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Article
Publication date: 1 January 2007

Pieter Klaas Jagersma and Désirée M. van Gorp

The article discusses offshoring as an irreversible trend that is redefining the paradigm of global competition of service firms, and provides insight and practical advice…

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Abstract

Purpose

The article discusses offshoring as an irreversible trend that is redefining the paradigm of global competition of service firms, and provides insight and practical advice regarding the offshore behavior of service firms for management professionals.

Design/methodology/approach

The offshoring process is applied to service firms including lessons learned. It is largely based on the results of a research study among 247 service firms determining their offshore behavior and illustrated with examples of their offshoring activities.

Findings

Offshoring is redefining global competition and service firms should use it as a tool to create a competitive advantage vis‐à‐vis their competitors. In doing so they should careful prepare offshoring in different phases of the process as suggested in the 4M approach. Moreover, they should decide in an early stage on monitoring, reporting and measuring the offshoring process and secure continuous commitment from management.

Research limitations/implications

The offshoring process referred to in this article as the 4M approach should be further tested among service firms.

Practical implications

Providing insight and practical advice regarding the offshore behavior of service firms for management professionals.

Originality/value

Research in the past has been largely focused on manufacturing firms. This article focuses on service firms and is based on findings of primary research executed by the authors.

Details

Business Strategy Series, vol. 8 no. 1
Type: Research Article
ISSN: 1751-5637

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Article
Publication date: 1 March 2005

Bruce Rutherford and Shawn Mobley

Offshoring, the process of relocating discrete business functions or processes to foreign locations, is rapidly expanding. Offshoring integrally links real estate…

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1636

Abstract

Offshoring, the process of relocating discrete business functions or processes to foreign locations, is rapidly expanding. Offshoring integrally links real estate decisions to business strategy, offering corporate real estate (CRE) professionals an opportunity to advise and perform at the highest levels of their organisations. Fulfilling this degree of strategic leadership requires knowledge of the issues, opportunities, challenges and tactics involved in the offshoring process. This paper analyses the views and experience of CRE executives involved in offshoring, and prepares the reader to think strategically, act proactively and employ best practices to achieve future success with offshoring.

Details

Journal of Corporate Real Estate, vol. 7 no. 1
Type: Research Article
ISSN: 1463-001X

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Article
Publication date: 24 August 2021

Matteo Podrecca, Guido Orzes, Marco Sartor and Guido Nassimbeni

This paper aims to offer a long-term systematic picture of the evolution of manufacturing offshoring (in terms of intensity, geography and drivers) highlighting the…

Abstract

Purpose

This paper aims to offer a long-term systematic picture of the evolution of manufacturing offshoring (in terms of intensity, geography and drivers) highlighting the changes in the surrounding context and the resulting transitions points (“points in time”) that have shaped its development path.

Design/methodology/approach

Three statistical tools were adopted on a dataset of 644 cases. First, the authors resorted to multiple structural change tests to identify the transition points. Second, the authors explored offshoring geography by conducting a network analysis. Finally, the authors adopted gravity models to shed light on offshoring drivers.

Findings

Results highlight three offshoring phases: expansion (2002–2006), reconsideration (2007–2009) and rationalization (2010 onwards). During the first phase, characterized by economic growth, firms were mainly interested in economic savings; offshoring to low-cost countries was the prevailing location strategy. Subsequently, during the economic crisis, the number of cases declined and the main drivers became market-based factors together with the research for cost savings. Finally, in the third phase, when the economy was still stagnating and new manufacturing technologies appeared, the number of offshoring cases has further decreased, and technological- and market-based factors have become the main location drivers.

Originality/value

The study is the first to adopt a systematic, empirical and quantitative approach to analyze the evolution of the manufacturing offshoring considering both the phenomenon itself and the triggering changes in the surrounding context. In doing this, the authors also tested the importance of considering the point in time in offshoring strategies.

Details

Journal of Manufacturing Technology Management, vol. 32 no. 9
Type: Research Article
ISSN: 1741-038X

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Book part
Publication date: 21 October 2019

Marco Bettiol, Maria Chiarvesio, Eleonora Di Maria, Cristina Di Stefano and Luciano Fratocchi

Manufacturing offshoring has received substantial attention within international business studies that have explored where activities are located and how they are…

Abstract

Manufacturing offshoring has received substantial attention within international business studies that have explored where activities are located and how they are governed. However, recent examples of manufacturing relocation to the home country/region have put the advantages of offshoring under scrutiny, since the location of production activities in high-cost countries may have positive impacts in terms of innovation and marketing opportunities. Despite the growing interest in offshoring and “relocations of second degree,” there is a lack of knowledge on the alternative strategies firms may implement after offshoring. This chapter aims to propose a comprehensive framework to summarize and classify the multiple alternatives firms may implement after the initial relocation abroad of manufacturing activities. Based on an extensive literature review and a comparative analysis of Italian case studies, the chapter suggests theoretical advancement in the theory of location of business activities, offering multiple post-offshoring strategic options that may be implemented individually or in combination. In so doing, the analysis also stresses the variety of strategic paths and the complexity of choices concerning manufacturing location, emphasizing reshoring as a nuanced phenomenon and exploring how domestic and foreign locations can complement each other and be mutually reinforcing.

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International Business in a VUCA World: The Changing Role of States and Firms
Type: Book
ISBN: 978-1-83867-256-0

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Book part
Publication date: 12 November 2010

Peter D. Ørberg Jensen and Torben Pedersen

Purpose – The purpose of the chapter is to analyze the factors that lead firms to offshore advanced tasks.Methodology/approach – The study uses a 1,500-firm survey from…

Abstract

Purpose – The purpose of the chapter is to analyze the factors that lead firms to offshore advanced tasks.

Methodology/approach – The study uses a 1,500-firm survey from Denmark to investigate the offshoring of 12 tradable manufacturing, technical, and service activities across different industries.

Findings – Findings indicate that offshoring of advanced tasks is driven by a different set of strategic motives than previous waves of offshoring, which predominantly included simple and standardized routine tasks. While the lower cost of unskilled, labor-intensive processes is the incentive for firms that offshore less advanced tasks, a desire to broaden and deepen global networks of new knowledge spurs highly knowledge-intensive companies to offshore more advanced tasks.

Originality/value of chapter – We propose that offshoring should be analyzed on a more disaggregated level of analysis than is the norm in mainstream offshoring literature. To reflect the trend whereby firms are “slicing” their value chain in finer and finer parts and locate these in various locations around the world, offshoring should be analyzed at the task level, since this paves the way for a richer understanding of offshoring strategies and processes.

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Reshaping the Boundaries of the Firm in an Era of Global Interdependence
Type: Book
ISBN: 978-0-85724-088-0

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Book part
Publication date: 20 October 2011

Oli R. Mihalache, Mashiho Mihalache and Justin J.J.P. Jansen

Purpose – The purpose of this chapter is to analyse the influence of offshoring on entrepreneurial activity (i.e. the introduction of new products and services).

Abstract

Purpose – The purpose of this chapter is to analyse the influence of offshoring on entrepreneurial activity (i.e. the introduction of new products and services).

Methodology/approach – Conceptual

Practical implication – The framework proposed in this study provides some indication to managers about designing an offshoring strategy. Particularly, we aim to inform managers that offshoring various functions may differentially influence firm innovation and that the effect also depends on the governance mode used for the offshore operations and managerial oversight of the offshoring process.

Originality/value of chapter – We provide a theoretical framework that proposes that the offshoring of knowledge intensive services (KIS) and that of labour-intensive services (LIS) will differentially influence the ability of firms to introduce new products and services. While the offshoring of KIS has an inverted U-shaped influence on entrepreneurial activity, the offshoring of LIS has a positive impact. In addition, we propose that these relationships are conditioned by organisational (i.e. governance mode) and managerial (i.e. TMT reflexivity) factors. Specifically, we argue that the degree of integration with the offshore affiliate and TMT reflexivity each moderate the non-linear relationship between offshoring KIS and innovation in such a way that the positive effects of low levels of offshoring KIS will be stronger and the negative effects of high levels of offshoring KIS will be lower. In addition, we argue that the degree of integration constrains and TMT reflexivity enhances the relationship between offshoring LIS and innovation.

Details

Entrepreneurship in the Global Firm
Type: Book
ISBN: 978-1-78052-115-2

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Book part
Publication date: 8 August 2014

Brian Daugherty, Denise Dickins and M. G. Fennema

Offshoring is the process of using unaffiliated foreign companies or affiliated offshore entities (AOEs) to manufacture goods or perform services. The Big 4 public…

Abstract

Offshoring is the process of using unaffiliated foreign companies or affiliated offshore entities (AOEs) to manufacture goods or perform services. The Big 4 public accounting firms offshore tax services (Houlder, 2007) and, more recently, have started to offshore audit tasks of their U.S.-based clients to AOEs located in India (Daugherty & Dickins, 2009). While the benefits of offshoring might be substantial, there are also costs associated with moving domestic work to foreign locations. One of these costs may be greater damage awards in lawsuits involving an audit failure where audit tasks were performed overseas as opposed to the United States. This study investigates that possibility by experimentally examining the effect of offshoring audit tasks requiring different levels of judgment on the amount of damages awarded by potential jurors as a result of an audit failure. The results show potential jurors awarded greater damages against the auditor when audit tasks were performed offshore than when they were performed in the United States. There was no effect of the level of judgment of the audit task on damages awarded. Since this study examines offshoring to only one location, India, results may not be generalizable to other offshore locations.

Details

Advances in Accounting Behavioral Research
Type: Book
ISBN: 978-1-78190-838-9

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Book part
Publication date: 13 August 2014

Marcus M. Larsen and Torben Pedersen

The purpose of this paper is to investigate the effect of the organizational reconfiguration of offshoring on firms’ strategies. A consequence of offshoring is the need to…

Abstract

The purpose of this paper is to investigate the effect of the organizational reconfiguration of offshoring on firms’ strategies. A consequence of offshoring is the need to reintegrate the geographically relocated organizational activities into a coherent organizational architecture. In order to do this, firms need a high degree of architectural knowledge, which is typically gained through learning by doing. We therefore argue that firms with more offshoring experience are more likely to include organizational objectives in their offshoring strategies. We develop and find support for this hypothesis using a mixed-method approach based on a qualitative case study and comprehensive data from the Offshoring Research Network. These findings contribute to research on the organizational design and architecture of offshoring and the dynamics of organizational architectures.

Details

Orchestration of the Global Network Organization
Type: Book
ISBN: 978-1-78350-953-9

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Article
Publication date: 15 June 2020

Lu Lu, Gary Gregory and Shawn Thelen

This research extends existing services offshoring literature by investigating how the type of information exchanged, technical support or personal billing, in conjunction…

Abstract

Purpose

This research extends existing services offshoring literature by investigating how the type of information exchanged, technical support or personal billing, in conjunction with country-of-service-origin (COSO) influences consumer likelihood to react negatively (boycott issue importance, NWOM, perceived service quality) to an offshore service exchange.

Design/methodology/approach

Structural equations modelling is employed to assess relationships among constructs when country of service origin (New Zealand and the Philippines) and type of service provided (technical support and personal billing services) are varied. Using a scenario-based experimental design we collected 337 responses from a consumer panel across Australia.

Findings

Results indicate that both COSO and type of information exchanged affect service sentiment. Overall, consumers feel more negative and more likely to punish a company for offshoring to culturally dissimilar countries such as the Philippines than to culturally similar ones such as New Zealand. However, consumers were more concerned with personal billing services provided from offshore providers than technical support, regardless of COSO.

Practical implications

Practitioners need to understand customer sentiment about services offshoring in general as well as the relationship between service type and country of service origin when designing the global service supply chain.

Originality/value

This study extends theory by applying a multi-dimensional portfolio perspective in examining customer sentiment of offshore services. Understanding the underlying bases of customer concerns and how companies can mitigate negative perceptions allows firms to better manage service offshore strategy.

Details

Journal of Service Theory and Practice, vol. 30 no. 3
Type: Research Article
ISSN: 2055-6225

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Article
Publication date: 7 March 2016

Sang-Chul Yoon

The purpose of this paper is to analyze the offshoring-employment relationship under globalization in Korean manufacturing for the period from 1998 to 2010 using…

Abstract

Purpose

The purpose of this paper is to analyze the offshoring-employment relationship under globalization in Korean manufacturing for the period from 1998 to 2010 using industry-level panel data and Generalized Method of Moments.

Design/methodology/approach

For the first time in the literature the type of trade specialization is taken into account, distinguishing manufacturing between export-specialized and import-specialized industries.

Findings

There is evidence that materials and services offshoring have a significantly negative effect on employment in export-specialized industries. In contrast, there is a non-significant association in import-specialized industries.

Research limitations/implications

These results may cast new light on the offshoring-employment relationship.

Originality/value

Major contribution of this paper is that it sheds new light on the effect of offshoring on employment by distinguishing export-specialized industries from import-specialized industries.

Details

Journal of Korea Trade, vol. 20 no. 1
Type: Research Article
ISSN: 1229-828X

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