The relocation of jobs to low-wage countries (offshoring) has been a widely used approach of European companies in search of competitive advantage during the recent decades. Whereas in the past production and manufacturing were affected, now the services industry starts to use this option. IT and telecommunications are among the most important services branches of the Western European economies today. Offshoring is becoming a macro-economic problem in these countries because a lot of jobs will be lost.
This dissertation researches the impact of offshoring on the German IT industry. Furthermore it points out the consequences for project management, quality assurance and human resources management. It highlights the pros and cons for the offshoring companies as well as the concerned employees.
This research starts with a detailed literature review that clarifies important key terms and outlines the key findings of other authors. After that the methodology chapter describes the theoretical framework of this dissertation. Within the scope of this research a survey was conducted among 335 German IT companies. As the surveyed companies are primarily small and medium-sized enterprises (SME) it ascertains the attitudes of this type of firms towards offshoring. The subsequent case study of the telecom supplier Alcatel shows the point of view of a global player on offshoring. At the end, the analysis of the results of the survey and the conclusions from the case study lead to the recommendations for large companies, SMEs and the affected IT employees.
The key finding of this dissertation is, that offshoring is a growing trend that no German IT company can deny regardless of its size. Currently the willingness for offshoring is strongly increasing, which means that many firms are in force to deal with this topic and the German IT employees must cope with changing demands in kind of IT jobs.
Table of Contents
1 Introduction
1.1 Background and Context
1.2 Research Objectives
2 Literature Review
2.1 Definition of Key Terms
2.2 Prerequisites for Offshoring
2.2.1 Globalisation
2.2.2 Decline of Transaction Costs
2.2.3 Global Sourcing
2.2.4 Process Orientation
2.3 Why Offshoring?
2.4 Opportunities and Threats
2.5 Where to Locate?
2.6 Choosing the Vendor
2.7 Employment Challenges
2.8 Offshoring – The Next Bubble?
3 Methodology
3.1 Design
3.2 Primary Data Collection
3.2.1 Interviews vs. Questionnaire
3.2.2 Structure of the Questionnaire
3.2.3 Sample and Processing
3.3 Secondary Data Evaluation
3.4 Case Study: Alcatel
4 Data
4.1 Results of the Questionnaire
4.2 Case Study: Alcatel
5 Analysis
5.1 Impact on the German IT Industry
5.1.1 How Large Companies Practise Offshoring
5.1.2 How SMEs Meet the Offshoring Challenge
5.1.3 Implications for the German IT Employment
5.2 Impact on Quality
5.3 Impact on Project Management
5.4 Impact on Human Resources Management
6 Conclusions
7 Recommendations
Research Objectives and Themes
This dissertation examines the impact of offshoring on the German IT industry, specifically focusing on the consequences for project management, quality assurance, and human resources management, while highlighting the distinct attitudes and strategies of SMEs versus large multinational corporations.
- Economic drivers and theoretical foundations of offshoring
- Comparative analysis of offshoring strategies between SMEs and large firms
- Challenges related to quality control, project management, and cultural integration
- Macro-economic impact on German IT employment and job security
- Strategic recommendations for navigating the offshoring process
Excerpt from the Book
The Hi-speed Company – Telecom, Matrix and Beyond
In 1987, Pierre Suard had been appointed head of Alcatel. He recognised that the structural problems would become serious due to the upcoming changes in the business environment. He strongly believed in decentralisation and wanted to create a pan-European profile for Alcatel. The first step was the reduction of headquarters staff. The next step was the introduction of the matrix structure. The matrix organisation employs a structure that has two different dimensions. One dimension is the country level; the other dimension is the business area level. The matrix structure is used by many global organisations today, as at it’s best, it helps to reduce complexity, enables the smooth sharing of resources across the company and establishes economies of scale. A company that adopts this structure typically gains agility and is able to react more quickly to market and customer demands. But, at its worst, the matrix can actually increase complexity if it is not implemented properly.
Summary of Chapters
1 Introduction: Provides the background for the relocation of IT jobs to low-wage countries and establishes the core research questions regarding the impact on the German IT industry.
2 Literature Review: Defines key offshoring terms and explores the drivers of global sourcing, process orientation, and the strategic risks and opportunities involved.
3 Methodology: Details the research design, including the use of surveys for primary data collection and the selection of Alcatel as a representative case study.
4 Data: Presents the survey findings from 45 German IT companies and provides a deep dive into the corporate transformation of Alcatel.
5 Analysis: Evaluates the impact of offshoring on different company sizes, quality standards, project management practices, and human resources management in Germany.
6 Conclusions: Summarizes the growing trend of offshoring and emphasizes the structural challenges facing the German IT market and its workforce.
7 Recommendations: Offers practical guidance for large corporations, SMEs, and individual IT employees to adapt to the changing global landscape.
Keywords
Offshoring, Outsourcing, German IT Industry, Global Sourcing, Cost Reduction, Project Management, Human Resources Management, Quality Assurance, SMEs, Alcatel, Strategic Transformation, Labour Market, Globalization, Technology Sector, Rightshoring
Frequently Asked Questions
What is the primary focus of this research?
The research explores how the relocation of IT jobs to low-wage countries affects the German IT industry, focusing on both large enterprises and small to medium-sized businesses.
What are the central themes discussed in the work?
The work covers economic motivations for offshoring, quality and performance standards, the structural changes within firms, and the resulting challenges for employees and project management.
What is the main objective of this study?
The primary goal is to analyze the consequences of offshoring for project management, quality assurance, and human resources, and to assess how German firms can remain competitive.
What methodology is used to conduct this research?
The author uses a mixed-methodology approach, combining an empirical survey of 335 German IT companies with secondary data evaluation and a specific case study of Alcatel.
What does the main body of the work cover?
The main body investigates the prerequisites for offshoring, analyzes specific company data, evaluates organizational shifts, and discusses the socio-economic implications of the trend.
Which keywords best characterize this dissertation?
Key terms include offshoring, IT industry, cost reduction, human resources management, strategic decision-making, and organizational transformation.
How does the Alcatel case study illustrate the broader offshoring trend?
The Alcatel case illustrates the challenges of integrating diverse national entities, the necessity of focusing on core competencies, and the practical implementation of downsizing in response to global market pressures.
Why is the difference between SMEs and large corporations significant in this study?
SMEs have different resource capabilities, levels of international experience, and organizational structures compared to large firms, which significantly influence how they approach and manage offshoring initiatives.
- Quote paper
- Dipl.-Ing., MBA Andreas Birkholz (Author), 2004, Offshoring of German high-tech IT jobs to low-wage countries, Munich, GRIN Verlag, https://www.grin.com/document/32533
