Knowledge Transfer in Offshore Insourcing

Offshore sourcing is the latest trend unfolding where companies look for cheaper offshore resource options to reduce their baseline costs. This involves the retrenchment of more expensive onshore resources, to be replaced by the hiring of cheaper offshore resources. A key activity is the transfer of knowledge from the onshore resource to the offshore resource. This paper looks at the key activities involved, namely, the management factors that determine whether or not to offshore a team; the preparatory activities that take place to enable successful knowledge transfer; the transfer of knowledge; and the subsequent integration of that knowledge into the organisation’s routines. Through two in-depth case studies of the technology department in a multinational bank, our findings suggest that each activity has its own unique characteristics, namely, economically and risk driven, matching of pre-requisite experience for optimization of absorptive capacity, intensive extraction of tacit knowledge, and organisational realignment.