Scandinavian engineering consultants doing offshoring engineering – new forms of knowledge and service sourcing

Paper in proceeding, 2013

Offshoring, a strategy of transferring activities across national borders, is becoming increasing attractive for engineering consulting firms operating in Europe. The consulting companies are knowledge based and continually struggle creating and maintaining knowledge intensive processes and organisations. They may experience lack of skilled personnel and or an increasing pressure on costs. Moreover countries like India offers highly qualified engineers at a relative low pay. The aim of this contribution is to investigate Scandinavian based consulting engineers’ experiences using offshoring. A host of possible organizational forms can be used to source knowledge globally. It can encompass a single project, but can be a profound collaboration and encompass a strategic transformation of the Scandinavian firm. Theoretically the paper builds on international business, knowledge intensive professional services and strategic management approaches. A literature study on offshoring in general and a compilation of studies of engineering offshoring shows that offshoring involve significant strategic choices beyond single project endeavours. The empirical method is combining desk research of the 30 largest consulting engineering companies in Denmark, Sweden and Norway with two case studies of a long term commitment and a project based. The firm strategies in using offshoring are differentiated; in house, outsource, offshore, and captive local investment. Even within the project frame, trust, communication and proper (soft) management are important and in the project studied the communication is hampered and extra resources used for basic knowledge accumulation, such as knowledge related to the building code used in Sweden. The company with long term commitment on the other hand have modified its overall strategy to incorporate a ever increasing element of offshoring in their business.The results thus show that a transactional approach to the collaboration is insufficient and that the offshoring firm can be seriously challenged in its strategy when trying to enable knowledge integration.