This thesis examines the impact of governance process development on engagements between onshore and offshore subsidiaries of multinational IT services organisations. Offshoring is a significant global phenomenon. Over the last decade, there has been substantial growth in the number of organisations setting up ‘captive’ (wholly owned subsidiaries) centres in offshore locations. The desired benefits of greater coordination, leveraging and sharing of knowledge have, in many instances, failed to materialise for these IT services organisations. These failures arise from a variety of causes including a lack of intra-organisational processes to coordinate and manage work, weak alignment between the parent organisation’s strategic objectives and those of the subsidiary, and the inability to navigate cross-organisational and cultural barriers. This thesis comprises three interrelated projects. The first established that organisations develop offshore subsidiaries in order to obtain one or more of a number of complex and interrelated set of strategic objectives. The second project, through the use of grounded theory, demonstrates that within one IT services organisation, imposed governance processes do not facilitate communication and engagement between the onshore and offshore subsidiaries. Cross-cultural and organisational differences inhibited the engagement between the subsidiaries, thus contributing to the failure to achieve the desired benefits of offshoring. Organisations engaged in captive offshoring are faced with two apparently contradictory sets of issues: a set of highly desirable and interrelated strategic benefits and a variety of operational challenges that arise from the imposed nature of the governance processes. The third project, a case study of a similar IT services organisation, examines how these apparently contradictory issues were resolved. The results show that it is the co-development and implementation of governance processes based on the informal working practices of both the onshore and offshore teams that enable the operational challenges established in the second project to be resolved and thus provide reconciliation between these and the achievement of the strategic benefits that drive offshoring. This thesis concludes that co-developed and implemented governance processes are a key factor in the mitigation of the deleterious effects of cross-organizational and cultural working and adds the notion of co-development and implementation of governance processes to the academic literature on the governance of outsourcing.

This thesis examines the impact of governance process development on engagements between onshore and offshore subsidiaries of multinational IT services organisations. Offshoring is a significant global phenomenon. Over the last decade, there has been substantial growth in the number of organisations setting up ‘captive’ (wholly owned subsidiaries) centres in offshore locations. The desired benefits of greater coordination, leveraging and sharing of knowledge have, in many instances, failed to materialise for these IT services organisations. These failures arise from a variety of causes including a lack of intra-organisational processes to coordinate and manage work, weak alignment between the parent organisation’s strategic objectives and those of the subsidiary, and the inability to navigate cross-organisational and cultural barriers. This thesis comprises three interrelated projects. The first established that organisations develop offshore subsidiaries in order to obtain one or more of a number of complex and interrelated set of strategic objectives. The second project, through the use of grounded theory, demonstrates that within one IT services organisation, imposed governance processes do not facilitate communication and engagement between the onshore and offshore subsidiaries. Cross-cultural and organisational differences inhibited the engagement between the subsidiaries, thus contributing to the failure to achieve the desired benefits of offshoring. Organisations engaged in captive offshoring are faced with two apparently contradictory sets of issues: a set of highly desirable and interrelated strategic benefits and a variety of operational challenges that arise from the imposed nature of the governance processes. The third project, a case study of a similar IT services organisation, examines how these apparently contradictory issues were resolved. The results show that it is the co-development and implementation of governance processes based on the informal working practices of both the onshore and offshore teams that enable the operational challenges established in the second project to be resolved and thus provide reconciliation between these and the achievement of the strategic benefits that drive offshoring. This thesis concludes that co-developed and implemented governance processes are a key factor in the mitigation of the deleterious effects of cross-organizational and cultural working and adds the notion of co-development and implementation of governance processes to the academic literature on the governance of outsourcing.

The purpose of this study is to increase understanding about critical factors Swedish manufacturing companies need to consider when offshoring. The study is based on two research questions. The first question is to investigate and understand why Swedish manufacturing companies offshore their facilities. The second research question aims to understand the critical factors companies need to consider when moving abroad. Case study and semi-structured interviews were used to collect data. These case studies took place in seven different Swedish manufacturing companies which have offshored their facilities outside of Sweden. A cross-case analysis is done in order compare all seven companies with factors they considered when moving abroad.  Then, this cross-case analysis is compared with the literature review. Comparing theoretical and empirical data results in finding the gap. The findings imply that most of the Swedish manufacturing companies moved abroad because of cost reasons. The most reasonable choice for companies in order to be more competitive was to move abroad. According to the literature is cost saving the biggest driver why companies decide to offshore their facilities. Furthermore, in order to have a successful offshoring it is important to consider several factors. Factors that have been considered by seven Swedish manufacturing companies differ but the main factors all seven companies considered before moving abroad are work competence, cost of production and lead time. Finally, the study provided valuable insight on real elements considered by Swedish companies when offshoring and which contributed with findings that compare and understand the relation between theoretical and empirical factors. The study results could be used as base for further investigations, especially in the gaps in theoretical review.

Captive offshoring innebär en förflyttning av utvalda aktiviteter till ett annat land där företaget som genomför förflyttningen också äger anläggningen och driver processen i egen regi. Att transferera produktionsprocesser till en ny plats kan innebära såväl positiva ekonomiska effekter som oväntad problematik kring allt från lokala lagar till kommunikationssvårigheter. Följande uppsats syftar till att studera captive offshoring inom tillverkande industrier och därigenom kartlägga vilka för- och nackdelar som kan uppstå i samband med en sådan omlokalisering. Studien syftar också till att undersöka hur företag hanterar de nackdelar som kan uppstå i samband med captive offshoring. I uppsatsen ingår även en fallstudie på Seco Tools AB i Fagersta, som i drygt 80 år har levererat verktyg för fräsning, svarvning, hålbearbetning och verktygssystem. Fallstudien fokuserar på relationen mellan företagets produktionsanläggning i Indien och huvudanläggningen i Fagersta. Datainsamling har skett i form av en inledande litteraturstudie, samt genom ett antal intervjuer och kvantitativ datainsamling i fallstudien. Resultatet av studien visar att kostnadsbesparingar är den främsta fördelen med captive offshoring och den primära anledningen till att företag väljer att använda den typen av strategi. Den ökade distansen som förflyttningen innebär skapar dock en ökad komplexitet i försörjningskedjan som kan medföra problematik inom områden som exempelvis kvalitet och kommunikation. För att hantera dessa risker är planering och förebyggande arbete innan transferering betydelsefulla faktorer. Erfarenhet har även visat sig ha en inverkan på hur företag hanterar de risker som kan uppstå. / Captive offshoring can be referred to as the transfer of selected processes, in which the company in charge of the transfer owns the facility abroad and remains in control over the processes in the host country. The transfer of production processes can lead to both positive economic effects as well as unexpected problems regarding anything from local laws to communication problems. The following thesis aims to study captive offshoring within manufacturing companies and thereby identify the advantages and disadvantages that may occur in that kind of transfer. The purpose is also to study how companies can deal with the disadvantages that may arise from captive offshoring. This thesis also includes a case study at Seco Tools AB in Fagersta, Sweden, a company which has supplied comprehensive metal cutting solutions for milling, stationary tools, hole making and tooling systems for over 80 years. The case study focuses on the relationship between the company’s production plant in India and the main plant in Fagersta. Data has been collected through an initial literature study, as well as through interviews and quantitative data in the case study. The results indicate that cost reduction is the main advantage for captive offshoring, and the primary reason for adapting this type of strategy. However, the increase in distance between production plants leads to an increase in complexity in the supply chain, which can create problems within areas such as quality and communication. Planning and preventive work before transfer are important factors to manage these risks. The study also shows that experience in captive offshoring has an impact on how companies deal with risks that may arise.