Managing Global R&D
Collaboration
Vinit Parida
ETS/Entrepreneurship and Innovation
Luleå University of Technology
Luleå
Feb 29, 2012
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)
2
Emerging Global Trends
Saab India Technology Centre invigt i Hyderabad i
samarbete med Mahindra Satyam
21 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 India
Bangalore har Volvo Aero sedan några år ett
produktutvecklingskontor.
Percept Activ launches Sandvik
Coromant’s ‘The Yellow Truck’
Campaign
Fri, 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 kickstarted on 3 October, 2011 in Pune
will be traveling to 49 cities covering
20,598 km in 115 days for their
valued customers.
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.
3
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.
4
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.
5
R&D Offshore Challenges
List of more than 20-30 prominent challenges
Interface Challenges
Cultural diversity
On-site Challenges
Fear of job losses
Global working
experience
Information
technology
Operational
routines
Knowledge sharing
and building
Offshore-site
Challenges
Access to talent
Retention of
talent
Intraorganizational
commitment
65 Interviews in eight Global companies
3P
6
R&D Offshore Challenges
Information Technology
Intra-organizational Commitment
Access to Talent
Global working experience
Fear of job losses
Cultural Diversity
Knowledge Sharing and Building
Retention of Talent
Operational Routines
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Top 3 Challenges
Top 2 Managerial Challenges
Top 2 Operational Challenges
60 respondents from two Global companies
7
Dynamic View-
Collaboration Life Cycle
Collaboration
Maturity
Setup
Stage
(Year 0)
Startup
Stage
(Year 1-3)
Ongoing Operation
Stage
(Year 3 and ahead)
Dissolution
Stage
8
Dynamic view-
R&D Offshore Challenges
Retention of talent
Access to talent
Operational routines
Collaboration
Maturity
Knowledge sharing
Knowledge building
Information technology
Fear of job losses
Global working experience
Cultural diversity
Intra-organizational
commitment
nizational
commitment
Setup Stage
(Year 0)
Startup Stage
(Year 1-3)
Ongoing Operation Stage
(Year 3 and ahead)
9
Managing Global R&D Collaboration
Thank you !
Any Questions?
For more information contact:
Vinit Parida vinit.parida@ltu.se
Luleå
Feb29, 2012
10
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 opportunities
Global 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
11
R&D Offshore Challenges
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”
“people here [i.e. on-site] have always been accustomed
to communicating easily and asking questions over the
wall and working on problems together”.
“Shifting from cost savings to R&D offshoring requires
strong internal organizational commitment and agreement,
which is typically missing for most multinational companies”
Fear of job losses
Global working
experience
Intraorganizational
commitment
65 Interviews in eight Global companies
3P
12
R&D Offshore Challenges
“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
“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”
“it is all about process development at our side (i.e. onsite). 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 ”
Access to talent
Retention of talent
Operational
routines
65 Interviews in eight Global companies
3P
13
R&D Offshore Challenges
“we usually get detailed information about our specific task
but we don’t understand the bigger picture”
“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”
“the offshore unit employees should have direct access to
models, drawings, and design practices but we are
restricted in providing them with this access”.
Knowledge sharing
and building
Cultural diversity
Information
technology
65 Interviews in eight Global companies
3P
14