Gazelle in elephant's clothing, an integrated model of outsourcing

Outsourcing, a form of trade in services can be considered as another aspect of global integration of economies, beneficial to trading nations based on comparative advantages principles. However, as offshore outsourcing becomes a fundamental armament in the arsenal of business strategies as organisations continue to stay competitive, the consequent loss of white collar jobs in increasingly knowledge intensive activities has to be properly understood. This paper presents a new framework to understand outsourcing, distinguishing in two important aspects. First, it answers the twin questions: 'what' can be outsourced and 'why' outsourcing may or not be a value proposition. The 'what' of an activity is described in our framework by two important variables, dislocation facilitation and knowledge intensity of the activity. The second important aspect of our model, the integration of three important variables, (that describe the 'what' and the 'why'), in order to permit a complete understanding of outsourced activities and explain the likelihood and evolution of international outsourcing and the implications via our dynamic analyses. Our integrated framework permits not only an understanding of outsourcing along these three dimensions, but also how changes in any parameter affects the activity along all the dimensions, thus, how the repercussions work their way through the entire model.