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International Outsourcing of Services: What Role for Central and East European Countries?

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Author Info

  • Metka Stare
  • Luis Rubalcaba

Abstract

Central and East European countries (CEECs) that have recently acceded to the European Union are increasingly emerging on the map of global companies as possible locations for outsourcing services. Starting from the assumption of labor cost differentials in favor of the CEECs, the paper explores the CEECs' capacity and potential to supply outsourcable services to the EU-15. We analyze trends in trade flows and foreign direct investment in computer services and other business services. Although the available statistical data are deficient and excessively aggregated, the scattered evidence suggests that the CEECs are important suppliers of outsourcable services to the EU-15. Apart from labor cost differentials, other factors, such as the availability of skilled workforce as well as geographical and cultural proximity, might also contribute to EU-15 companies' preference for the CEECs when deciding on the location for international outsourcing of services. Increased specialization within the enlarged European Union could bring greater benefits from the international outsourcing of services, provided the European Union improves the functioning of labor markets and the competitiveness of the service sector, including the efficient implementation of the internal market for services.

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Bibliographic Info

Article provided by M.E. Sharpe, Inc. in its journal Emerging Markets Finance and Trade.

Volume (Year): 45 (2009)
Issue (Month): 5 (September)
Pages: 31-46

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Handle: RePEc:mes:emfitr:v:45:y:2009:i:5:p:31-46

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Web page: http://mesharpe.metapress.com/link.asp?target=journal&id=111024

Related research

Keywords: business services; Central and East European countries; computer and information services; foreign direct investment; international outsourcing/offshoring; trade;

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Cited by:
  1. Jože P. Damijan & Matija Rojec & Maja Ferjančič, 2011. "The Growing Export Performance of Transition Economies: EU Market Access versus Supply Capacity Factors," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(4), pages 489-509, December.

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