losses

Global working experience

Access to Talent

Intra-organizational Commitment

Information Technology

0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5

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Dynamic View- Collaboration Life Cycle

Setup Stage

(Year 0)

Startup Stage

(Year 1-3)

Ongoing Operation Stage

(Year 3 and ahead)

Dissolution Stage

Collaboration Maturity

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Dynamic view- R&D Offshore Challenges

Setup Stage(Year 0)

Startup Stage(Year 1-3)

Ongoing Operation Stage(Year 3 and ahead)

Collaboration Maturity

Fear of job losses

Knowledge sharing Knowledge building

Intra-organizational commitmentnizational commitment

Cultural diversity

Information technology

Global working experience

Operational routines

Access to talent

Retention of talent

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Managing Global R&D Collaboration

For more information contact:Vinit Parida vinit.parida@ltu.se

Luleå Feb29, 2012

Thank you ! Any Questions?

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Recommendation

Challenge Recommendation Fear of job losses Regular internal discussions and meetings about future of offshore engagement with

managerial and operational level stakeholders and future opportunitiesGlobal working experience

Identify and recruit individuals with an appropriate managerial/ leadership skill-set to facilitate and coordinate offshore engagement on-site

Access to talent Recruit experienced employees at the offshore unit at the managerial level and undertake campus recruitment visits to top engineering universities.

Retention of talent Develop customized growth plans for offshore unit employees to reduce the rate of attrition and create incentive for retention of talent

Operational routines Perform internal analyses of processes and tasks based on three critical criteria – level of transferability, maturity, and risk.

Knowledge sharing and building

Formal and informal knowledge transfer programs, such as online seminars, crash courses on specific tools, internal regular meetings.

Emphasize the development of product knowledge at the offshore unit through access to the factory floor and sharing design practices.

Intra-organizational commitment

Development of a specific offshore strategy and dedicated offshore unit

Information technology

Investment in developing information logistics and data exchange tools which ensures access to relevant information for offshore employees

Cultural diversity Initiate inter-cultural learning programmes through promoting on-site visits and offshore unit visits

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R&D Offshore Challenges

65 Interviews in eight Global companies

3P

List of more than 20-30 prominent challenges

“I think/I hope that we still have work left”“the people here (on-site) initially thought that everything will move to low-cost countries. This is a critical issue”

Fear of job losses

Global working experience

“people here [i.e. on-site] have always been accustomed to communicating easily and asking questions over the wall and working on problems together”.

Intraorganizational commitment

“Shifting from cost savings to R&D offshoring requires strong internal organizational commitment and agreement, which is typically missing for most multinational companies”

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R&D Offshore Challenges

65 Interviews in eight Global companies

3P

Operational routines

“it is all about process development at our side (i.e. on-site). The current processes followed are highly individual, so they lead to too much artistic freedom….so basically we need to straighten up our internal offshore processes and start to produce similar functional work packages every time ”

Retention of talent “we have lost several competent offshore engineers in the last few years. This is a challenge for us because we have to start from the beginning each time with the new recruits”

Access to talent “Due to the presence of several global engineering companies in close proximity (e.g. Bangalore high-tech parks), it can be difficult to attract the top talent” –hotspot phenomenon

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R&D Offshore Challenges

65 Interviews in eight Global companies

3P

Knowledge sharing and building“we usually get detailed information about our specific task

but we don’t understand the bigger picture”

Cultural diversity “they don’t dare to make mistakes but as engineers we expect them to draw their own conclusions and come up with ideas and solutions”

Information technology

“the offshore unit employees should have direct access to models, drawings, and design practices but we are restricted in providing them with this access”.