This is a summary of findings of a recent study conducted by Prayag Consulting  to understand the effectiveness of offshoring for high technology product development companies.  The broad objectives of the study were to understand the drivers behind offshoring and to understand how to make it work by learning from experiences of companies who have outsourced product development to third parties, or set up their own R&D centers in India .  

Emphasis was laid both on  strategic factors such as what led to the decision to offshore, as well as operational factors that played a role in successful deployment of the offshore model.  

The respondent profile was a mix of heads of development centers, account managers/business development managers, and users.  

The one to one interviews were analyzed using a framework created by Prayag, and the findings have been presented in the following report.    

The key takeaways from this study are the following-  

• Offshore product development is evolved and India is a favored destination
• Both models- use of third party and setting up own development center are prevalent and have their merits. Choice of the appropriate model needs to be made on a case-to-case basis.
• For early stage start-ups the recommended path is to go with a mid-sized third party to start with, unless there are compelling IPR or skill availability related reasons to do otherwise. The other criterion to consider is whether the space occupied to the start-up is highly specialized and requires sophisticated lab facilities and infrastructure.
• Critical success factors at a strategic level include buy-in from all levels of management (top and operational), having a clear road map for offshoring, and right choice of partner/DC head.
• On the operational side, ability to get the right people, people management and communication are important factors.