Outsourcing Of Business Services Research Articles

The Nexus among Competitively Valued Exchange Rates, Price Level, and Growth Performance in the Turkish Economy; New Insight from the Global Value Chains

Currently, global value chains (GVCs) are increasingly shaping the global economy, covering a growing share of international trade, GDP, and employment globally. Global trade is impacted by the emergence of GVCs in areas as diverse as commodities, electronics, and business service outsourcing, among other areas, since the countries involved in the GVCs hold some value(s) and benefit(s) from the exports of the finished product. In this study, the nexus among Competitively Valued Exchange Rates, Price level, and Growth Performance in the Turkish Economy; New insight from the GVCs is investigated using annual data from 1980 to 2020 within the framework of the ARDL bound test, Bayer and Hanck Cointegration (BHC) test, and ECM. The study results revealed that the relationship among real effective exchange rate, exports, and imports induced economic performance and external trade competitiveness particularly when directed at GVCs in both the short and long run. The study recommends that policies enhancing a 10% equilibrium convergence are required annually to competitively minimize the dependence on foreign value-added inputs by importing only world-class inputs for value addition and exports benefits in the competitive GVCs world. Furthermore, monetary policy, GVCs, and economic growth should be investigated.

Latent classes of accounting outsourcing firms

PurposeOutsourcing of accounting increasingly attracts research interest, but research concerning the impact of the benefits of outsourcing on firm capabilities and performance across firms remains limited. This paper aims to reveal the unobservable latent classes of firms that outsource their accounting functions by testing a research model concerning the topic.Design/methodology/approachThe authors build on accounting outsourcing research and adapt a research model from the literature on business services outsourcing. The authors analyze the data from 261 small and medium-sized enterprises in Europe using finite mixture structural equation modeling (FMSEM) and additional methods.FindingsThe authors reveal three latent classes with different research models. Thriving outsourcers (N = 103) have a positive attitude toward accounting outsourcing and associate competitive capabilities with mediating the relationship from outsourcing benefits to firm performance. Annoyed outsourcers (N = 143) are dissatisfied with their accounting service provider and only associate outsourcing benefits with competitive capabilities. Convenient outsourcers (N = 15) feel comfortable with their current accounting service provider and associate outsourcing benefits with neither capabilities nor with firm performance.Research limitations/implicationsThe study initiates the discussion about the unobservable heterogeneity among accounting outsourcers. The study introduces the use of the FMSEM method in accounting outsourcing research.Practical implicationsThe study offers novel insights concerning accounting outsourcers and proposes original explanations for their outsourcing decisions that would help both the outsourcers and accounting service providers.Originality/valueThe study might be the first to categorize accounting outsourcers using FMSEM.

TENDENCJE ROZWOJU RYNKU NOWOCZESNYCH USŁUG BIZNESOWYCH W POLSCE

Globalizacja prowadzi do integracji i współzależności państw. Towarzyszy jej tworzenie nowych instytucji, których działalność przekracza granice państwowe. W ostatnich kilkunastu latach na świecie rozwija się dynamicznie rynek nowoczesnych usług biznesowych. W artykule przedstawiono tendencje rozwoju nowoczesnych centrów usług biznesowych w Polsce. Pokazano dynamikę zmian w tym sektorze z prognozą na rok 2017. Określono motywy decyzji inwestorów zagranicznych o lokalizacji centrów outsourcingowych oraz ich związek z rozwojem rynku nieruchomości biurowych. Branża stała się też swoistym motorem napędzającym rynek nowoczesnych nieruchomości biurowych. Powstało prawie 1000 centrów usług, w których stworzono ponad 200 tys. nowych miejsc pracy.

Business service outsourcing in manufacturing firms: an event study

PurposeMany manufacturing firms entrust partners to provide services on their behalf. However, it is not clear whether and when firms can capture the potential value advantages of outsourcing business services. The purpose of this paper is to investigate the effects of different types of business service outsourcing on firm value.Design/methodology/approachThe paper uses event study methodology to estimate the impact of business service outsourcing announcements on abnormal returns of publicly traded manufacturing companies in Europe.FindingsExternal service outsourcing that directly affects the company’s customers leads to more favorable outcomes than internal service outsourcing. This effect is contingent on the strategic outsourcing intention, the service’s reliance on technology, and the choice of the outsourcing partner.Research limitations/implicationsFindings show that firm value depends critically on the service value it delivers to customers. Future research could explore further contingency variables, and investigate the role of service outsourcing networks and relationships.Practical implicationsThe insights of this study help managers to decide why, how, and to whom they should outsource their business services, as well as how to justify their outsourcing decisions, and how to communicate them toward the financial markets.Originality/valueThis research sheds light on the value implications of outsourcing decisions. Two types of business service outsourcing are distinguished, namely, internal and external. Furthermore, the study enhances our understanding of a contingency perspective on service outsourcing decisions.

Conflict resolution in business services outsourcing relationships

Many organizations source administrative business services like information technology, human resources, procurement, legal, financial and accounting services through external service providers, a practice known as Business Services Outsourcing (BSO). Many of these relationships are strategic, in the sense that they are large, underpin clients’ business strategies, and the client can become highly dependent on service provider capabilities and performance. The BSO market is over $1trillion in size and has been growing for two decades. Despite the size and maturity, up to 50% of BSO relationships result in poor outcomes, partly because partners cannot resolve conflicts. Based on interviews with client and provider leads from 13 BSO relationships, we answered the research question: “What types of inter-organizational conflicts arise in BSO relationships and how do partners resolve them?” We extended the prior literature on inter-organizational conflict frameworks by conceptualizing three types of conflicts specific to BSO: commercial conflicts, service conflicts, and relationship conflicts. Conflicts as we study them here are not minor disagreements, but have a strategic dimension. Commercial conflicts were the most serious because outsourcing relationships are firstly commercial transactions—a provider must earn a profit and a client must meet its economic business case to be viable. Theoretically, we found Thomas and Kilmann’s typology of conflict resolution styles to be robust enough to characterize the BSO conflict cases, provided a switched style category was included. In our data, we found that only the collaborative and switched-to-collaborative styles resolved conflicts to the satisfaction of both partners, which is consistent with theory. Novel findings that extend or contest prior theory are identified as part of a future research agenda. For practitioners, we also identified five effective conflict resolution behaviors.

External and Internal Factors Motivating Outsourcing of Business Services by Meeting-Industry Companies: A Case Study in Krakow, Poland

The aim of this article is to evaluate the external and internal factors motivating the selection of business services to be outsourced by key meeting-industry (business tourism) players, with a particular focus on knowledge-intensive business services. The case-study method was adopted in the article to analyze the motivation behind outsourcing of knowledge-intensive business services by meeting venues and event companies in Krakow (Poland). The results confirm that event companies tend to subcontract out core services connected with the organization, promotion and/or management of events, event services, and technical support for events.

Special issue on global sourcing of business and IT services

I ncreasing globalization and technological developments have contributed to the growth of the outsourcing and offshoring trends worldwide. These trends started in the late 1980s–early 1990s as Information Technology Outsourcing (ITO). This has been expanding to include Business Processes and Services (BPO), and today also covers a wide range of knowledge-intensive and strategic processes and services. The global IT outsourcing ITO market has increased each year since 1989, when global ITO was only a US$9–$12 billion market. On conservative estimates, looking across a range of reports and studies, global IT outsourcing revenues will probably exceed $290 billion in 2012. With business process outsourcing revenues exceeding $175 billion in the same year, and offshore outsourcing representing more than $85 billion of these combined revenue figures, it is very clear that, with its 20 year plus history, outsourcing of IT and business services is moving into becoming an almost routine part of management, representing for many major corporations and government agencies the greater percentage of their back office expenditures. Moreover, all projections we have looked at or made suggest continued growth over the next 5 years (2012–2016). Our own synthesis of the reports from Everest, Gartner, NASSCOM and IDC suggests that ITO global growth will be in the range of 5–8% per annum, with business process outsourcing rising by 8–12% per annum, and, subsumed within these, offshore outsourcing growing at an even faster annual rate. Client organizations continue to have a strong appetite for contracting with domestic, offshore and global BPO providers, and offshoring remains strong despite some reshoring pressures in developed countries. The year 2011 saw slowing of BPO growth in many markets with a pick up later into 2012. Some, but by no means all, are now experiencing growth rates above 12% per annum. In practice, offshoring and outsourcing often retain their scale through recessionary as well as growth periods, making them attractive businesses for growing economies. A highly competitive global services market presents opportunities and revenues for countries able to offer the right mix of strong cost, reliable service and secure location. The growth of outsourcing and offshoring affects all industries and organizations, and has also attracted the attention of governments and politicians who are frequently found arguing in favour, or against, these phenomena. In Western Europe and North America, opinions are divided between seeing outsourcing as a potential danger, for example, people losing their jobs that are moved offshore, and as potential benefits – lower costs, accessing skills in short supply, supporting increased scale of expanding businesses. In the developing economies – and we have identified over 120 offshore locations for IT and business services – outsourcing and offshoring are usually perceived positively as bringing new business, foreign investment, and facilitating job creation and economic growth in these countries.

Survey results: are client organizations responding to anti‐offshoring pressures?

PurposeGiven the global economic recession, anti‐offshoring political campaign platforms and proposed anti‐offshoring legislation in many developed countries, organizations face pressure to keep jobs in their home country. The purpose of this study is to determine the extent to which organizations are responding to anti‐offshoring pressures. It aims to ask whether client organizations are changing their buying patterns for information technology outsourcing (ITO) and business process outsourcing (BPO) services because of anti‐offshoring pressures.Design/methodology/approachA survey was administered to respondents representing 84 client organizations that purchase ITO and BPO services. Nine countries are represented, but the data primarily capture US client responses.FindingsOverall, it was found that client organizations are not changing their buying patterns because of anti‐offshoring pressures. Client respondents report strong satisfaction with offshore outsourcing of IT and business services. In particular, clients favorably reported on the costs savings and increased flexibility with offshore ITO and BPO. Consequently, the majority of respondents have not altered how they select service providers or service locations because of anti‐offshoring pressures.Practical implicationsThe economic recession is prompting at least two pressures on client organizations: reduce costs and keep jobs at home. Based on the authors' findings, the former is more influential. Even though respondents indicated a moderate to high level of uncertainty about possible anti‐offshoring legislation being passed, client organizations continue to source IT and BP services without much consideration to anti‐offshoring pressures.Originality/valueAcademic researchers have conducted very few studies that examine the effects of public pressure on sourcing strategies of client organizations. This research contributes to the body of knowledge by filling that gap. ITO and BPO clients and practitioners, as well as politicians, lobbyists, and labor advocates will find the results pertinent.

Offshoring and Outsourcing Business Services to Central and Eastern Europe: Some Empirical and Conceptual Considerations

The global structural shift towards service-based foreign direct investment (FDI) across the world is a relatively recent phenomenon resulting from the increased tradability of services. Although India and Ireland have traditionally been viewed as the main receiver countries, the Central and Eastern European (CEE) region is becoming an increasingly popular destination for business service offshoring and outsourcing. The article focuses first on the empirical and conceptual challenges to understanding the offshoring and outsourcing of business services in the context of significant difficulties with their definition, categorization and classification. It discusses the shortcomings of quantitative data and provides a theoretical framework needed to understand the specific patterns of service sector FDI in the context of CEE. Second, the article outlines the current position of CEE countries as destinations for service sector FDI: it analyses the patterns of service sector investment and discusses the reasons for its emergence as a receiver region. The empirical material is drawn from 30 interviews conducted with senior managers in business service foreign investment in the Czech Republic, Hungary, Poland and Slovakia. The article concludes that the composition of services FDI flows is changing, reflecting the growth of resource seeking vertical investment in the region. The share of CEE countries in the global flows of this type of investments is still low, but the region shows a growing potential. Its attractiveness is based on a number of factors, like availability of skilled labour with strong language skills, low costs, favourable business and stable political environment, well-developed infrastructure and geographical and cultural proximity to Western Europe.

Beyond Offshore Outsourcing of Business Services

The re-organization of production across national boundaries has been extensively practised in industries such as motor manufacturing and clothing for the past four decades. This follows a realization by companies that competitive advantage would flow from retaining certain business functions ‘in-house’, while disaggregating, or externalizing, elements of the production process overseas to gain cost efficiencies (Ghoshal, 1987). Resting on the underlying principles of international division of labour, such sourcing decisions have tended to retain higher ‘knowledge orientated’ skills in advanced nations, while lower ‘value-added’ functions have been devolved to less-advanced regions.Following these earlier examples from manufacturing, it has become evident that a wide range of corporations, straddling a diverse range of industrial and service sectors, are recognizing the potential operational and competitive advantages of dis-aggregating business processes and services and relocating them on a geographically dispersed basis. Business functions amenable to international sourcing have included IT services, software, administrative and call centre or ‘voice’ facilities. It is perhaps not surprising that the United States, as a ‘liberal market’ economy (Hall & Soskice, 2001) has been at the epicentre of corporate moves to ‘marketize’ various components of business activity and to externalize such functions on the basis of cost–benefit-based criteria. At the outset we would note that outsourcing refers to the contracting of a job to another company, whether or not in the home country, offshoring means moving jobs out of the country, whether or not they leave the company (Blinder, 2009). The term offshore outsourcing therefore refers to the transference of an activity or function both outside the company and outside the country.This special issue originated in a symposium convened at the University of Hert-fordshire Business School in September 2011, under the auspices of GEBRU (Global Economy and Business Research Unit), entitled ‘the Offshore-Outsourcing of Business

The Stability of Offshore Outsourcing Relationships

Offshore outsourcing of administrative and technical services has become a mainstream business practice. Increasing commoditization of business services and growing client experience with outsourcing have created a range of competitive service delivery options for client firms. Yet, data from the Offshoring Research Network (ORN) suggests that, despite increasing market options and growing client quality and cost efficiency expectations, clients typically renew provider contracts and develop longer-term relationships with providers. Based on ORN data, this paper explores drivers of this phenomenon. The findings suggest that providers promote contract renewal by making client specific investments in software, IT infrastructure and training, and by involving clients in outsourcing operations, thereby increasing relation specific joint equity and creating opportunities for client monitoring and control. Interestingly, these strategies apply to routine rather than knowledge-intensive tasks, and are more likely to be applied by large rather than small providers. Surprisingly, high degree of contract specification makes contract renewal less likely. The paper contributes to the growing literature on strategic outsourcing of business services and the importance of governance mechanisms addressing ‘hidden costs’ as well as ‘hidden benefits’ of offshore outsourcing relationships.

Outsourcing and Offshoring of Business Services: Challenges to Theory, Management and Geography of Innovation

Massini S. and Miozzo M. Outsourcing and offshoring of business services: challenges to theory, management and geography of innovation, Regional Studies. Drawing on an original survey, this paper discusses the trends and challenges posed by the outsourcing and offshoring of business services. It documents and analyses the increasing offshoring of business services (administrative services, call centres, information technology services, procurement, and product development) from the United States and Europe to less developed countries, the functions offshored, the size of offshorers, their destination, and the delivery models, and it explores the role of information and communication technologies and the development of both large global services suppliers and entrepreneurial ventures in developed and less developed countries. The paper derives implications regarding outsourcing decisions, the globalization of high value-adding activities, such as product development and innovation, raising issues of evolving market structure and the emergence of technical clusters where companies develop expertise to provide, and compete for, activities and skills across a range of sectors. Massini S. et Miozzo M. L'approvisionnement à l'extérieur et les activités extraterritoriales des services aux entreprises: les défis à la théorie, à la gestion, et à la géographie de l'innovation, Regional Studies. Puisant dans une première enquête, cet article discute des tendances et des défis posés par l'approvisionnement à l'extérieur et les activités extraterritoriales des services aux entreprises. On décrit et analyse l'essor des activités extraterritoriales des services aux entreprises (services administratifs, centres d'appels, services de la technologie de l'information, approvisionnement, et développement de produits) des Etats-Unis et de l'Europe aux pays en voie de développement, les fonctions extraterritoriales, la taille des entreprises extraterritoriales, leur zone d'accueil, et les modes de livraison, et on examine le rôle des technologies de l'infomation et de la communication et le développement à la fois des grandes sociétés des services mondialisées et des créations d'entreprise dans les pays développés et en voie de développement. On en tire des conclusions pour la décision de s'approvisionner à l'extérieur, la mondialisation des activités à haute valeur ajoutée, telles le développement de produits et l'innovation, et les questions soulevées quant à l'évolution de la structure du marché, et la naissance des grappes techniques où les entreprises développent le savoir-faire afin de fournir, et de disputer, des activités et des compétences à travers une série de secteurs. Approvisionnement à l'extérieur Activités extraterritoriales Services aux entreprises à intensité de connaissance Innovation Massini S. und Miozzo M. Outsourcing und Auslandsverlagerung von Geschäftsdiensten: Probleme bei der Theorie, Verwaltung und Geografie von Innovation, Regional Studies. Auf der Grundlage einer Originalerhebung erörtern wir in diesem Beitrag die Trends und Probleme beim Outsourcing und bei der Auslandsverlagerung von Geschäftsdiensten. Wir dokumentieren und analysieren die zunehmende Verlagerung von Geschäftsdiensten (Verwaltungsdiensten, Callcentern, Informationstechnologie-Diensten, Beschaffung und Produktentwicklung) von den USA und Europa in weniger entwickelte Länder und untersuchen die ausgelagerten Funktionen, die Größe und die Zielorte der auslagernden Firmen sowie die Umsetzungsmodelle. Ebenso untersuchen wir die Rolle der Informations- und Kommunikationstechnik und die Entwicklung von großen, weltweit tätigen Dienstanbietern sowie von neuen Firmen in entwickelten und weniger entwickelten Ländern. Wir erörtern die Auswirkungen hinsichtlich der Outsourcing-Entscheidungen, der Globalisierung von hochgradig wertsteigernden Aktivitäten (wie z. B. Produktentwicklung und Innovation), der Probleme in sich entwickelnden Marktstrukturen und des Entstehens von fachlichen Clustern, in denen Firmen Fachwissen entwickeln, um Aktivitäten und Fachkenntnisse in einem breiten Spektrum von Sektoren anzubieten bzw. um darum zu konkurrieren. Outsourcing Verlagerung ins Ausland Wissensintensive Geschäftsdienste Innovation Massini S. y Miozzo M. Subcontratación y deslocalización de servicios comerciales: desafios para la teoría, la gestión y la geografía de la innovación, Regional Studies. Basándonos en una encuesta original, en este artículo observamos las tendencias y los retos que implican la subcontratación y la deslocalización de servicios comerciales. Documentamos y analizamos el aumento de la deslocalización de servicios comerciales (servicios administrativos, centros de llamadas, servicios de tecnología de la información, adquisición y desarrollo de productos) desde los Estados Unidos y Europa a países menos desarrollados, las funciones externalizadas, el tamaño de las empresas que externalizan, su destino y los modelos de proveedores. Asimismo evaluamos el papel de las tecnologías de información y comunicación y el desarrollo de grandes suministradores de servicios globales y proyectos empresariales en países desarrollados y menos desarrollados. El articolo deriva consecuencias para las decisiones de la subcontratación, la globalización de las actividades de alto valor añadido (tales como el desarrollo y la innovación de productos) y discute las consecuencias para la evolución de la estructura del mercado y la aparición de aglomeraciones técnicas en las que las empresas desarrollan habilidades para competir y ofrecer servicios a una amplia gama de sectores. Subcontratación Deslocalización Servicios comerciales con alto nivel de conocimientos Innovación

The unbundling of corporate functions: the evolution of shared services and outsourcing in human resource management

This article analyses the demand side of business services outsourcing. Using insights from a number of bodies of literature, the article interprets business services outsourcing as corporate restructuring involving the administrative functions of the firm. Propositions are developed around the following. First, the existing corporate structure and the nature of supplier markets affect the paths chosen to create shared business services and to move to outsourcing. Second, the trajectory of the move to shared services and outsourcing affects the distribution of capabilities between users and suppliers. The study examines these propositions through a comparison of human resource outsourcing in two leading consumer products companies, Procter & Gamble (P&G) and Unilever. We find that a relatively high degree of centralization at P&G led it to create an internal shared services center before outsourcing, whilst a more decentralized Unilever utilized outsourcing as an occasion for globally standardizing its systems and processes. The article draws implications of these different paths for core capabilities.

Management Control of Business Service Outsourcing

This study pursues research questions about outsourcing in the framework of a four-stage process model that is derived from complementary, structural, transaction-cost and resource-based views of outsourcing. The stages are: • Strategy development for outsourcing business activities • Partner identification and selection • Contracting • Implementation and control of daily operations We use Merchant and Van Der Stede’s (2007) typology of management controls – cultural, personnel, action, and results controls – to describe the uses of management controls in the stages of this framework. This paper presents the results of a two-part field study at three global companies that have outsourced non-strategic resources across foreign borders (aka offshoring) with different outsourcing strategies, business complexities and degrees of success. These firms also represent three different industries: air transportation, consumer products, and high technology manufacturing. The outsourcing choices reflect the purchasing firms’ different strategies, and the providers range from local to global suppliers, who also have different strategies. The three outsourcing implementations represent extremes from repeated, market-mediated transactions to a strategic alliance, and one point in between. The research was conducted in the context of operating in Latin America, which has unique regional characteristics, but also presents issues common to the management control of outsourcing elsewhere. The first part of the field study describes how structural theory explains the design and implementation of management controls in the simplest case, where near-commodity resources are outsourced with unilateral contracts. The second part of the field study presents results from two more complex and contrasting cases of customized outsourcing with bilateral contracts, which identify the ascendance of cultural controls and trust-building that are less salient than bureaucratic controls in the simpler context. This research points to understanding and anticipating the dynamic nature of management control of outsourcing through iterative verification of performance and trust-building. We find that cultural affinity and trust might not replace bureaucratic controls in complex contracting but can (1) reduce unproductive conflicts and (2) enhance cooperation and innovation. We find unanticipated side effects of global outsourcing that raise important risk management, financial reporting, auditing, human resource, and education issues. Finally, the paper points to promising areas of future qualitative and quantitative research on the management control of outsourcing relationships.

Outsourcing and Offshoring of Business Services: Challenges to Theory, Management and Geography of Innovation

Drawing on an original survey, we discuss the trends and challenges posed by the outsourcing and offshoring of business services. We document and analyse the increasing offshoring of business services (administrative services, call centres, IT services, procurement and product development) from USA and Europe to less developed countries, the functions offshored, size of offshorers, destination, and delivery models and explore the role of ICTs and the development of both large global services suppliers and entrepreneurial ventures in developed and less developed countries. We derive implications regarding outsourcing decisions, globalisation of high value adding activities, such as product development and innovation, raising issues of evolving market structure and the emergence of technical clusters where companies develop expertise to provide, and compete for, activities and skills across a range of sectors.

Outsourcing and Offshoring: Key Trends and Issues

This paper provides a discussion of key issues which emerged from a review of the debate on offshoring and outsourcing. Although offshoring is not a new phenomenon, the current phase of offshoring is marked by the increased tradability of services enabled by ICT. The paper puts forward a clear definition of offshoring - defined as a combination of trade flows, FDI, and employment shifts - before doing three things. First, official statistics on international trade and FDI were examined to gauge the extent of offshoring in services. Second, the paper analyses the causes and consequences of different types of outsourcing seen as strategies for corporate restructuring. Third, the impact of outsourcing on jobs and professions is assessed in terms of the repackaging of tasks, skills and knowledge. Our challenge in having an informed debate about offshoring is (a) to articulate the benefits and costs of offshoring by linking the three areas, namely trade and FDI, corporate strategy, and employment; and (b) to collect better data – both official statistics and private surveys - that enable us to link micro-level business decisions on outsourcing and offshoring to sectoral and economy-wide outcomes. Even with inadequate data, however, this paper provides pointers to answer such questions as: *Why is outsourcing and offshoring happening now? *What is the impact of outsourcing/offshoring on home and host economies? *What policies should be devised to address the causes and consequences of offshoring? The key points raised in this paper are as follows. 1. Definitions: Offshoring happens when private firms or governments decide to import intermediate goods or services from overseas that they had previously obtained domestically. It is therefore about sourcing decisions which involve (a) imports, (b) displacement of domestic production and associated jobs, and sometimes (c) foreign direct investment (FDI) outflows if sourcing happens from overseas affiliates. It is difficult to combine three separate sources of data to measure the precise extent of offshoring defined in this way. 2. Trade and FDI: Bearing in mind the limitations to official statistics, they indicate that offshoring of services is quite small, relative to that in manufacturing. In particular: *World trade in services, valued at $1.8 trillion in 2003, is still only a fifth of that in manufacturing. *Only 10% of services output enter international trade, whereas 50% of manufacturing does, indicating that offshoring of services is small relative to outsourcing within national borders. 4. Despite this small size, the tradability of services is expected to grow, especially in business services (including IT and professional services) which make use of ICT. *The top two exporters of computer services are Ireland and India, but the top two exports of other business services are the US and the UK. Unlike in manufacturing, the US and the UK maintain a trade surplus in business services. *In part because of such trade surplus, job losses embodied in offshoring is quite small, at 2.4% of total employment in the US in 2003. *For emerging markets, the Indian model of promoting export-platform FDI in software and business services provides one, but not the only, template for promoting them as offshore locations. 3. Corporate Strategies: Growth in outsourcing and offshoring of business services depends on the nature of corporate strategy and business models. Corporate strategies to outsource business services became established only in the late 1990s, driven primarily by the ICT revolution and the Anglo-American shareholder value business model, in which CEO/CFO takes a lead to reduce costs and improve return on assets. Asset sales are therefore just as important as relocating to low-cost areas. *The current phase of outsourcing and offshoring is marked by two distinct types of outsourcing: first, the unbundling and re-centralisation of corporate functions, and second, vertical dis-integration of inputs. The former affects all sectors of the economy, including manufacturing and the public sector. *These two distinct types of outsourcing offer emerging market suppliers different opportunities to upgrade their capabilities and to create higher value added. In particular, these suppliers that entered markets via the provision of low value added standardized services may move up the supply chain (e.g. in software) or deepen their functional knowledge in business services. 4. Jobs and Professions: The movement of service jobs from developed economies to low cost emerging market locations is being accompanied by significant repackaging of tasks, skills, and knowledge into a job, occupation, or profession. This is leading to changes in occupational and professional identity, and is creating new challenges for governments formulating their policies for education and training, and for professional associations thinking about the upgrading of capabilities.

The Unbundling of Corporate Functions: The Evolution of Shared Services and Outsourcing in Human Resource Management

This paper analyses the demand side of business services outsourcing. Using insights from a number of bodies of literature, the paper interprets business services outsourcing as corporate restructuring involving the administrative functions of the firm. Propositions are developed around the following. First, the existing corporate structure and the nature of supplier markets affect the paths chosen to create shared business services and to move to outsourcing. Second, the trajectory of the move to shared services and outsourcing affects the distribution of capabilities between users and suppliers. The study examines these propositions through a comparison of human resource outsourcing in two leading consumer products companies, Procter & Gamble (P&G) and Unilever. We find that a relatively high degree of centralization at P&G led it to create an internal shared services center before outsourcing, whilst a more decentralized Unilever utilized outsourcing as an occasion for globally standardizing its systems and processes. The paper draws implications of these different paths for core capabilities.

Spatial Agglomeration, Technology and Outsourcing of Knowledge Intensive Business Services. Empirical Insights from Italy

The aim of this paper is to explore the main drivers of outsourcing of Knowledge-Intensive Business Services (KIBS) by Italian manufacturing firms. While anecdotal and empirical evidence has emphasised labour cost and scale economies as being behind firms' choices to outsource production or service activities, here we focus on spatial agglomeration and technology as important factors. Using microeconomic data on Italian manufacturing firms for the period 1998?2003, we develop a two-stage Heckman model in order to avoid selection bias: first, we estimate the determinants of the firm's decision to outsource business-related services; second, we estimate the main factors underlying the intensity of KIBS outsourcing, expressed by the number of service activities that are externalised. Our results show that labour cost savings do not seem to be relevant in driving the decision to outsource KIBS, but the use of Information and Communication Technology (ICT), Research and Development (R&D) and location within a dense and technologically developed industrial district has very positive effects.

Outsourcing and Offshoring of Business Services: How Important is ICT?

This paper considers the impact that information and communication technology (ICT) has on firms' choices over organisational form. In particular, the decision over whether to produce in-house or outsource services, and the decision over the location of activity. ICT reduces the transaction and adjustment costs of moving activity outside the firm, and of carrying it out at greater geographic distance. We find that more ICT intensive firms purchase a greater amount of services on the market and they are more likely to purchase offshore than less ICT intensive firms.

Sustainability of Business Service Outsourcing: The Case of Human Resource Outsourcing (HRO)

This paper discusses the theory and evidence behind the logic of business process outsourcing, with a specific focus on human resource outsourcing (HRO). Market analysts project rapid growth in the global market for HRO, from around $30 billion in 2005 to just over $40 billion in 2008. The paper interprets HRO as a case of the unbundling of corporate functions, used as part of fundamental corporate restructuring by global multinational companies. Demand for HRO is satisfied by a mixed type of vendors who believe that their survival depends on growth in the scope of expertise and economies of scale, leading to consolidation through M&A. As HRO deals grow in the scope of processes and shift their weight from transactional to transformational work, contracts are likely to become more complex and longer. Consequently, more relational contracts will have to be used to govern outsourcing relationships. Moreover, professional jurisdiction is being redefined through outsourcing, particularly for the HR profession but also for consultants and lawyers involved in third-party advisory networks. We argue that the sustainability of growth in HRO depends substantially on whether relational contracts and a newly reconstituted HR profession emerge in due course.