IT outsourcing and employment growth at the firm level

Outsourcing is widely associated with accompanied job losses in the outsourcing firm, at least in the short run. However, the medium and long run effects of outsourcing on employment growth might still be positive. This paper particularly focuses on IT outsourcing and its medium-term effects on employment growth. Therefore, a three year time period from 2003 to 2006 is analysed using German firm-level data and instrumental variable estimation. I find evidence that IT outsourcing has a positive effect on firms' employment growth rate. However, dividing the sample into manufacturing and service firms, a medium-term positive growth effect of IT outsourcing can only be observed for firms operating in the service sector. --Information and Communication Technology,Outsourcing,Employment Growth

IT outsourcing and employment growth at the firm level

Outsourcing is widely associated with accompanied job losses in the outsourcing firm, at least in the short run. However, the medium and long run effects of outsourcing on employment growth might still be positive. This paper particularly focuses on IT outsourcing and its medium-term effects on employment growth. Therefore, a three year time period from 2003 to 2006 is analysed using German firm-level data and instrumental variable estimation. I find evidence that IT outsourcing has a positive effect on firms’ employment growth rate. However, dividing the sample into manufacturing and service firms, a medium-term positive growth effect of IT outsourcing can only be observed for firms operating in the service sector

Empirical analysis of information technology and business process outsourcing

Diese Dissertation befasst sich in drei empirischen Aufsätzen mit der Auslagerung von Informationstechnologien (IT) und Geschäftsprozessen. Der erste Beitrag untersucht die Auswirkung von IT-Outsourcing auf die Arbeitsproduktivität der auslagernden Unternehmen, wobei ein Endogenous Switching Regression Modell im Rahmen einer Cobb-Douglas Produktionsfunktion verwendet wird. Die Ergebnisse zeigen, dass Mitarbeiter, die hauptsächlich mit einem Computer arbeiten, produktiver sind in Unternehmen die IT auslagern. Daher kann die Computernutzung und IT Outsourcing als komplementäre Faktoren betrachtet werden, die sich beide positiv auf die Arbeitsproduktivität auswirken. Der zweite Aufsatz befasst sich mit der Wirkung von IT Outsourcing auf das Beschäftigungswachstum. Während Outsourcing zumindest kurzfristig oftmals mit einem Beschäftigungsabbau in den auslagernden Unternehmen assoziiert wird, können die mittel- bis langfristigen Auswirkungen von Outsourcing durchaus positiv sein. Durch einen Instrumentalvariablenansatz wird für mögliche Endogenität zwischen Beschäftigungswachstum und IT Outsourcing kontrolliert. Die empirischen Ergebnisse sprechen dafür, dass sich Outsourcing mittelfristig positiv auf das Beschäftigungswachstum der Unternehmen auswirkt. Allerdings zeigt eine separate Betrachtung des verarbeitenden Gewerbes und von Dienstleistungsunternehmen, dass dieser positive Effekt nur für letztere signifikant ist. Der dritte und letzte Beitrag untersucht die Auswirkung der Auslagerung von IT nahen Geschäftsprozessen auf die Unternehmensproduktivität. Diese Analyse basiert auf Paneldaten. Um Verzerrungen durch nicht beobachtbare Heterogenität von Firmen, Messfehler der Variablen und Simultanität der In- und Outputs zu erfassen, werden verschiedene Schätzverfahren im Rahmen einer Cobb-Douglas Produktionsfunktion verwendet. Die Ergebnisse zeigen einen signifikanten positiven Effekt der Auslagerung von Geschäftsprozessen auf die Produktivität der Unternehmen.This thesis consists of three essays that contribute to the empirical literature on information technology (IT) and business process outsourcing. The first essay analyses the impact of information technology outsourcing on labour productivity in outsourcing firms by using an endogenous switching regression model in a Cobb-Douglas production function framework. Estimation results show that employees who mainly work with a computer are more productive in firms conducting IT outsourcing. Therefore, computer usage and IT outsourcing can be interpreted as complementary factors that positively affect firms’ labour productivity. The second essay refers to the employment effects of IT outsourcing. Even though, in most cases outsourcing is widely associated with accompanied job losses in outsourcing firms, the medium and long term effects of outsourcing can absolutely still be positive. The analysis is conducted by using an instrumental variable approach to account for possible endogeneity between the employment growth rate and IT outsourcing. Estimation results provide empirical evidence that IT outsourcing has a positive effect on a firms’ medium-term employment growth rate. However, dividing the sample into manufacturing and service firms, a significant medium-term positive growth effect of IT outsourcing can only be observed for firms operating in the service sector. Finally, the last essay takes a close look at the impact of IT-related business process outsourcing on firm productivity. This analysis is based on panel data. In order to account for unobserved firm heterogeneity, measurement errors in the variables and simultaneity of inputs and output, different estimation techniques are applied to estimate a Cobb-Douglas production function model. The results clearly reveal a positive and significant impact of business process outsourcing on firm-level productivity

Productivity effects of business process outsourcing: a firm-level investigation based on panel data

This paper analyses the impact of business process outsourcing (BPO) on firm productivity based on a comprehensive German firm-level panel data set covering manufacturing and service industries. The growing importance of service inputs into the production process is undisputed. Firms increasingly buy all or at least parts of selected services they need from external service providers. This is especially true for services which rely to a great extent on new information and communication technologies. Outsourcing firms can concentrate on their core competencies. Additionally, they benefit from the expertise of the external service provider. Finally, external vendors are able to provide services at lower price because of scale effects. By estimating a production function, I show that BPO has a positive and significant impact on firm-level productivity. The results are robust across different estimation techniques. --Business Process Outsourcing (BPO),Productivity,Panel Data,Olley-Pakes,System-GMM

Does IT Outsourcing Increase Firm Success? An Empirical Assessment using Firm-Level Data

Using German firm-level data, an endogenous switching regression model within a production function framework is estimated in order to explore differences in labor productivity between IT outsourcing and non-IT outsourcing firms. This approach takes possible complementarities between IT outsourcing and production input factors into account and further allows IT outsourcing to affect any factor of the production function. Estimation results show that IT outsourcing firms produce more efficiently than non-IT outsourcing firms. Furthermore, they have a significantly larger output elasticity with respect to computer workers. Therefore computer workers and IT outsourcing can be interpreted as complementary factors positively affecting firms? labor productivity. An additional analysis indicates that IT outsourcing, in the medium-term, has a positive effect on firms? employment growth rate. --IT Outsourcing,Productivity,Endogenous Switching Regression,Employment Growth

Europe’s digital future : focus on key priorities

Customised products and services, flexible working arrangements, productivity growth, and increasing prosperity – these are just some of the advantages promised by a digitised and connected economy. Business managers and politicians are keen to reap the potential benefits of the digital transformation. Such a transformation of the economy, however, is a complex task which goes hand in hand with a significant number of challenges. Digital transformation brings about changes in production and innovation processes, in markets and working environments, and also has societal implications. In particular, there are widespread fears that the increased use of machines and robots for tasks previously completed by humans shall result in job losses. Actors at both European and national levels have launched numerous agendas, initiatives and directives in order to support the digital transformation. The Digital Agenda, part of the Europe 2020 Strategy consists of seven pillars (EU Commission, 2016a): i) Digital Single Market, ii) Interoperability & Standards, iii) Trust & Security, iv) Fast and ultra-fast Internet access, v) Research and innovation, vi) Enhancing digital literacy, skills and inclusion, vii) ICT-enabled benefits for EU society. These seven pillars comprise 132 actions ranging from simplifying Pan-European licensing for online works (action 1), to investing in High-Performance Computing (action 132)

On the Determinants of Cloud Computing Adoption

Cloud computing is widely seen as a new source of innovation as well as a driving factor of productivity improvements of firms. This paper analyses the determinants of cloud computing adoption in general as well as for specific deployment (Public vs. Private) and service models (SaaS, IaaS, PaaS). Our data set contains a representative sample of 2,970 German firms and refers to the years 2014 and 2015. The econometric analysis confirms our three main hypothesis regarding firms' decision to adopt cloud computing in general. The share of workers with mobile internet access, being a start-up, as well as the regional availability of high-speed fixed-line internet access increase the likelihood of a firm for using cloud computing services

Innovationsleistung und Innovationsbeiträge der Telekommunikation in Deutschland

Deutschland zählt weltweit zu den führenden Innovationsstandorten in der Telekommunikation. In den vergangenen 15 Jahren kamen zwischen 10 und 14 % aller Patentanmeldungen in diesem Technologiefeld aus Deutschland. Die Technologieentwicklung erfolgt arbeitsteilig zwischen der Geräteindustrie (Netzwerktechnik, Endgeräte), den Telekommunikationsanbietern, Softwareunternehmen und öffentlichen Forschungseinrichtungen. Dabei sind es vor allem einige wenige große Unternehmen, die die technologische Dynamik bestimmen

Innovationsleistung und Innovationsbeiträge der Telekommunikation in Deutschland

Eine leistungsfähige Telekommunikationsinfrastruktur und innovative Anbieter von Telekommunikationsdiensten sind ein wesentliches Fundament für moderne Industriegesellschaften. Moderne Telekommunikation ermöglicht den raschen, sicheren, kostengünstigen und flexiblen Austausch von Informationen. Sie erleichtert die Integration von wirtschaftlichen Abläufen, sie schafft neue Kommunikationsmöglichkeiten für Bürger, Unternehmen und Behörden, sie stößt neue Produkt- und Dienstleistungsangebote in unterschiedlichen Anwendungsfeldern an, und sie fördert den wirtschaftlichen und sozialen Austausch zwischen Regionen und Ländern. Eine umfassende Nutzung von Telekommunikation erhöht die Produktivität in einer Volkswirtschaft und gibt Wachstumsimpulse bei Beschäftigung und Wertschöpfung. Für den Innovations- und Industriestandort Deutschland ist die Telekommunikationsbranche aus mehreren Gründen von zentraler Bedeutung. --

Does IT outsourcing increase firm success? : an empirical assessment using firm-level data

Using German firm-level data, an endogenous switching regression model within a production function framework is estimated in order to explore differences in labor productivity between IT outsourcing and non-IT outsourcing firms. This approach takes possible complementarities between IT outsourcing and production input factors into account and further allows IT outsourcing to affect any factor of the production function. Estimation results show that IT outsourcing firms produce more efficiently than non-IT outsourcing firms. Furthermore, they have a significantly larger output elasticity with respect to computer workers. Therefore computer workers and IT outsourcing can be interpreted as complementary factors positively affecting firms’ labor productivity. An additional analysis indicates that IT outsourcing, in the medium-term, has a positive effect on firms’ employment growth rate