The impact of offshoring on knowledge‐intensive services: A study of activities in service production processes

Abstract

Abstract Research summary: In order to identify the impact of offshoring on knowledge‐intensive services (KIS), the activities related to the transfer and co‐creation of knowledge in the service production process are studied in this paper. The concepts of activity systems and activity structures from practice theory are used to analyze these activities. A qualitative case study of multiple offshored KIS shows that offshoring changes activity systems and structures within the production process. Activities related to the transfer of knowledge are reduced while the co‐creation of knowledge remains evident in the process. As a result, KIS become more modularized and less customized, evidencing changed KIS characteristics. The paper adds to service offshoring and international service management literature and extends practice theory. Managerial summary: This paper studies how knowledge‐intensive services (KIS) are impacted by a geographic relocation of the services across country borders. The relocation, termed offshoring, implies that the service client and provider are geographically separated and need to interact on a distance in order to produce the service. As the service production is dependent on the transfer of existing knowledge and co‐creation of new knowledge by clients and service providers, the geographic distance is challenging KIS production processes. An empirical analysis finds that the geographic distance is changing the way the services are produced. The transfer and co‐creation of knowledge are reduced leading to fewer interactions between clients and service providers, mainly knowledge coproduction remains important. These changes lead to altered KIS production processes and service characteristics.