Whether and What to Offshore?

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    Abstract

    In this article, we explore the idea that offshoring of services and technical work should be regarded as a dynamic process that evolves over time. Firms gradually move from offshoring of simple, standardized activities towards offshoring of advanced activities when they accumulate experience with offshoring, and this type of offshoring comes with an entirely different set of characteristics compared to traditional, cost-seeking offshoring. Based on a unique survey among the total population of firms in the eastern region of Denmark, we analyze some of the dynamics of this process through a model that incorporates two different aspects of the process of offshoring. First, we approach the question of whether to offshore and establish a baseline that investigates the determinants of firms’ participation - or lack thereof - in offshoring. Secondly, we approach the question of what to offshore and the subsequent process of offshoring, as we analyze the determinants of the offshoring of advanced, highend technical, and service activities. The findings are consistent with the notion of offshoring as a dynamic process as they show how some (cost-related) determinants play a role when firms first engage in offshoring, while rather different determinants matter for the subsequent process of offshoring of advanced activities. Although the model portrays a simplified expression of the offshoring process with two stages, the findings underpin our view that a process perspective on offshoring is a useful analytical framework.
    Original languageEnglish
    Place of PublicationKøbenhavn
    PublisherCenter for Strategic Management and Globalization
    Number of pages40
    ISBN (Print)9788791815034
    Publication statusPublished - Mar 2007
    SeriesSMG Working Paper
    Number4/2007

    Keywords

    • Offshoring dynamics
    • Service offshoring

    Cite this

    Jensen, P. D. Ø., & Pedersen, T. (2007). Whether and What to Offshore? Center for Strategic Management and Globalization. SMG Working Paper, No. 4/2007