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New Bangalores - The role of Central and Eastern Europe in business and IT services offshoring

  • Zoltan Gal

    ()

    (Centre for Economic and Regional Studies, Hungarian Academy of Sciences Associate professor, University of Kaposvar, Faculty of Economics)

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    The paper discusses how the second global shift in business services provision and corporate restructuring open up new offshoring opportunities into Central and Eastern Europe (CEE). It explores three problems: First, it builds upon the theoretical framework of the new paradigm of globalization, which considers offshoring as one of the most important globalizing forces of recent time. This results in a shift in global trade, namely from trade in goods to trade in tasks determined by the changing trends in the division of labour. Second, the paper gives an overview of services relocation into CEE in comparison with its Asian counterparts. As the EU expanded eastwards, the opportunities for European corporations to offshore their business services to these nearshore locations increased. Building on the region s nearshoring advantages such as geographical-cultural proximity and on their multilingual graduate supply, CEE is likely to utilise more value added quality driven BPO and KPO services. Third, the paper examines the implications of offshoring for the home markets in CEE assessing its impact on their locations. It reveals the role of offshoring activities in the metropolitan transformation and discusses the factors that make the capital cities an increasingly attractive option for companies to relocate their services. Despite CEE has taken advantage on the trend supported by the global service delivery models reducing dependency on any single location, its further growth may be influenced by the worsening macro-conditions, and future prospect of the region depends largely on government incentives and on the success of exploiting talent pools offered by its provincial cities.

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    File URL: http://jedep.spiruharet.ro/RePEc/sph/rjedep/Rev6_6_Gal.pdf
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    Article provided by Alliance of Central-Eastern European Universities in its journal Published in Journal of Economic Development, Environment and People.

    Volume (Year): 2 (2013)
    Issue (Month): 3 (September)
    Pages: 77-100

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    Handle: RePEc:sph:rjedep:v:2:y:2013:i:3:p:77-100
    Contact details of provider: Web page: http://jedep.spiruharet.ro/

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    1. N. Gregory Mankiw & Phillip Swagel, 2006. "The Politics and Economics of Offshore Outsourcing," NBER Working Papers 12398, National Bureau of Economic Research, Inc.
    2. Meyer, Thomas, 2006. "Offshoring to new shores: Nearshoring to Central and Eastern Europe," MPRA Paper 5785, University Library of Munich, Germany.
    3. Robert-Nicoud, Frédéric, 2008. "Offshoring of routine tasks and (de)industrialisation: Threat or opportunity--And for whom?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 517-535, March.
    4. Anonymous, 2003. "Competing in the 21st Century," Amber Waves, United States Department of Agriculture, Economic Research Service, April.
    5. Hillberry, Russell & Hummels, David, 2008. "Trade responses to geographic frictions: A decomposition using micro-data," European Economic Review, Elsevier, vol. 52(3), pages 527-550, April.
    6. Mary Amiti & Shang-Jin Wei, 2005. "Service offshoring, Productivity, and Employment: Evidence From the United States," IMF Working Papers 05/238, International Monetary Fund.
    7. Michael H Grote & Florian A T�ube, 2006. "Offshoring the financial services industry: implications for the evolution of Indian IT clusters," Environment and Planning A, Pion Ltd, London, vol. 38(7), pages 1287-1305, July.
    8. Ricardo, David, 1821. "On the Principles of Political Economy and Taxation," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, edition 3, number ricardo1821.
    9. Grote, Michael H. & Täube, Florian A., 2007. "When outsourcing is not an option: International relocation of investment bank research -- Or isn't it?," Journal of International Management, Elsevier, vol. 13(1), pages 57-77, March.
    10. Magdolna Sass & Martina Fifekova, 2010. "Offshoring and Outsourcing Business Services to Central and Eastern Europe: Some Empirical and Conceptual Considerations," European Planning Studies, Taylor & Francis Journals, vol. 19(9), pages 1593-1609, October.
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