As increasing number of product firms across the globe are boarding – or at least thinking to board - the offshore bandwagon, I think it is important for these firms to first understand the stages in sending product development offshore. Here, the golden rule is - building Product Design Offshore Capability is a journey, and not a quick fix.

While developing a globally distributed R&D system, firms essentially pass through four stages as they mature their program management processes, define what is core and non-core development, and build trust in their suppliers. Forrester’s research shows that the evolution parallels just how clients’ IT services relationships develop. And over a 36 to 60-month voyage, firms build internal support for sending more complex work to countries like India and steadily update their internal processes to suit distributed product design.

The four stages in taking product development work offshore:

Based on a comprehensive study of more than 20 companies that use offshore locations (such as India) for product design, our research shows that the migration of the work follows the same four-stage offshore evolution that Forrester has observed in traditional IT services. This four-phase framework takes customers from having no offshore presence to a point where the global delivery has become a core competency for the customer. The way firms leverage remote locations, the complexity of the work sent offshore, and the level of project management skills varies substantially across the stages.

Stage I: Bystanders. These companies either have no offshore initiatives or they have just started to investigate the potential for taking work to India or Russia. Clearly, these companies (high-tech and otherwise) have not developed the program management expertise to govern the offshore work. More than 50% of product companies fall in this category.