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Outsourcing and Offshoring: Implications for Productivity of Business Services

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  • Mari Sako
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    Abstract

    This paper reviews the implications of outsourcing and offshoring for the productivity of business services in the UK. Official statistics indicate that business-service productivity has grown by over 20 per cent in the last 7 years at the same time as employment grew by 20 per cent. The paper considers possible factors that account for the simultaneous growth of employment and productivity. First, we discuss outsourcing and offshoring, and their role in enhancing productivity through greater specialization, standardization, and consolidation of business processes, and a shift to higher value-added services. Outsourcing of business services is interpreted as part of corporate restructuring, namely as the unbundling of corporate functions as well as vertical disintegration. Second, as some services become more like products, both low-skilled and high-skilled jobs are subjected to productivity growth through standardization and digitization. It is argued, however, that the future of business-service productivity is on a knife-edge, depending on the mix of two sources of productivity enhancement--namely greater standardization and capturing value from customized solutions. Copyright 2006, Oxford University Press.

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    Bibliographic Info

    Article provided by Oxford University Press in its journal Oxford Review of Economic Policy.

    Volume (Year): 22 (2006)
    Issue (Month): 4 (Winter)
    Pages: 499-512

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    Handle: RePEc:oup:oxford:v:22:y:2006:i:4:p:499-512

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    Web page: http://oxrep.oupjournals.org/

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    Cited by:
    1. Ioan I. ANDONE & Vasile Daniel PAVALOAIA, 2010. "Outsourcing the Business Services," Informatica Economica, Academy of Economic Studies - Bucharest, Romania, vol. 14(1), pages 163-171.
    2. Manning, Stephan, 2013. "New Silicon Valleys or a new species? Commoditization of knowledge work and the rise of knowledge services clusters," Research Policy, Elsevier, vol. 42(2), pages 379-390.
    3. Christopher Robertson & Anna Lamin & Grigorios Livanis, 2010. "Stakeholder Perceptions of Offshoring and Outsourcing: The Role of Embedded Issues," Journal of Business Ethics, Springer, vol. 95(2), pages 167-189, August.
    4. Jianghuai Zheng & Lili Zhang & Yu Wang, 2011. "The underdevelopment of service industry in china: An empirical study of cities in Yangtze River Delta," Frontiers of Economics in China, Springer, vol. 6(3), pages 413-446, September.
    5. Gu, Wulong & Baldwin, John R., 2008. "Outsourcing and Offshoring in Canada," Economic Analysis (EA) Research Paper Series 2008055e, Statistics Canada, Analytical Studies Branch.
    6. da Silveira, Giovani J.C., 2014. "An empirical analysis of manufacturing competitive factors and offshoring," International Journal of Production Economics, Elsevier, vol. 150(C), pages 163-173.
    7. Gu, Wulong & Baldwin, John R., 2008. "Impartition et delocalisation au Canada," Serie de documents de recherche sur l'analyse economique (AE) 2008055f, Statistics Canada, Direction des etudes analytiques.
    8. Jensen, Peter D. Ørberg, 2012. "A passage to India: A dual case study of activities, processes and resources in offshore outsourcing of advanced services," Journal of World Business, Elsevier, vol. 47(2), pages 311-326.
    9. Zheng, Jianghuai & Zhang, Lili & Wang, Yu, 2010. "The underdevelopment of service industry in China: an empirical study of cities in Yangtze River Delta," MPRA Paper 33125, University Library of Munich, Germany, revised Jun 2011.
    10. Beretta, Silvio & Targetti Lenti, Renata, 2011. "“India in the Outsourcing/Offshoring Process: A Western Perspective” - L’India nel processo di outsourcing/offshoring: un punto di vista occidentale," Economia Internazionale / International Economics, Camera di Commercio di Genova, vol. 64(3), pages 269-296.

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