Maturity model framework for offshore development centres

Abstract

The concept of global sourcing started when the multi-national companies discovered places like India as untapped sources of high tech professionals at substantially lower labour costs. To leverage the labour arbitrage they build captive offshore development centres that supplemented onshore development initiatives from these offshore locations. Following the same practice IT Departments of many companies started offshore centres to do low level IT work. Over a period of time the importance of these centres evolved from tactical to strategic as they provided higher degree of business value in a seamless integrated model with the parent organization. Simply put, Global Product Development means maximizing the financial and operational productivity of the product development process by spreading product development activities across multiple regions of the world in order to better match value-add to cost. In this context, the definition of product development ranges from marketing activities that identify and document customer needs; to engineering activities that conceptualize, design, analyze and refine new product ideas; to activities that plan and document manufacturing, operation, and maintenance processes; to sustaining activities that make ongoing product changes and refinements. Regions with high costs include industrialized countries like the United States, United Kingdom, Germany, France, Italy, and Japan. The list of lower cost regions is long, but major nations include India, China, Russia and various other Eastern European and Asian countries. Implementing Global Product Development requires reconfiguring product development activities across multiple regions of the world. As of today, Bangalore is home to many ODC centres which have been setup over a period of last 20-30 years providing employment to many IT professionals. Many ODC organizations have evolved to be of strategic importance to the parent organizations through new product development and IP generating innovations.