Offshore Behavior of Service Firms: Policy Implications for Firms and Nations

Abstract

The aim of this paper is to provide a more in-depth view on the offshore behavior of service firms and translating findings of an extensive research study on offshoring in the service sector into policy implications for firms and nations. In the article a distinction is made between different types of offshoring service firms use to relocate their business activities and jobs involved to foreign locations, i.e. under direct control (captive offshoring) or using an intermediary (offshore outsourcing) or a combination of both, as a special form of internationalization. The findings of our research study show that different motives result in distinct choices of service firms for offshore outsourcing or captive offshoring and offshore locations. Furthermore, various categories of motives relate to different barriers. More importantly, results of this study show that alignment of initial motives and set goals in different phases of the offshoring process increases the success rate of offshoring by service firms.