Building Service Provider Capabilities: The Impact of Clients and Service Types in Service Offshore Outsourcing

In this paper we study whether and how the interaction between clients and the service providers contributes to the development of capabilities in service provider firms. In situations where such a contribution occurs, we analyze how different types of activities in the production process of the services, such as sequential or reciprocal task activities, influence the development of different types of capabilities. We study five cases of offshore-outsourced knowledge-intensive business services that are distinguished according to their reciprocal or sequential task activities in their production process. We find that clients influence the development of human capital capabilities and management capabilities in reciprocally produced services. While in sequential produced services clients influence the development of organizational capital capabilities and management capital capabilities.