egy are also mostly large players primarily concerned with increas- ing operational efficiencies in the near future.
Source: duke University/The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.8: Percent of companies planning new functional implementations in the next 18 to 36 months
Information technology
With strategy Without strategy 42
29 37
19 35
39 33
19 21 16
21
13 19
16 19
13 16
19 12
23
7 0
Call centers/help deskSoftware developmentFinance and accounting Research and developmen
t
Human resourcesProduct design Marketing and sales
Procurement Engineering ser
vices Legal ser
vices
7.4. The globalization of innovation marches
Source: duke University/archstone Consulting offshoring research Network 2005. Survey; duke University/Booz allen Hamilton offshoring research Net- work 2006. Survey and duke University/The Conference Board offshoring re- search Network 2007/2008 Survey.
graph 7.9: Cumulative percent of companies offshoring functions overtime
0 60 50 40 30 20 10
1990 1992 1994 1996 1998 2000 2002 2004 2006
Software development Information technology Administrative services
Product development Call centers Marketing and sales Procurement
respondents reported that product and software development are the most frequently offshored applications, which is true for both the overall survey and industry-specific results (graphs 7.10 and 7.11).
Source: duke University/The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.10: Distribution of functional implementations initiated in 2007
(percentage)
3 3
22
20
19 17
16
Software development Administrative services Procurement
Marketing and sales Information technology
Call centers Product development
3 3
22
20
19 17
16
Software development Administrative services Procurement
Marketing and sales Information technology
Call centers Product development
main findings of the offshoring research network [ 163 ]
Source: duke University/The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.11: Distribution of functional implementations by industry
(percentage)
34
31 12
12
5 5 1
25
22 15
14 14
7 3
Administrative services Call centers Marketing and sales
Technical services Software
Procurement Software development Information technology Product development
9 4 11
11
15 16
35 Manufacturing
34
31 12
12
5 5 1 25
22 15
14 14
7 3
Administrative services Call centers
Marketing and sales Procurement
Software development Information technology Product development
9 4 11
11
15 16
35 Manufacturing
34
31 12
12
5 5 1 25
22 15
14 14
7 3
Administrative services Call centers
Marketing and sales
Technical services Software
Procurement Software development Information technology Product development
9 4 11
11
15 16
35 Manufacturing
Companies across Europe and the United States reported off- shoring highly skilled innovation activities (graph 7.12), includ- ing functions that require a high level of knowledge and expertise and involve none repetitive tasks (i. e., product design, r&d, en- gineering services, and software development).
Source: duke University//archstone Consulting offshoring research Network 2005. Sur- vey; duke University/Booz allen Hamilton offshoring research Network 2006. Survey and duke University/The Conference Board offshoring research Network 2007/2008 Survey.
The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.12: Distribution of functional implementations by country of origin
(percentage)
80 90 100
60 70
40 50
10 20 30
Belgium
Netherlands Germany
Scandanavia Spai U.K.
n U.S
0
Procurement
Administrative Marketing and sales
Call centers Software development Information technology Product development
80 90 100
60 70
40 50
10 20 30
Belgium
Netherlands Germany
Scandanavia Spai U.K.
n U.S
0
Procurement
Administrative Marketing and sales
Call centers Software development Information technology Product development 80
90 100
60 70
40 50
10 20 30
Belgium
Netherlands Germany
Scandanavia Spai U.K.
n U.S
0
Procurement
Administrative Marketing and sales
Call centers Software development Information technology Product development
respondents increasingly considered growth strategy and domestic shortages of qualified personnel important strategic drivers for offshoring innovation and software development (graph 7.13).
Source: duke University/The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.13: Percent of respondents rating drivers as “important”
or “very important”
Software and product development Other Labor cost saving
s 8892
69 57
69
49 6064
59
38 51 52 50
61 4551
38 20
3539 3336
32 39
2830 26
20 2123 2120
Growth strategy
Access to qualified personnel Other cost saving
s
Increasing speed to market Part of a larger global strategy
Competitive pressure Business process redesig
n
Domestic shortage of qualified personnel Exploit countr
y-specific advantages
Exploit location-specific advantages Improved ser
vice levels
Accepted indust ry practice
Access to new market s
Enhancing system redundancy Differentiation strategy
apart from cost concerns, respondents said the most impor- tant location criteria for innovation and software development ac- tivities are talent availability and access to employees with a high level of expertise (graph 7.14).
The offshore destination for innovation activities depends on the firm’s country of origin (graph 7.15).
Service quality and employee turnover offshore are considered two of the most important risks affecting innovation and software development applications (graph 7.16).
Source: duke University/The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.14: Percent of respondents rating location factors as “important”
or “very important”
Software and product development Other Low cost of labo
r 72
79 68
60 67
57 52
65 55
36 3034
22 34
22 32
22 29
20 38
20 21 1821 17
27
12 12 11 24
9 10 2 3
Talent pool available High level of expertise
Low costs (besides labor costs)Matches language requirements Location of the best se
rvice provider Cultural proximit
y
Political stability in host countr y
Quality of infrastructur e
Co-locating with existing BP facility offshore Avoiding hot spot
s
Access to local marketGeographical proximity
Go-locating with existing manufacturing plant offshore
Supporting existing customers locally Government incentives
Other
Source: duke University//archstone Consulting offshoring research Network 2005 Survey; duke Uni- versity/Booz allen Hamilton offshoring research Network 2006 Survey; and duke University/The Con- ference Board offshoring research Network 2007/2008 Survey. The Conference Board offshoring re- search Network 2007/2008 Survey.
graph 7.15: Location distribution of IT, software, and product development by country of origin
(percentage) 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India
100 90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India 100
90 80 70 60 50 40 30 20
Belgium Germany NL Scand Spain U.K. U.S.
10 0
Australia Philippines Other Asia Latin America United States
Africa Russia Middle East
Western Europe Eastern Europe China Mexico
Canada India
Source: duke University/The Conference Board offshoring research Network 2007/2008 Survey.
graph 7.16: Percent of respondents rating risks as “important” or “very important”
Software and product development Other Service qualit
y 51 69
53
47 47 49 47
43 45 36
42 54
41 36 39
33 36 41
35 44
18
High employee turnove r
37
Operational efficiency Loss of managerial control
Lack of intellectual property protection Data securit
y
Loss of internal capabilities/
process knowledge Lack of buy-in of offshoring
in corporate cultur e Wage inflatio
n
Lack of acceptance
from internal clientsLack of acceptance from customers
Not surprisingly, service providers have responded to the off- shoring of innovation by increasing their product development and knowledge process outsourcing (KPo) offerings (graph 7.17).
Source: duke University/Booz allen Hamilton Service Provider 2007 Survey.
graph 7.17: Cumulative percent of providers offering classes of services
(percentage)
0 70 60 50 40 30 20 10
1980 1985 1990 1995 2000 2005
Information technology Product development Call centers
Administrative services Procurement
Knowledge/analytical services Marketing and sales