Outsourcing and Offshoring: Key Trends and Issues
Executive Summary................................................................................................................. 3
Introduction .............................................................................................................................. 5
1
Offshoring as International Trade and FDI ................................................................... 8
2
Corporate Strategies and Business Models .............................................................. 18
3
Impact on Jobs and Professions................................................................................. 27
4
Conclusions and Implications for Emerging Markets............................................... 33
References.............................................................................................................................. 36
2
3
4
1
The US is used as a major example for expositional convenience, but there are plenty of replays of similar scenes in the UK and other OECD countries.
2
Such concerns provoked a flurry of legislative proposals in 34 US states, all intended to restrict offshoring in state contracted work (UNCTAD 2004).
5
Location Decision
Corporate Boundary Decision
Domestic Domestic Divisions/ Affiliates 1 Source from Domestic Suppliers
Overseas Establishing Foreign Affiliates (FDI and trade) 5 Source from Foreign Suppliers (International trade)
Insource
4 3 2
Outsource
Offshoring
Outsourcing
3
For example, Gecis Global, General Electric’s captive outsourcing operation in India, was sold and is known as Genpact, with 19,000 employees and $500 million annual revenue.
6
7
4
It is possible to use the input-output table to separate out intermediate use and final consumption in international trade. For example, in the UK in 1995, 97 per cent of business services were accounted for by intermediate imports used by business firms. The share
Introduction .............................................................................................................................. 5
1
Offshoring as International Trade and FDI ................................................................... 8
2
Corporate Strategies and Business Models .............................................................. 18
3
Impact on Jobs and Professions................................................................................. 27
4
Conclusions and Implications for Emerging Markets............................................... 33
References.............................................................................................................................. 36
2
3
4
1
The US is used as a major example for expositional convenience, but there are plenty of replays of similar scenes in the UK and other OECD countries.
2
Such concerns provoked a flurry of legislative proposals in 34 US states, all intended to restrict offshoring in state contracted work (UNCTAD 2004).
5
Location Decision
Corporate Boundary Decision
Domestic Domestic Divisions/ Affiliates 1 Source from Domestic Suppliers
Overseas Establishing Foreign Affiliates (FDI and trade) 5 Source from Foreign Suppliers (International trade)
Insource
4 3 2
Outsource
Offshoring
Outsourcing
3
For example, Gecis Global, General Electric’s captive outsourcing operation in India, was sold and is known as Genpact, with 19,000 employees and $500 million annual revenue.
6
7
4
It is possible to use the input-output table to separate out intermediate use and final consumption in international trade. For example, in the UK in 1995, 97 per cent of business services were accounted for by intermediate imports used by business firms. The share
References: 2 Such concerns provoked a flurry of legislative proposals in 34 US states, all intended to restrict offshoring in state contracted work (UNCTAD 2004).