Knowledge for sale - the benefits and effects of off-shoring knowledge-based jobs in engineering, design, and R&D - a case study

A framework consisting of a conceptual model and a closed-loop knowledge work outsourcing decision model is developed. A process flow model of a medical device company's product development function is analysed, where this framework is applied to understand various outsourcing options for the company. The conceptual framework describes major attributes related to outsourcing decisions, parameters associated with various attributes and the relationship intensity of parameters with three knowledge work outsourcing options - in-house, near-shoring, and off-shoring. The proposed model is closed loop, emphasizing the importance of regular re-evaluation needed for an off-shored function. The modeling framework contributes to a company's decision whether or not a particular knowledge-based function should either be kept in-house, near-sourced or off-shored. The general perception of off-shoring is to reduce costs but, the proposed model takes into account additional factors such as, market accessibility, strategic partnership, reduced time to regional market, access to overseas talent pool, and governmental incentives, etc. These factors play a vital role in determining an outsourced function. The paper discusses various options and makes recommendations for tapping into technological advancements around the world, their effects on supply chain management and other competitive advantages presented by off-shoring. Knowledge Management Research & Practice (2010) 8, 351-368. doi:10.1057/kmrp.2010.24