Offshoring - Explained
What is Offshoring?
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What is Offshoring?
Offshoring is when a business process carried out in a country is relocated outside of that country. The process may be outsourced to a third party or handled by a foreign controlled business. An offshored business process might include manufacturing, accounting, customer support, etc.
Academic Research on Offshoring
- Offshoring: the next industrial revolution?, Blinder, A. S. (2006). Foreign affairs, 113-128. The economists who are of the view that offshore outsourcing is only a routine extension of global trade are neglecting how great transformation it can bring and how important the results can be. The societies and governments of the developed countries should begin preparing and quick.
- Trading tasks: A simple theory of offshoring, Grossman, G. M., & Rossi-Hansberg, E. (2008). American Economic Review, 98(5), 1978-97. Most of the global trade was done as an exchange of complete products for centuries. But with the latest developments in technology, communication and transportation, it highly implies various countries enhancing value to the international supply chain. The authors present a new concept of the international production process that stresses on tradable tasks. Its cost reduction can create shard gains.
- Getting offshoring right., Aron, R., & Singh, J. V. (2005). Harvard business review, 83(12), 135-43. Half of the companies that have transferred processes offshore are not successful in getting the expected financial gains. 3 part methodology is helpful, i.e. (1) companies should rank their processes (2) the companies should keep in sight the operational risks of offshoring. (3) companies need to determine their offshore locations. This paper helps the companies in selecting the right processes considering these 3 points.
- Offshoring in a knowledge economy, Antrs, P., Garicano, L., & Rossi-Hansberg, E. (2006). The Quarterly Journal of Economics, 121(1), 31-77. The authors propose a theory in which the heterogeneous agents are assigned, hierarchical groups. The less professional agents have specialisation in production. More professional agents have specialisation in problem-solving. The globalisation develops wage inequality in the Southern countries, but not essentially in the northern ones. It affects the global economy.
- Offshoring without guilt, Venkatraman, N. V. (2004). MIT Sloan Management Review, 45(3), 14. Minutes. In this research, the author explains with examples and diagrams the concept of offshoring without quilt.
- Productivity impacts of offshoring and outsourcing, Olsen, K. B. (2006). This paper is a survey of the statistical analysis of the offshore outsourcing, skill upgrading and the productivity impacts therein. There are no clear patterns of the ways offshore outsourcing influences productivity. However, some indications show the impacts of positive productivity. In the manufacturing concerns, increasing effects of productivity are smaller than in the services sector.
- Offshoring: Value creation through economic change, Farrell, D. (2005). Journal of Management Studies, 42(3), 675-683. Companies should take offshoring not being an economic threat but being an important chance for their traders and consumers. Instead of controlling offshoring, businesses should devise effective labour policies. Optimizing international production will definitely lead to fewer costs. It will lower the prices and increase purchasing power as well as new job opportunities.
- Explaining job polarization: Routine-biased technological change and offshoring, Goos, M., Manning, A., & Salomons, A. (2014). American Economic Review, 104(8), 2509-26. This study addresses the spread of job polarisation in sixteen Western European states for the year 1993 to 2010. It then presents a structure to elaborate job polarisation with the help of a routine biased change in technology and offshoring. This paper splits it into within and between the industry elements.
- Why are companies offshoring innovation? The emerging global race for talent, Lewin, A. Y., Massini, S., & Peeters, C. (2009). Journal of International Business Studies, 40(6), 901-925. This research statistically examines the determinants of business decisions regarding the activities of offshore innovation. The authors make a survey to check the effect of past experience, managerial intentions and environmental factors on its probability. The results depict the shortage of professional engineers and scientists in the United States. So, the addition of qualified employees is a significant factor for innovation decisions of offshoring. Businesses are in a worldwide talent race.
- Offshoring in the new global political economy, Levy, D. L. (2005). Journal of Management Studies, 42(3), 685-693. This paper is a challenge to the claims of the economists that offshoring is a form of trade with shared benefits. The author says that the reduction in salaries by offshoring can create wealth for the traders but not, essentially, for employees and the countries. There should be an international commodity market of specific skill set and transfer of workers, firms and countries in balanced market power.
- Smarter offshoring., Farrell, D. (2006). Harvard business review, 84(6), 84-92. In selecting a location for offshoring, the businesses should focus less on wage rates and more on other things that the candidate states are able to accomplish their business needs. They should evaluate their needs on different dimensions and try to understand how substitute areas can fulfil those requirements for an expected future.
- Beyond offshoring: assess your company's global potential., Farrell, D. (2004). Harvard business review, 82(12), 82-90. Now, the businesses know very well that they can cut down the costs with offshoring and shifting employment to areas of low wages. In this paper, the authors present a step by step methodology to check where the industry lies in the globalisation spectrum. This is because, at the same time, all sectors of the economy do not have the same issues and opportunities.
- Offshoring work: business hype or the onset of fundamental transformation?, Lewin, A. Y., & Peeters, C. (2006). Long Range Planning, 39(3), 221-239. This study contains the findings of the ORN (Offshoring Research Network) that brings into consideration the offshoring of technical as well as admin work to countries of the lower cost. The offshoring grows fast. However, as soon as becomes widespread, it changes the way of organizing the industrialized economies of higher cost to compete internationally. Offshoring can be a sign of more basic transformation including many developing forces.