We treat offshoring as a managerial innovation. Should it still be considered an innovation? The purpose of this paper is to use innovation theory, especially, Rogers' diffusion of innovation theory (DOI) to examine this question.
The paper examines the case of electronic data systems (EDS), a very large Information Technology Professional Services (ITPS) company, using a case study approach based on interviews, internal documents and secondary sources.
At EDS it was found that offshoring has been fully assimilated within just a few years. During the early 2000s, EDS faced the challenge of a large‐scale shift in the competitive landscape and moved a large share of its global operations to offshore locations. The paper shows how this innovation has been diffused within the firm through the creation of an assessment and migration organization that has institutionalized and routinized the process of offshoring. At EDS, each client project goes through a centralized offshoring assessment process to determine where best to send the work and how to perform the knowledge transfer quickly and effectively. Observations are made about the speed of diffusion: about 7‐10 years in this case, from initial innovation agenda setting to its routinization.
This paper filled a gap in studying managerial innovation; made some estimates of the speed of diffusion; and applied the hypothesized stages of innovation diffusion to the context of offshore software services. The limitation is that this is a case study and therefore generalization may be qualified.
This paper is among the first that studies offshoring (as opposed to outsourcing) in terms of DOI theory.
