Competence-Based Decision Support for the Offshoring of Automotive Product Development Processes to India

Master's Thesis from the year 2006 in the subject Business economics - Supply, Production, Logistics, grade: 1.3, Hamburg University of Technology, language: English, abstract: The increasing importance of offshoring as a strategic tool for firms which possess substantial resources in high-cost locations is reflected in the increasing quantity and value of work being offshored. The offshoring of Automotive Product Development Processes (generically called Automotive Engineering Services) serves not only to reduce developmental costs for firms, but can also help firms develop resources in fast-growing markets, which can also act as an important source of future revenue.

The trend of offshoring Automotive Engineering Services (ES) activities to India is becoming increasingly important. Of the $15 billion offshore ES market (including automotive and other ES activities), India claimed 12% in 2005 . Experts claim that this value will increase to $40 billion by 2020, representing a market share of 25%. The increasing importance of ES offshoring is reflected in increasing investments and acquisitions of Indian firms in this business area.

The dynamic situation being faced by firms wishing to offshore ES work to India necessitates a decision support methodology, which was outlined in this work.

Introduction to Present Work

The present project aimed to provide offshoring decision support to automotive product development firms located in Germany/W. Europe by answering the following two questions:

1. Which process steps in the automotive product development process are best offshored? Which process steps should be retained in-house, onshore?

2. In case of offshore partnerships, which criteria may be used to evaluate prospective offshore partners?

Offshoreability

The offshoreability of an organizational process may be defined as the ease with which it may be offshored to another location, without losing any of its value or efficiency. Offshoreability thus depends on many factors- the main factors have been summarized within this work.

The concept of offshoreability may thus be used to make offshoring decisions regarding the processes or process steps to be offshored, to decide upon measures/upgrades that may increase offshoreability and thus the benefit from offshoring, and to decide upon factors which may be used to evaluate possible offshore partners.