LEARNING TO LET GO

MORE THAN 8,000 MILES AWAY in Calcutta, India, a team of engineers is designing bottle caps and their production molds for a variety of products ranging from liquor to motor oil. Back home in Indiana, a team of engineers that used to design the same bottle caps now focuses on more value-added engineering

The U.S. engineers work for Indianapolis-based Alcoa Closure Systems International (CSI), a business unit of $26.2 billion aluminum manufacturer Alcoa Inc. The Indian engineers work for Tata Consultancy Services Ltd., an information technology consulting and business process outsourcing (BPO) firm based in Mumbai, India. Alcoa CSI's decision to outsource a process typically viewed by manufacturers as a critical part of product development is part of a growing trend in manufacturing.

What began as the movement of non-core processes-such as human resources, IT, customer service and indirect procurement-to third-party offshore locations where the jobs can be performed cheaper, is picking up steam in other business processes that directly impact manufacturing. As evidence, a 2005 study conducted by Boston-based AMR Research Inc. shows that 30% of 283 manufacturers surveyed are outsourcing a portion of their product-development process. In that same survey, 72% of respondents said they expected to increase the outsourcing of their R&D and engineering processes by 2008.