Companies move high-end jobs offshore to access talent

Companies
are increasingly moving sophisticated, mission-critical functions such
as product design and research and development to China, India and
other offshore locations primarily because these countries can provide
highly skilled scientific and engineering workers who are in short
supply in the United States and Europe, according to a new study by
Duke University and management consulting firm Booz Allen Hamilton.

And even though companies continue to
offshore more high-skilled work, they are increasingly concerned about
the loss of managerial control that accompanies outsourcing functions
close to their core business.

The 2006 Duke CIBER/Booz Allen offshoring study
is the third in an annual series originated by the Offshoring Research
Network (ORN) led by professor Arie Y. Lewin at Duke’s Fuqua School of
Business. It takes a comprehensive look at strategic factors driving
decisions to offshore. It also examines offshore operating delivery
models and performance outcomes of various companies’ offshoring
efforts. The 2006 study examined 530 companies from both the U.S. and
Europe, through partnerships with universities in the United Kingdom,
Germany, Spain, Netherlands, Belgium and Scandinavia.

Key findings of the study include:

• The need to source talent globally is
  replacing low-skilled, low-cost labor as the decisive factor in
  companies’ offshoring strategy. Nearly three-quarters of the companies
  that establish or expand product development offshore report that
  “access to qualified personnel” is the most important driver of their
  offshoring strategy, and almost 70 percent of survey respondents select
  an offshoring location based on the availability of needed expertise. ”
  Access to qualified personnel” has increased substantially (by 70
  percent in the last two years) as a major reason for establishing or
  expanding innovation, product development and product extensions
  offshore.

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