Offshoring and Its Effects on the Labour Market and Productivity: A Survey of Recent Literature

Offshoring has become an increasingly prominent aspect of the globalization process. Evidence over the past two decades suggests that offshoring has not exerted a noticeable impact on overall employment and earnings growth in advanced economies, but it has likely contributed to shifting the demand for labour towards higher-skilled jobs. There appear to be some positive effects of offshoring on productivity, but such effects differ by country.

Economic and Business Responses to the Pressures of Commoditization

This paper examines the pressures of commoditization will continue to exert itself on companies and managers everywhere: the increasing impact of demographic change; the requirement to maintain a keen eye on costs in order to compete effectively within the global market; the continued advance of technology; the ability to standardize processes and eliminate major inefficiencies; the pressure to outsource and offshore business activities in order to exploit the cost advantages of cheaper labour and the opportunity for your competition to attack your markets and replicate your products and services more freely.Tackling commoditization in a fragmented or short-termist way will not allow you to understand its effects and nor will it provide the solid platform required to build an effective response. So when it comes to considering the potential impacts of commoditization you need to ask yourself the following two questions: 1. Can all or part of our business become commoditized? It is easy to believe that you are immune to the effects of commoditization and that you don’t need to respond to something that may not even be on your horizon. When responding to this question the best approach is to start from the position that everything you do is capable of becoming commoditized if not now, then certainly at some point in the future. Of course you may find that not everything can be commoditized, but it is far better to come to this conclusion after completing a thorough analysis of your business than making assumptions based upon a limited perspective or worse still, gut feel 2. How should we respond to the threat of commoditization? In particular should we embrace it or avoid it? This is a crucial question to answer once you have understood the threats and opportunities commoditization poses to the organization. As with any strategic decision it is likely to have significant operational implications. In some cases you may find that you have little alternative but to become more commoditized yourself, whilst in others you may be able to adopt a more flexible approach. When considering the response, you will need to think about such things as: • How can we insulate ourselves from the threat of commoditization? • Given the choice what parts of our business should we allow to become commoditized? • Where and in which markets should we innovate as a way of avoiding the commoditization trap? • Where should we target our investments – with our customers, on our back office processes, in research and development, on acquisitions or all of the above?Commoditization, Offshoring, Talent, Technology, Competition, Inequality

Globalization, Offshoring and Economic Insecurity in Industrialized Countries

This paper shows that a “new wave of globalization,” involving extensive offshoring, has raised both actual and perceived labor market insecurity in industrialized countries. The paper analyzes various channels through which this new wave of globalization leads to economic insecurity. It emphasises the key role of overall macroeconomic conditions in determining the outcome of offshoring. The paper points out the inadequacies of various policy responses that industrialized countries have come up with so far and advocates urgent steps toward formulation of policies and erection of institutional structure more appropriate to confront the challenges of the new of globalization.offshoring, contracting out internationally, economic insecurity, profit share, financialization, globalized production, social security benefits

Organizational Responsiveness to Anti-offshoring Institutional Pressures

This study explores the extent to which organizations are responsive to pressures from institutional constituents against offshoring of information technology and business processes. Drawing on a theoretical framework that integrates institutional and strategic explanations, it proposes that organizational responsiveness to anti-offshoring institutional pressures is a function of both the characteristics of such pressures as well as organizations’ prior success with offshoring. Results based on moderated hierarchical multiple regression analyses on survey data from 84 offshoring client organizations indicate the following. First, both greater organizational expectations of enhanced social legitimacy obtained from compliance and mimetic influences from other organizations led to greater organizational responsiveness. Second, despite the strong precedent, organizational dependence on a key pressuring constituent had no effect. Third, both conflict of institutional expectations with organizational goals and greater regulatory environment uncertainty reduced responsiveness. Fourth, surprisingly, organizational success with offshoring had no direct effect on responsiveness. However, it attenuated the otherwise strong positive effect of social legitimacy and exacerbated the negative effect of regulatory environment uncertainty. Implications of these findings for research and practice are discussed

“You Feel The Threat From Asia”. Onshore Experiences of IT Offshoring To India

This article investigates the experiences of employees and managers in Swedish companies that offshore IT services to India, focusing on how implementation of offshoring is changing the work organization and working conditions for software developers onsite. Our analysis highlights the fact that the working conditions have been significantly redesigned in several different ways because of offshoring, most obviously due to the need for knowledge transfer between the onshore and the offshore working sites. The study illustrates how employees and managers onsite utilized different strategies for knowledge transfer and how these strategies were more or less successful, sometimes due to resistance from employees. The article concludes that, although offshoring contributed to a separation of conception from execution in these companies, there were few signs of routinization of daily work tasks for onsite employees. Instead, it was the routinized and noncore tasks that were offshored while project management tasks were taken over by onsite staff, which meant that they ended up in a superior position vis-à-vis their Indian colleagues as new global hierarchies were created. Power relations at work, both within firms and between firms, are thus brought to light

Innovation Offshoring:Asia's Emerging Role in Global Innovation Networks

Most analysts agree that critical ingredients for economic growth, competitiveness, and welfare in the United States have been policies that encourage strong investment in research and development (R&D) and innovation. In addition, there is a general perception that technological innovation must be based in the United States to remain a pillar of the American economy. Over the past decade, however, the rise of Asia as an important location for "innovation offshoring" has begun to challenge these familiar notions. Based on original research, this report demonstrates that innovation offshoring is driven by profound changes in corporate innovation management as well as by the globalization of markets for technology and knowledge workers. U.S. companies are at the forefront of this trend, but Asian governments and firms are playing an increasingly active role as promoters and new sources of innovation. Innovation offshoring has created a competitive challenge of historic proportions for the United States, requiring the nation to respond with a new national strategy. This report recommends that such a strategy include the following elements: output forecasting techniques ... Improve access to and collection of innovation-related data to inform the national policy debate; Address "home-made" causes of innovation offshoring by sustaining and building upon existing strengths of the U.S. innovation system; Support corporate innovation by (1) providing tax incentives to spur early-state investments in innovation start-ups and (2) reforming the U.S. patent system so it is more accessible to smaller inventors and innovators; and Upgrade the U.S. talent pool of knowledge workers by (1) providing incentives to study science and engineering, (2) encouraging the development of management, interpretive, cross-cultural, and other "soft" capabilities, and (3) encouraging immigration of highly skilled workers.Innovation Networks, Innovation Offshoring, Asia

Globalisation : trends, issues and macro implications for the EU

Globalisation, defined as an increasingly integrated world economy, has the potential to generate the largest structural upheaval in economies since the industrial revolution. As in the past, this process is being underpinned by both technological change and by a shift in policies in many countries towards a more open, market based, system of economic governance. These policies reflect the realities of a new world order where knowledge creation and absorption and the flexibility of the regulatory and institutional frameworks will be the key determinants of the economic fortunes of economies. This paper examines the historical empirical evidence regarding globalisation and quantifies the macro benefits and costs for the EU over the coming decades.globalisation, trade integration, global productivity, terms of trade, Denis , Mc Morrow, R�ger

Disruptive Innovation…in Reverse: a Theoretical Framework to Look at New Product Development from Emerging Economies

It is now clear that emerging economies are gaining increasing importance in the global innovation system. Their actual role is perhaps the central question driving the growing interest in this topic and to which this paper attempts to respond. Although several authors have identified and discussed the process of innovation from emerging economies, it remains under-explored. We view the disruptive innovation (Christensen, 1997) and reverse innovation (Immelt et al, 2009) paradigms side by side: two theories that we think offer interesting and complementary perspectives when we position emerging markets at the centre of the stage as a source of innovation. By analyzing different definitions and descriptions provided by the literature on innovation for and from emerging economies, this paper attempts a reinterpretation of the concept of reverse innovation, defined as a type of disruptive innovation.Disruptive Innovation, Reverse Innovation, Emerging Economies, Product Development, Cost Innovation, R&D Internationalization.

IT Services Offshoring to Africa: Assessing the Attractiveness and Readiness of Nigeria

This paper presents one of the first comprehensive analyses of Nigeria’s future readiness and attractiveness as a potential destination for IT-enabled services offshoring. The paper examines existing literature on IT services offshoring to Africa, and presents results from in-depth evaluation of seven important location selection criteria. The study indicates that while Nigeria appears to be making progress in many areas, the country is neither yet ready nor attractive as an offshoring destination. Nevertheless, the analysis suggests that Nigeria might already be on the path to attaining readiness in the future. However, significant hurdles will need to be surmounted if Nigeria is to become fully attractive for offshoring. The study further reinforces beliefs that Nigeria has the potential to take its own share of the global offshoring market, and concludes that bringing IT services to Nigeria is all about seeking opportunities while muddling through manageable risk

IT OFFSHORING: History, Prospects and Challenges

Offshore provision of IS/IT related services has been growing rapidly in recent years and seems firmly set to continue. This trend is fueled by the many advantages of offshore service procurement; however, there are dangers in this practice. Furthermore, offshoring requires adaptation of the IS function and IS management. This, in turn suggests the need for modifications of IS curricula in order to prepare graduates for the new environment. The advantages of offshoring are those of outsourcing in general – cost saving and allowing the organization to focus on its core activities. The main dangers include loss of possibly-important business skills and reliance on remote suppliers who face risks that are unfamiliar to the client firm. The loss of jobs due to offshoring also introduces political considerations. Offshore IS activities are generally the responsibility of an organization’s CIO. This management responsibility requires awareness of cultural and legal differences and of risks associated with offshoring and outsourcing in general. Offshoring has an effect on job opportunities for graduates of information systems programs. The number of some jobs will shrink, but new positions with new responsibilities are likely to emerge. Training of students in the U.S. and other countries in the developed world to function in an environment of offshored operations will introduce new IS roles and skills and require the adaptations of IS curricula