Narrow Results

This paper is a non-technical survey of the literature on offshoring and outsourcing, with special focus on the relevance of this literature for Asia. We first see how and to what extent this new literature helps us understand firms' tradeoffs between outsourcing and integration, the variation in the mixes of organizational forms and the location of outsourced activities. We also explore what plausibly triggers offshoring and thereafter what determines its dynamics. Finally, we draw inferences from the existing theory and empirical work about the developmental impact of offshoring on Asia, with special attention to issues related to inequality and poverty.

This paper evaluates data validity of available empirical sources and the extent of services sector labor market impact of offshoring in the US, EU-15 and Japan. A three-tier data validity hierarchy is identified, while the employment impact of offshoring in the three regions is found to be limited. Correspondingly, developing Asia is unlikely to experience large-scale employment gains as a destination region. Instead, the crucial role of domestic entrepreneurs in the growth of the Indian IT-related services industry is highlighted, as are the twin educational challenges facing developing Asia: the need to improve both primary and higher education simultaneously.

This paper examines India's role in services outsourcing within Asia. It provides a brief overview of the global as well as Indian services outsourcing industry. The core section examines India's relationship with other Asian countries such as China, the Philippines, Vietnam, and Malaysia in service outsourcing. It examines the extent to which these countries pose a competitive challenge to India and concludes that at this time, India is far ahead although it is likely to face growing competition as its costs rise. The paper highlights the need to move beyond this comparative paradigm and to examine the complementary and collaborative opportunities that exist between India and other Asian countries in services outsourcing. It concludes that there is considerable scope for such synergies and that India and other Asian countries can form different parts of a larger regional or global delivery model. Regional and bilateral agreements within Asia can also facilitate this process.

This paper studies the impact of outsourcing on productive performance of manufacturing industries in Singapore. The paper develops an outsourcing measure based on the narrow definition of intermediate imports given by Feenstra and Hanson (1996, 1999). Based on the input-output tables, the study uses 5-digit industrial-level classifications to measure the impact of outsourcing on productivity of the manufacturing industries in Singapore from 1995–2004. The outsourcing measure is further decomposed by import of services, import of IT services and import of business services. This decomposition allows us to study the impact of outsourcing of services in addition to the cross-border fragmentation of products and components. The results suggest strong positive impact of cross-border sourcing on the productivity of the manufacturing sector. The decomposition of outsourcing measure indicates that the manufacturing industries are more involved in cross-border sourcing of services, particularly in business services.

As a result of IT outsourcing and offshoring, IT professionals and educators are faced with the following question: What SE & KE skill sets will make a software engineer or a knowledge engineer immune to the impact of outsourcing and offshoring? This article summarizes the position papers from a panel held during the 2006 International Conference on Software Engineering and Knowledge Engineering from July 5 to 7 at the Hotel Sofitel, Redwood City in California, USA. Bringing software and knowledge engineers closer to the needs of their prospective customers and providing more value than simply pure software development and maintenance, is an open challenge at least for traditional computer science and software engineering curricula.

Following the increasing globalization of value chains, offshoring is gaining importance for firms' competitiveness. Strategy, management, and organizational scholars have analyzed this phenomenon from different theoretical lenses and with a variety of methodological approaches. However, literature lacks a framework within which to analyze firms' offshoring strategies and processes. This paper proposes an interpretative framework to understand extant literature as well as to identify possible gaps to be fulfilled with future research. The identified categories of the proposed interpretative framework are: antecedents, processes, and outcomes. We use case-based evidence to populate the framework and to highlight implications for innovation management.

This paper examines various economic issues on offshoring (international outsourcing). It begins with a discussion of the factors that determine a firm's decision to offshore and illustrates, with simple models, the cost saving of offshoring certain stages of production and the advantages of specializing in some input production and engaging in input trade. The paper then examines the recent trend in offshoring with special emphases on the rise of IT offshoring and the characteristics of firms engaging in offshoring and exporting. The effect of offshoring and national welfare is then discussed in light of numerous results in recent empirical studies. Finally, after examining the current US programs to aid the displaced workers, the paper discusses various short-run and long-run policy proposals to alleviate the negative impacts of offshoring.

This chapter explores the attractiveness of the Middle East and North Africa (MENA) relative to other regions for trade in services by European firms. Businesses no longer just search for low-cost labor but also seek to tap into the talent markets of emerging countries in knowledge-intensive core business functions. The availability of large talent pools that can be trained and retained is a key deciding factor in the choice of an offshore location, as is the size and the depth of the female labor force. The study finds that the MENA region has the necessary market and labor fundamentals to become a viable near-shoring destination for European firms and that it has a significant advantage associated with its female talent pool. Nonetheless, it also has highly significant disadvantages, due to impediments that women face in joining and staying in the labor market. Overall, the findings suggest that MENA may lose the competition to attract jobs in this growing global sector.

Information Technology Outsourcing (ITO), Business Process Outsourcing (BPO), and Knowledge Process Outsourcing (KPO) have become accepted practices and strategic choices for many firms among developed and newly industrialized nations. Why? Comparative advantage of countries and companies is the basic driving force for global sourcing. Labor arbitrage is only one of the several benefits offered by global sourcing. Global sourcing does have inherent risks — loss of control being one of the primary risks. What? The global market for ITO took off in the late 1980s. Since the beginning of the new millennium, global market for BPO has also been growing steadily. Even KPO market has taken off in the last five years. Over the years, the functions being outsourced have increased in scope and scale and have climbed the value chain ladder. ITO functions include information system (IS) analysis, IS design, IS development, IS implementation, IS maintenance, and sometimes the management of entire data centers. BPO functions include call centers, accounting, payroll, employee benefits, tax preparation, radiology analysis, films and cartoons production, healthcare including medical tourism and surrogate motherhood. KPO functions include research about company’s industry, business, and market. KPO requires significant amount of domain knowledge about a client company and analytical skills. Where? Outsourcing locations can be onshore, nearshore, offshore, farshore, multi-shore. Each one offers certain advantages and disadvantages. Choosing right shore or right shores requires thorough analysis of all factors in each context. Crowd sourcing is increasingly becoming popular. Cloud sourcing is steadily replacing traditional sourcing. How? Several arrangements are possible for global sourcing. These include insourcing through subsidiaries in host countries, joint ventures, or outsourcing to third parties.

Achieving success in global information technology (IT) sourcing or offshoring projects is a significant, emerging challenge for many organizations. In following the Global Sourcing Life cycle, the ongoing management cycle of the global sourcing relationship is a critical stage for managing the project and successfully achieving the contracted results. Success in this stage requires a significant amount of detailed management, cooperation, and coordination among the client and vendor organizations. This chapter synthesizes key findings from eight dyadic case studies consisting of 56 interviews in total from both client and vendor firms detailing their IT offshoring ongoing management experiences. The case investigations lead to the discovery of 12 disparate and innovative lessons learned emerging from the experiences and challenges involved with global IT offshoring on the part of client and vendor firms. These lessons learned cover a wide assortment of personal (individual), and organizational issues encountered while offshoring. Accordingly, the lessons learned are organized into three main categories: (1) economic, (2) strategic, and (3) relational. The presented lessons learned play a key role in the ongoing management stage of the Global Sourcing Life cycle. The list of lessons learned can suitably guide client and vendor firms in their plans to engage in successful IT offshoring projects in the future.

We develop a two-country general equilibrium model, in which heterogeneous firms offshore routine tasks to a low-wage host country. In the presence of fixed costs for offshoring the most productive firms self-select into offshoring, which leads to a reallocation of domestic labor towards less productive uses if offshoring costs are high. As a consequence domestic welfare may fall. The reallocation effect is reversed and domestic welfare rises if offshoring costs are low. The aggregate income distribution, comprising wages and entrepreneurial incomes, becomes more unequal with offshoring.