Offshoring and Coordination: A Case Study at Nordea

Abstract: The number of firms choosing to offshore activities is increasing, and service offshoring is predicted to change the way firms choose to compete. Yet, there are several challenges that firms tend to encounter when offshoring and due to the mismanagement of these, many offshoring projects fail to deliver results according to plan. This thesis aims to investigate how the use of coordination mechanisms affect the outcome of offshoring in an organization engaging in captive offshoring. To accomplish this, a qualitative case study has been performed at the Nordic bank Nordea and a theoretical framework has been created against which the empirical findings have been tested. This thesis has concluded that the two categories of coordination mechanisms, common ground and ongoing communication, have a positive effect on the outcome of offshoring. Also, leadership and culture have been found to influence the outcome of coordination mechanisms. Coordination has been found to derive from both formal and informal grounds where formal coordination springs from the actions of managers implementing coordination mechanisms. Informal coordination on the other hand is the result of trust and cooperation originating from the use of coordination mechanisms. With both types of coordination present the negative effects of offshoring challenges are mitigated, resulting in a positive contribution to the offshoring outcome.